AIC's entry in Iloilo water chain opposed

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ILOILO CITY — Metro Pacific Iloilo Water (MPIW) has cautioned that a proposed bulk water supply project with Aboitiz InfraCapital (AIC) could significantly hike water rates, potentially burdening consumers with charges as high as P50 per cubic meter.

During a public hearing on Monday, MPIW Chief Operating Officer Angelo David Berba voiced strong opposition to AIC's entry into Iloilo's water supply chain, arguing that having another private player act as a bulk water intermediary would only escalate prices.

"The city, the customers don't need another private entity as a middleman for bulk water that will translate to higher prices," he said.

"We are already grappling with the private bulk water supplier charging us every year increasing in prices without control from the national government," he added.

Berba explained that if the deal pushes through, AIC would sell bulk water at a proposed rate of P40 per cubic meter to MPIW in a business-to-business (B2B) arrangement.

AIC's proposed base rate is nearly double MPIW's current domestic rate of P22 and significantly higher than its pending rate adjustment of P29.19 per cubic meter awaiting approval from the Local Water Utilities Administration (LUWA).

"In a B2B arrangement, P40 is a nonstarter. That's why I'm passionate about this — we can bring it down to P30 or less, which is still manageable for us," he said.

Berba cautioned that AIC's proposed rate could reach P50 per cubic meter once power costs, salaries, nonrevenue water and other expenses are included.

"Most likely, the Ilonggo consumer would be paying around P50," he said.

He further cited that their current supplier, Metro Iloilo Bulk, is heavily compliant with the National Water Resources Board's framework, which only allows price adjustments every two years based on inflation.

"They can't just increase rates arbitrarily. It's every two years, and even then, it's only inflationary or catch-up adjustments. It's not automatic. Other bulk water suppliers, on the other hand, increase rates automatically, even beyond inflation," he said.

He stressed that awarding the bulk water contract directly to the Metro Iloilo Water District (MIWD), rather than involving a private middle entity, is the most efficient and cost-effective way for the usage of the bulk water supply component of the Jalaur River Multipurpose Project Phase II (JRMP II).

Not a middleman

Christiane Henritz Batallones, assistant vice president for business development at AIC, countered that the company is not acting as a middleman but as a partner aiming to enhance Iloilo's water security.

"We're here to help Metro Iloilo and not to broker the water supply... We are not forcing any off-takers. We are here to provide alternative, sustainable and redundancy in the water supply," he said, clarifying that AIC's offer is to complement existing distributors, not compete with them.

He added that bulk water rates should not be equated with consumer residential rates, as these are structured differently by LUWA, with higher commercial and industrial rates cross-subsidizing domestic usage.

Under AIC's proposal, there is no equity and cost sharing with the city government, and its role would be limited to facilitating permits and assisting with right-of-way issues.

Water rates under the AIC proposal would also be regulated through a contract-based tariff system, with adjustments pegged to inflation.

Batallones assured that the agreement ensures private profit margins stay within industry benchmarks and that there's no exclusivity clause, or the city can still engage other suppliers.

Despite AIC's assurances, Berba remained firm that the National Irrigation Administration assigning the 1 cubic meter per second water right of the JRMP II to MIWD remains the most viable route.

"Since 2017, from the time we came in, we've been banking on JRMP II on our proposal. That's why until now, we still don't have enough water. We are really short on supply," he said.