There was nothing in the contract between the Cagayan de Oro Water District (COWD) and its bulk water supplier Cagayan de Oro Bulk Water Inc. (COBI) that allowed COBI to issue a disconnection notice to the water district.

 

‘We told them (COBI representatives) that there’s a mechanism in the contract that will resolve conflicts, misunderstandings or disagreements on (water rate charges) and that is through arbitration,’ said COWD board member Gerry Caño to fact-finding committee chairman Councilor James Judith II during the second day of the inquiry into the COWD-COBI contract.

 

When asked if the signed contract allows court mediation to resolve water rate payment disputes between COWD and COBI, Caño replied in the affirmative.

 

Late last month, COBI issued a fourth disconnection notice to COWD due to collectibles it imposed on the water district amounting to P426 million. Unless the amount is settled, COBI stated in its notice that it will discontinue supplying bulk water to COWD at the end of March.

 

COWD general manager Engr. Antonio Young said about 30,000 to 40,000 households in Cagayan de Oro City’s eastern side would be affected by COBI’s disconnection since COBI has a pipeline there.

 

‘However, COBI cannot physically disconnect the water supply in the city’s western areas because the lines and water treatment plant/facilities are owned by Rio Verde Water Consortium Inc.,’ Young said.

Disallowances issued by the Commission on Audit (COA) on COWD payments to Rio Verde, its former bulk water supplier, forced it to seek another bulk water supplier.

 

COWD terminated its contract with Rio Verde sometime in 2017 and in that same year, COWD entered into a joint venture agreement with Metro Pacific Investments Corp. for the creation of COBI.

Manila-based Metro Pacific serves as majority owner of COBI with 95 percent while COWD has a five percent stake.

 

Despite the agreement, both Young and Caño acknowledged Councilor Judith’s pointed references that COBI supplies COWD with bulk water sourced from Rio Verde’s water distribution system.

 

When Judith asked if COWD can pay the P426 million collectibles charged by COBI, the two COWD officials said they can eventually settle through a staggered payment basis. ‘But such payments (over P1 million) need COWD board approval and the board insisted that it doesn’t recognize the (P3 increase charged by COBI) as they cited force majeure owing to the COVID-19 pandemic,’ Caño said.

 

Under the COBI-COWD contract, COBI can impose a P3.97 incremental increase every three years. COWD is paying P16.60 per cubic meter of water to COBI. (Stephen Capillas of City Information Office)