NO TO ANOTHER ‘MIDDLEMAN’: MPIW Opposes AIC Deal, Warns of Higher Water Rates

By Rjay Zuriaga Castor

Metro Pacific Iloilo Water (MPIW) has raised alarm over the proposed bulk water supply project of Aboitiz InfraCapital (AIC), warning that it could result in domestic consumers or households paying double the current water rate – or even higher – in Iloilo City.

Angelo David Berba, chief operating officer of MPIW, said during a public hearing on Monday, May 26, that AIC’s entry as a “middleman” in the water supply chain would only lead to steeper rates.

“The city, the customers don’t need another private entity as a middleman for bulk water that will translate to higher prices,” he said during the committee hearing on AIC’s proposal.

“We are already grappling with the private bulk water supplier charging us increasing prices every year without control from the national government,” he added.

Berba emphasized that if AIC is awarded the project, the water transaction will be business-to-business (B2B), with AIC selling to MPIW.

AIC’s proposed rate stands at PHP40 per cubic meter, more than double MPIW’s current rate of PHP22 per cubic meter.

Berba stressed that AIC’s proposed rate is just a “non-starter” price.

MPIW recently proposed an increase in the basic water rate from the current PHP20 per cubic meter to PHP29.19 per cubic meter, pending approval from the Local Water Utilities Administration (LWUA).

“We’re currently selling water at PHP20 for domestic consumers. On average, let’s say around PHP25. So if it’s going to cost PHP40, we first need assurance from LWUA, the regulator, that we’ll be granted the proper tariff adjustment to absorb that PHP40,” he said.

“In a B2B arrangement, PHP40 is a non-starter. That’s why I’m passionate about this — we can bring it down to PHP30 or less, which is still manageable for us,” he added.

Berba said they have been lobbying the National Water Resources Board (NWRB) to regulate bulk water entities.

He noted that MPIW’s current supplier, Metro Iloilo Bulk (MIB), complies with NWRB’s framework, which only allows price adjustments every two years based on inflation.

“They can’t just increase rates arbitrarily. It’s every two years, and even then, it’s only inflationary or catch-up adjustments. It’s not automatic. Other bulk water suppliers, on the other hand, increase rates automatically, even beyond inflation,” he said.

Berba cautioned that AIC’s proposed rate could reach PHP50 per cubic meter once power costs, salaries, non-revenue water, and other expenses are included.

“Most likely, the Ilonggo consumer would be paying around PHP50,” he said.

Berba argued that the National Irrigation Administration (NIA) should award the one cubic meter per second (1 CMS) allocation to the Metro Iloilo Water District (MIWD), calling it the most viable and quickest way to secure additional supply.

“We can deliver that in two to three years’ time at the cheapest peso per cubic meter, lower than AIC’s proposal,” he said.

AIC: We Are Not a Middleman

Christiane Henritz Batallones, AIC’s assistant vice president for business development, defended the company’s role in the water supply chain, saying AIC should not be considered a middleman.

“We’re here to help Metro Iloilo and not to broker the water supply,” he said.

“We are not forcing any offtakers. We are here to help. We are here to provide alternative, sustainable, and redundant water supply. We are not here to compete with anyone. We are here to complement the distribution companies,” he added.

Berba maintained that while MPIW has proposed a rate increase, it remains significantly lower than AIC’s offer.

“We’ve been lobbying the national government since we are heavily complying with the tariff rates from LWUA. Since 2019, we have not received a tariff increase. Three years ago, the increase should have been approved. We’ve been heavily dependent on that to finance our operations,” he said.

Batallones also clarified that bulk water rates should not be directly equated with residential water rates.

He explained that LWUA categorizes usage into residential, commercial, and industrial tiers, where higher commercial and industrial rates help subsidize residential rates.

“The bulk water rates do not necessarily translate to whatever the residential rates will be,” he said.

G2G vs PPP Debate

A central issue during the hearing was whether a Government-to-Government (G2G) arrangement or a Public-Private Partnership (PPP) is the better model to secure new water sources.

Atty. David Abraham G. Garcia, head of the Iloilo City PPP Office, said he asked MIWD about the G2G project timeline and was told it has existed since 2017.

“If there is a G2G option, I swear, that’s what we are going to take. We were told this G2G has been there since 2017. We don’t know the timeline. We don’t know what will happen, but the city is still lacking water,” he said.

Garcia said NIA indicated a preference to assign water rights to a government entity — in AIC’s case, the Iloilo city government.

MIWD is currently working with NIA which tapped the Asian Development Bank (ADB) under a Transaction Advisory Services (TAS) Agreement signed in September 2024.

The ADB provides technical assistance and project preparation support for infrastructure to NIA, including the bulk water supply component of the Jalaur River Multipurpose Project Phase II (JRMP II) or the megadam in Calinog, Iloilo.

Earlier, it was reported that NIA formally rejected a proposal from AIC to tap the dam, citing conflicts in development priorities and existing agreements.

In a letter dated March 31 obtained by Daily Guardian, NIA Administrator Eduardo Guillen told AIC First Vice President Francis David Roque that the agency cannot proceed with the proposal due to misalignment with NIA’s development plans.

“NIA is unable to move forward with the Unsolicited Proposal as it is not aligned with the NIA’s comprehensive development plan and poses a conflict with our existing agreement with the Asian Development Bank (ADB),” the NIA letter reads.

Guillen pointed out their existing TAS Agreement with the ADB, which was signed in September 2024.

But Batallones explained that under their proposed framework, the water permit could still be assigned to the city government, qualifying the project as G2G in structure.

“There’s a provision in the contract that gives the Iloilo City Government a step-in right in case AIC fails to secure the water permit — and that becomes G2G,” he said.

“It’s still a PPP, but the water permit mode is via NIA to the city government, just as Metro Pacific is a private company that uses MIWD as its partner to secure the permit,” he added.

He clarified that ADB, while an advisor, has no authority to influence who receives the permit.

“They’re just an advisor. The TAS agreement between NIA and ADB does not grant decision-making power,” Batallones said.

Berba reiterated MPIW’s preference for a G2G deal over AIC’s PPP proposal.

“Since 2017, we’ve been banking on JRMP II. That’s why until now, we still don’t have enough water. We are really short on supply,” he said.

“I really hope it becomes a G2G deal, because AIC’s proposal looks like it involves a middleman,” he added.

Desalination Costs

The hearing also discussed MPIW’s PHP66.5 million desalination project led by parent firm Metro Pacific Water.

Berba confirmed that while the project will boost supply, its power-intensive operation will raise costs.

“As you increase capacity, costs rise as well because it’s power-intensive. The efficiency of desalination is around 50 percent,” Berba explained.

“To generate 60 million liters of potable water per day, you need to extract 120 million liters of seawater, which requires 2.5 to 3 megawatts of electricity,” he added.

To lower costs, MPIW is partnering with the city to develop a waste-to-energy facility that will power the plant.

However, AIC questioned whether MPIW can realistically maintain rates below PHP30 once the plant becomes operational.

Batallones noted that expenses for power, chemicals, labor, and recovery will likely push rates higher.

Berba responded that MPIW can offer water at PHP30, a rate already written into its joint venture contract with MIWD.

“It’s already in the contract, not just a proposal. As long as the 1 CMS allocation is granted to us, we are contractually bound,” he said.

“Even if our capital expenditures exceed the original estimate, we must still comply with the agreed tariff rate. Our per-cubic-meter rate is already set,” he added.

Terms of the AIC Deal

Batallones said the proposal includes no equity contribution from the city government.

Its role is limited to assisting with the bulk water purchase agreement and securing permits and rights of way, if needed.

Potential rate increases would follow a tariff-by-contract formula with annual inflation adjustments.

“As part of the concession agreement, the city government is privy to the formula and the computations, which include both financial and economic returns,” he said.

“It was ensured that the private entity will not earn profit beyond what is prescribed by industry benchmarks,” he added.

Batallones noted that the deal includes no exclusivity clause, allowing the city government to engage with other bulk water suppliers in the future.