MIWD clarifies COA report on bulk water purchases

By: Gerome Dalipe

The management of Metro Iloilo Water District (MIWD) shed light on the Commission on Audit (COA) findings on its 2018 bulk water purchases amounting to about P202.73-million.

In their 2018 annual audit observation report, auditors noted that MIWD purchased 15,656,280.64 cubic meters from its bulk water supplier Metro Iloilo Bulk Water Supply Corp (MIBWSC).

But the bulk water purchases were drawn from the Sta. Barbara Water Treatment Plant (WTP) based on a “delivery point” located before the reservoir for treated bulk water.

The audit report indicated that the practice violated Sec. 1 of the joint venture agreement (JVA) between MIWD and the bulk water supplier, thus “unduly assuming” the risks of non-revenue water (NRW), the auditors said.

“The NRW risk for this volume of bulk water as it passed through the reservoir should have been the responsibility of the bulk water supplier,” read the COA report.

Sec. 1 of the joint venture agreement (JVA) between the MIWD and MIBWSC dated July 7, 2016, states the Santa Barbara water treatment plant including the transmission lines treated water reservoirs, sedimentation basin, rapid sand filter plant, including the pumps and pipelines, and groundwater deep wells located in San Miguel, Pavia, Oton and Cabatuan, Iloilo is owned and controlled by MIWD.

Pursuant to Sec. 4.02 (Operation and Maintenance of Existing Facilities) of the lease agreement dated July 7, 2016, provides the MIBWSC shall operate and maintain the existing facilities in accordance with good operating practices.

On the other hand, the delivery point for Sta. Barbara water treatment plan is Delivery Point 2 with a volume of 42,000 cubic meters per day.

The Metering System refers to the electro-magnetic flow meters, including testing and monitoring equipment and related instruments per off-take to monitor and record the delivery of bulk treated water at the delivery points.

Based on the above definition, the treated bulk water at the reservoir is good as delivered and billable to the district after passing through the bulk water flow meter.

The auditors, along with MIWD and bulk water supplier visited the site of the delivery point 2 last June 22, 2018.

The auditors discovered the location of the water production meter sensor previously used by MIWD has been adopted by MIBWSC using an electromagnetic flow meter to measure the volume of treated bulk water delivery for billing purposes.

The auditors also observed the flow meter is located before the treated bulk water reservoir, which is made of concrete.

The bulk water reservoir is almost 20 years and has not been tested for its structural integrity and reliability before the start of the joint venture undertaking.

“Considering these factors, the risk of NRW is assessed to be high,” the auditors said.

Based on the above provisions of the joint venture, the treated bulk water reservoir should have been under the responsibility of MIBWSC but the treated bulk water inside it belongs to the agency.

Thus, the water metering system and delivery point should be located after the treated bulk water reservoir since the MIWD has no direct control over it.

“For this reason, we highlight the importance of the location of the metering system and delivery point for more effective and efficient management of NRW at the MIWD’s side,” the auditors said.

In the report, the auditors asked the MIWD to build an appropriate site for the metering system and delivery point for the treated bulk water at the Sta. Barbara water treatment plant to improve the accuracy of measurement of bulk water purchases.

Likewise, the MIWD is urged to clearly define the exact location of the treated bulk water delivery point to strengthen controls in mitigating the risk of non-revenue water.

 

DELIVERY POINT

In a statement, MIWD OIC-manager Amarylis J.C. Castro said COAs Audit Observation Memorandum on June 19, 2019 pertained to the delivery point or the location of the water meter for the bulk water purchases.

Castro said COA did not question the P202.72 Million bulk purchases.

The MIWD executive noted that the meter was located before the reservoir for treated water, “whereby unduly assuming the risks of Non-Revenue Water (NRW).”

“This is the old set up of MIWD, but discussions between MIWD and Metro Iloilo Bulk Water Supply Inc (MIB) were earlier made to transfer the meter. However, it was only on April 22, 2019 that the final details and specification of delivery point shop drawings and flow meter chamber were finally agreed upon by both parties which allowed the procurement process of project materials to commence,” Castro said.

Engr. Rolixto Jodieres Jr., Chief Operating Officer of MIB, stated in a July 10, 2019 letter that due to various pipe requirements and the importation of the flow meter and valves, it will take 5 months from issuance of purchase order for the materials to arrive.

Completion of the project was expected to be at the end of November 2019 if deliveries will be on time, Jodieres added.

This was explained to COA in a management letter dated August 1, 2019 and in the August 5 COA exit conference.

COA stated its recommendations and management agreed that the metering system and delivery point for the treated bulk water at Sta. Barbara WTP be promptly implemented to improve the accuracy of measurement of the bulk water purchases.

Clearly defined and exact location of the treated bulk water delivery point will be observed as per Schedule 7 of the BWSA to strengthen controls in mitigating the risk of NRW, Castro said.

“Verification of the status of the project by MIWD Management with Engr. Jodieres indicated that deliveries of materials were completed in November 15, 2019 and awarding of the contract of the meter replacement activity to the winning bidder is in process. It is expected that signing of the contract with the winning bidder and MIB will be completed this December,” she added.

Castro said the execution of the project is supposed to be in January 2020.

“But since it is a Festival period for Iloilo (Dinagyang Festival, Jaro Fiesta and Candelaria) and the execution of the project will entail a two-day water interruption and another two days for the installation of a bypass line in the 600-mm diameter raw water line needed to remove line clogging of rocks, it is deemed ideal to proceed with the project simultaneously after the Candelaria Festival to lessen public inconvenience,” she explained.