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Laiban issue seen linked to corporate rivalry

By Daxim Lucas
Philippine Daily Inquirer
First Posted 22:42:00 07/28/2009

Filed Under: Economy and Business and Finance, Water Supply

(First of three parts)

MANILA, Philippines - Is the controversy surrounding the P50-billion Laiban Dam project part of an ongoing battle between corporate titans Manuel Pangilinan and Ramon Ang for dominance over the evolving Philippine business landscape?

That the future of Metro Manila?s water supply is now part of the bruising fight between the PLDT and San Miguel Corp. groups has become a possibility after fresh information emerged that Maynilad Water Services Inc. had earlier expressed interest in joining a group that would develop the watershed in Tanay, Rizal as the next major source of water for the growing metropolis.

The very same project is now set to be awarded to rival San Miguel Corp., which submitted an unchallenged bid for the deal?a deal that is now being criticized for its alleged ?haste? and ?lack of transparency? with which it was concluded.

In a telephone interview, Maynilad president and CEO Rogelio Singson told the Inquirer that the company?which is majority-owned by Pangilinan-run Metro Pacific Investments Corp.?had, in fact, eyed the project in 2007.

?This was discussed then,? Singson said. ?The original proponent was CalEnergy. We sat down with them, [and] we told them, yes, we were interested. Please let us know the final conditions.?

This was corroborated by two independent sources who were familiar with the dealings of Maynilad on this issue.

?I can confirm that Laiban was offered to Maynilad back then, but for some reason, the company or its management passed it up,? said the source. ?They simply decided that it was uneconomical and would not give them the returns they were looking for.?

The other source said that no less than Pangilinan had expressed interest in undertaking the Laiban project either through Maynilad or through a separate corporate vehicle or structure that would help the group hurdle cross-ownership limits set in Maynilad?s concession agreement with the MWSS.

The importance of Laiban as an alternative source of water for Metro Manila?s growing population was underscored in a letter sent by the heads of both the Ayala-controlled Manila Water Co. and Maynilad to then MWSS administrator Lorenzo Jamora on July 30, 2007?two years before the current controversy exploded into the limelight.

?Based on the March 2007 Laiban Dam project consultancy report that was submitted by [consulting firms] Daruma and Norconsult, their study projected that the water demand will be around 5,600 million liters per day (MLD) by 2015, with the corresponding demand of 7,000 MLD,? said the letter, signed jointly by then Manila Water president Antonino T. Aquino and Maynilad?s Singson.

Uncomfortable

?With Angat?s/Ipo?s existing capacity of 4,000 MLD, and another 90 MLD from groundwater sources, any new source or sources that will be developed should be capable of producing at least 1,510 MLD by 2015,? he said, referring to the two dams that are the current sources of drinking water for Metro Manila residents.

?Another delay in the Laiban Dam project will have an impact on our service obligations,? they warned. ?In this regard, we fully support the implementation of the Laiban Dam project and recommend that MWSS should initiate and take responsibility for the said project.?

Despite Laiban?s importance, Singson stressed that he was uncomfortable with the deal that MWSS and San Miguel?as the unchallenged bidder for the project?are about to seal.

?What we?re saying is that we have to see if it?s the best option for us,? Singson said, adding that he is uncomfortable about the supposed ?take or pay? scheme that may end up saddling consumers with payments for unused water.

No contest

Asked if his group is going head to head with San Miguel over Laiban, Metro Pacific?s Pangilinan said: ?We are not considering an investment in Laiban Dam. So in [this] respect of this project, there is no contest, no ?tussle,? no competition from us.?

He added that he did not think Maynilad had been ?publicly critical? of the deal.

It is his group?s policy ?not to comment on investments which other corporates may be considering,? Pangilinan said.

However, San Miguel president Ramon Ang expressed doubt that concern over the deal?s structure was the root cause of the controversy surrounding Laiban.

?Some people are jealous because they did not think of it first,? he said in an interview. ?This deal is legal, aboveboard, and it will assure cheap water for Manila residents and jobs for Filipinos.?

?The criticism [shows] crab mentality at work,? Ang said. ?I know who they are.?

(To be continued)



Copyright 2014 Philippine Daily Inquirer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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