ODA FINANCING ON KALIWA DAM PROJECT TO BENEFIT CONSUMERS WITH CHEAPER PROJECT, FINANCING COSTS
The use of highly concessional Official Development Assistance (ODA) financing to construct the New Centennial Water Source-Kaliwa Dam Project will benefit Filipino consumers more with cheaper project and financing costs rather than if the project were to go through the Public-Private Partnership (PPP) route, which would entail additional charges passed on to water users so whoever the private proponent will be can recoup its investments, Department of Finance (DOF) Assistant Secretary Antonio Joselito Lambino II has said.
Lambino pointed out that even if going through the PPP route to build the Kaliwa Dam would be at “no cost to the government,” it does not mean “no cost to consumers.”
“The higher project and financing costs of a solicited PPP would have been borne by users, eventually,” Lambino said during a press briefing. “There’s no such thing as free water.”
Lambino recalled that in January 2014, the then-Investment Coordination Committee (ICC) restructured the project components of the Kaliwa Dam and changed the mode of financing from ODA to PPP with an estimated project cost of P18.7 billion. This amount was subsequently slashed to P12.25 billion when the National Economic and Development Authority (NEDA)-ICC approved the recommendation of the Metropolitan Waterworks and Sewerage System (MWSS) to revise the project’s funding component. This approval was subsequently confirmed by the NEDA Board, which is chaired by President Duterte.
An ICC document from 2014 stated that under a PPP mode for the Kaliwa Dam project, “amortization payments will be financed through the imposition of a Water Security Charge as a separate line item in the water bill of the consumers,”Lambino said.
Lambino said that when the Duterte administration took over and decided to undertake the project through ODA, the project cost went down from P18.7 billion under a PPP scheme to P12.2 billion. Even if fees and interest payments are taken into account in completing the project through ODA, the cost would still be significantly lower at P14.5 billion compared to the estimated price tag of P18.7 billion under a PPP scheme, he added.
“The ODA has helped us ensure faster implementation and has allowed us to finance the project at rates lower than the private sector would be able to get,” said Lambino.
As for the unsolicited proposal of the Japan-based Global Utility Development Corp. (GUDC), Lambino noted that it only involved the construction of the Kaliwa intake weir, which is just a portion of the whole project.
“A weir would have made the project incomplete and unable to address the long term needs and the water shortage problems we will continue to face into the future,” Lambino said.
Besides being incomplete, the PPP Center also informed the MWSS leadership in March 2017 that the GUDC’s unsolicited proposal was ineligible under Section 10.3 of the implementing rules and regulations (IRR) of the Build-Operate-Transfer (BOT) law, which states that priority projects shall not be eligible to be accepted as unsolicited proposals, unless involving a new concept or technology, Lambino said.
Moreover, the BOT law also states that any component of an approved project shall not be eligible for any unsolicited proposal, he added. In this case, the ICC already approved the bigger New Centennial Water Source- Kaliwa Dam project in 2014.
According to Lambino, GUDC has been pushing its unsolicited proposal for a mere intake weir as early as 2008, but the government has, since 2013, opted for the construction of a complete dam.
MWSS consultant Engr. Noel Ortigas explained that unlike dams, weirs are dependent on the water flowing from the source, such as a river. “It will only get what is flowing in the river at a particular time. Hence, if the flow rate is low, then the flow of water into the weir is also low,” he said.
The GUDC proposal, which involves building a 7-meter high weir, is also susceptible to the effects of both droughts and flooding, Ortigas added.
In contrast, the 60 meter-high Kaliwa Dam can provide adequate water even during low-flow seasons because it can store water.
Unlike a weir where water has the possibility to overflow, a dam’s overflow is channeled into a spillway to prevent flooding, Ortigas explained.
Moreover, the proposed Kaliwa Dam, he said, conforms to international safety standards, with its design able to withstand an earthquake of “probable maximum magnitude.”