P18.7-B Kaliwa Dam project a negotiated deal, says COA | Inquirer Business

P18.7-B Kaliwa Dam project a negotiated deal, says COA

/ 07:21 AM August 20, 2019

MANILA, Philippines — The bidding for the P18.7-billion Kaliwa Dam project in Quezon province, which was won by a Chinese state-owned company, was in fact a negotiated contract from the start, according to the Commission on Audit (COA).

“The procurement of the project is with the semblance of a competitive bidding when in reality, it is a negotiated contract from the inception of the bidding process,” the COA said.


Malacañang said it had yet to study the COA memorandum.

“We’ll let the President decide on that,” said presidential spokesperson Salvador Panelo when asked if the government was open to suspending the contract amid questions about the selection process.


One of the Duterte administration’s big-ticket projects to be funded by loans from Beijing, the Kaliwa Dam is expected to ease Metro Manila’s water shortage.

Critics, however, have assailed the project on the grounds that it would displace indigenous groups and that the terms of the Chinese loans are onerous.

The audit agency has called on the Metropolitan Waterworks and Sewerage System (MWSS) to explain the bidding process for the dam project after only one Chinese bidder was deemed eligible as the two others had been disqualified.

In an audit observation memorandum (AOM) dated June 10, the COA said it was questionable that only China Energy Engineering Corp. Ltd. (CEEC) was qualified in the two stages of the procurement process “due to the seemingly intentional purposes” of the bidders not to comply.

Required documents

The AOM, addressed to MWSS Administrator Reynaldo Velasco and Leonor Cleofas, deputy administrator for engineering and technical operations group, said the criterion of competitiveness had not been achieved in the bidding.

At the opening of the bids and evaluation of minimum eligibility requirements, one of the bidders, the consortium of Guangdong Foreign Construction Co. Ltd.-Guangdong Yuantian Engineering Co., immediately failed because it lacked certain documents.


These included the license from the Philippine Contractors Accreditation Board and the absence of a single largest completed contract.

At the second stage of evaluation, the financial bid of Power Construction Corp. of China reached P13 billion, 6.91 percent higher than the approved budget of contract (ABC), causing its disqualification.

“This raises doubt on the bid … since the nominated bidders were already informed in the bid documents … that bids received in excess of the ABC shall be automatically rejected at bid opening,” the COA said.

“It can be deduced that two bidders/contractors were included merely to comply with the at least three bidders requirement as stated under the procurement law.”

Lack of track record

The AOM also cited the failure of the three contractors to comply with the MWSS requirement of at least 20 years track record in design and engineering.

The track record specifically pertains to dam and tunneling works, and the same experience as principal contractor in construction and commissioning of projects of similar nature and complexity.

Both CEEC and Guangdong Foreign Construction Co. Ltd-Guangdong Yuantian Engineering Co. listed projects but did not specify the dates of completion.

Power China Limited, meanwhile, only listed completed projects between 2010 and 2016.

Awaiting ECC

The notice of award was issued to CEEC in December 2018, but the notice to proceed remains pending as it awaits the environmental compliance certificate (ECC) from the Department of Environment and Natural Resources and the letter of guarantee from the Bangko Sentral ng Pilipinas.

Field investigation by the National Commission on Indigenous Peoples for free and prior informed consent of indigenous communities of the Dumagat to be affected by the dam project is still on the second stage out of five required assemblies.

State auditors also said the loan from Export-Import Bank of China for the project remained ineffective due to the “nonsubmission of documents” required under the loan agreement. —With a report from Julie M. Aurelio

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TAGS: CEEC, China Energy Engineering Corp. Ltd., COA, Commission on Audit, Kaliwa dam, MWSS, Salvador Panelo
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