(Eagle News) – The Department of Finance defended the Official Development Assistance (ODA) mode of financing to construct the Kaliwa Dam Project, saying that this was cheaper and more beneficial for Filipino consumers.
Finance Assistant Secretary Antonio Joselito Lambino III said that the ODA from China was preferred over a Public-Private Partnership (PPP) route which, he said, would entail “additional charges” to be passed on to water users.
“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.”
The DOF official 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.”
This is because the additional charges to be passed on to the consumers would be done under a PPP mode so that the private component could recoup its investments, Lambino said.
-Water security-
The Metropolitan Waterworks and Sewerage System (MWSS) said that the proposed New Centennial Water Source Project (NCWSP) or the Kaliwa Dam project will “provide water security, reliability and additional supply for Metro Manila.”
“It is planned to be site specific, zeroing in on the Kaliwa-Kanan-Agos River Basin as an alternative water source,” it said.
The NCWSP will involve the construction of a dam at the Kaliwa River (Laiban Dam), and a smaller dam (Kaliwa Dam) downstream to maximize the water supply, and to ensure short and long term supply for Metro Manila and its adjoining areas, it explained.
The Kaliwa Dam project in Quezon province is envisioned to meet “the increasing water demand by constructing a redundant dam for Metro Manila’s domestic water supply.”
It was in January 2014 that 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, a DOF release explained.
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.
-Cost down from P18.7 billion to P12.2 billion –
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,” Lambino added.
Earlier, Finance Secretary Carlos Dominguez explained that the Duterte government got lower interest rates and fees, aside from a longer grade period under its loan agreements with China compared to other deals obtained by the past administration.
He particularly cited the $211 million loan agreement for Kaliwa Dam which carries an interest rate of two percent per annum, which he said was lower than the three percent per annum rate secured by the Arroyo administration under the $116.6 million loan agreement with China. This is for the Angat Water Utilization and Aqueduct Improvement Project Phase II.