Misamis prov’l gov’t to lend P1B to ailing CDO water firm
CAGAYAN DE ORO CITY—The provincial government of Misamis Oriental is poised to lend the cash-strapped Cagayan de Oro City Water District (COWD) P1 billion through the purchase of bonds that the water firm is planning to issue.
COWD interim general manager Fermin Jarales told the Inquirer that Gov. Peter Unabia gave this assurance during a meeting to apprise him of developments in the financially distressed water firm and how the current management is trying to keep it afloat.
Unabia chairs the committee on infrastructure and utilities, which counts COWD as a member, of Northern Mindanao’s Regional Development Council.
Jarales said Unabia also committed to convince the provincial government of Bukidnon to also invest in the COWD’s bonds once these are issued.
A bond is a debt instrument usually underwritten by a financial institution and will earn investors periodic interest income.
The decision of Misamis Oriental to invest in the water district was a “highly welcome developments, especially at this time when we are on the edge of a financial abyss,” Jarales said.
“This is a big vote of confidence on the five-year business development plan of COWD,” he added.
Operating losses
Based on the plan, COWD will need P6.7 billion in investments in the next five years to address, among others, water wastage, currently at 56 percent, due to aging pipes and pilferage, and beef up its technical capacity to expand its service coverage to include new settlements and subdivisions as well as commercial establishments.
According to Jarales, the COWD’s financial needs cannot be borne by its own reserves as this had been depleted through years of operating losses.
Although COWD had secured years ago a P253-million loan from a government bank to address its problem with nonrevenue water or wastage, the drawdown had stuck due to poor implementation by the previous management of the P25.3 million funds initially released to it.
Because of these, Jarales said, they identified other modes of financing such as bond issuance and grants for capital expenditures (capex).
“In terms of capex grant, we have secured P150 million from the Department of Public Works and Highways, through the efforts of Cagayan de Oro’s congressmen, to upgrade our water transmission and distribution infrastructure. It is now being bid out,” Jarales noted.
Another P350 million “unconditional grant” was extended by the Local Water Utilities Administration, part of which would bankroll the capacity building program for COWD employees.
Game changer
“But the biggest game changer is the expected investments from the local governments. You see, Bukidnon and Misamis Oriental provinces share the Cagayan de Oro River watershed from which we get at least half of the water supply we distribute,” he explained.
Apart from serving 75 of the city’s 90 villages, COWD, the first water district to be organized in the country, also covers Opol town and Barangay Casinglot of Tagoloan town in Misamis Oriental, in all comprising at least 100,000 service connections.
Jarales said he also looked forward to the participation of the Cagayan de Oro city government in funding COWD’s needs, banking on an earlier commitment relayed by Mayor Rolando Uy.
The water supply problems in the city had attracted the attention of the national leadership as a day before President Marcos’ visit here in May last year, not a drop flowed from the connections of some 40,000 households owing to a dispute between COWD and its bulk water supplier.