‘COUNTDOWN BEGINS’: Aboitiz faces 18-month deadline for Iloilo City bulk water supply project

By Rjay Zuriaga Castor and Juliane Judilla

The PHP 5.12 billion Iloilo Bulk Water Supply Project is on a strict 12–18 month timeline, with the contract automatically ending if Aboitiz InfraCapital Inc. (AIC) fails to deliver the agreed water supply.

On Wednesday, Dec. 3, the Iloilo City Council ratified the concession agreement and project schedules signed between Mayor Raisa Treñas-Chu and AIC.

All council members approved the measure except Councilor Sheen Marie Mabilog, who abstained.

Councilor Sedfrey Cabaluna presided over the session as Vice Mayor Lady Julie Grace “Love-Love” Baronda was on official travel.

The ratification formally approves and legally binds the concession agreement, confirming terms set after AIC’s Original Proponent Status in May 2025 and any Swiss Challenge process, allowing construction of facilities to deliver 86 million liters per day of bulk water.

During the session, Atty. Ann Clarice Opinion, public-private partnership specialist of the city government’s PPP Center, said the agreement reflects the terms approved by the council on June 11.

The competitive Swiss Challenge ran from July 8 to Oct. 6.

No other company submitted competing bid documents at the end of the 90-day comparative challenge period.

Treñas-Chu issued a Notice of Award (NOA) to AIC on Oct. 23.

Opinion emphasized that the water supply to be provided by AIC is a key condition of the contract.

If the firm cannot deliver water by the deadline, it must certify that no water is available. In that case, the other party has the right to exit the contract without penalties or further responsibilities.

“The assumption of the contract is that there is a water source from Aboitiz. If, within the period that we stipulated, they are unable to provide the water source, then they will submit a certification of sorts, like a no water,” Opinion said.

“Basically, they are unable to provide the water, and we walk away clean. So there are no obligations,” she added.

AIC is targeting water rights for the Jalaur River Multipurpose Project (JRMP) Stage II, which can allocate about 86 million liters daily for Iloilo City’s commercial and industrial needs.

Metro Pacific Iloilo Water (MPIW), the city’s primary water distributor, did not submit a counterproposal.

MPIW, which has opposed the entry of another bulk water supplier, warned that AIC’s project could raise water rates to as high as PHP 50 per cubic meter.

MPIW began a phased increase from PHP 20 to PHP 28.67 per cubic meter in November 2025.

Opinion said that even if AIC’s project proceeds, MPIW will still be needed as the distribution utility.

“I’m not sure what their plans are, but we will be in conversations with them because part of the contract obviously will be to enter into bulk water supply agreements with the distributors,” she said.

CONTESTED WATER RIGHTS

When asked about the likelihood that water rights from JRMP II will be granted to AIC, Opinion said the outcome is uncertain, as the National Irrigation Administration (NIA) will decide.

“I know that the applications, at least from our end, from the Iloilo City government, we have stated that we are open to being granted water rights for this particular project in mind,” she said.

In March, NIA rejected AIC’s unsolicited proposal to construct the JRMP II highline canal and bulk water supply project, citing conflicts with development priorities and existing agreements.

In July, NIA and the Metro Iloilo Water District (MIWD) signed a memorandum of understanding (MOU) to tap into the JRMP II.

MPIW was formed in 2019 between MIWD and Metro Pacific Water.

Under the MOU, MIWD is authorized to conduct a one-year feasibility study on using JRMP II as a water source.

The agreement also allows MIWD to build and operate part of the JRMP II highline canal for raw water conveyance, which will later be turned over to NIA.

MIWD will also construct the necessary intake and treatment facilities to produce potable water.

The project remains subject to regulatory approval from the National Water Resources Board, which issues water use permits.

AIC previously said the MOU will not derail its plans because the agreement remains exploratory.

INDEFINITE OWNERSHIP

AIC’s proposal follows a build-own-operate (BOO) scheme, which allows a private proponent to finance, construct, own, operate, and maintain a facility indefinitely, recovering costs through user fees without transferring ownership to the government.

Consumer group Panay Consumer Alliance (PCA) said this model signals “extreme commercialization” of water services.

The group argued that the BOO scheme gives AIC permanent ownership of the water treatment plant and pipeline system, leaving the city without long-term control over critical infrastructure.

The group added that this structure “locks consumers into dependence on a private monopoly” and contradicts the principle of water as a public service and human right.

“Water becomes a runaway expense for consumers. This violates the principle that essential services must remain affordable and accessible,” the group said.

PCA also disputed the proposed PHP 40.20 per cubic meter base rate, which it said is more than twice the regional benchmark of PHP 16.83 per cubic meter and significantly above MPIW’s PHP 25.20 per cubic meter tariff.

The group has previously opposed MPIW’s new water rate.

The agreement includes provisions allowing automatic rate adjustments through inflation indexing, energy cost pass-through and periodic rate reviews.

PCA said these mechanisms could lead to sustained increases in consumer bills and place a heavier burden on low-income households.

“Under the agreement, a basic human need like water becomes subject to market pricing with automatic increases from CPI indexing, energy pass-through and triennial rate reviews. This means that consumers will face drastically higher water bills, with the poor bearing the highest burden. Water insecurity and disconnections will increase,” the group said.

PCA said several clauses shift financial and operational risks to the city government and consumers.

These include a take-or-pay obligation requiring the city to pay for 60–80 million liters per day of bulk water regardless of actual demand, grantor compensation provisions requiring payment to the private partner in case of regulatory delays or policy changes, and government responsibility for raw water shortages.

Termination provisions requiring the government to compensate AIC for debt, equity and projected returns were also cited.

The group urged the public and policymakers to reject the concession agreement and study public-sector models used in other cities.

It also called for more transparent decision-making, pro-poor tariff protections and greater public participation in water governance.

Meanwhile, Treñas-Chu emphasized the project as critical infrastructure to expand supply and ensure access to potable water, enabling the government to achieve 24/7 reliable service for Ilonggos in the coming years.

“This milestone takes us a step closer to realizing our goal of achieving long-term water security for Iloilo City,” she said.

“Through this project with Aboitiz InfraCapital, we are investing in Iloilo’s future — fueling economic growth in Western Visayas and improving the quality of life of our fellow Ilonggos,” she added.