CAGAYAN DE ORO CITY – Cagayan de Oro City Water District (COWD) debt remains unaddressed despite the recent agreement to prevent disconnection of water supply from its bulk supplier.

Engr. Antonio Young, stated that the company still lacks the legal authority to settle the debt incurred by Cagayan de Oro Bulk Water Inc. (COBI), their supplier. This is especially true with regard to the cumulative price difference that resulted from COBI’s 2021 rate adjustment, which went from P16.60 to P20.57 per cubic meter.

“The primary concern here is the legal foundation for payment,” Young stated, restating that COWD, via its Board of Directors, disregarded the rate modification carried out by their bulk supplier following their declaration of a pandemic-related force majeure.

The amount was not recorded as payables in COWD’s book of accounts since it was not acknowledged.

Following a letter from COBI to COWD demanding it to repay its over P400 million debt as non-payment will result in the cutoff of its water supply, Mayor Rolando Uy here convened top officials of the two parties on January 25.

In addition to the pricing differential following the implementation of COBI’s rate adjustment, the over P400 million debt also included past-due billings.

But according to Young, as of January 2024, all of the unpaid invoices for the first four months of 2022 have been settled, leaving them with just the December payment.

Young said the amount was lowered to roughly P350 million after prior billings were paid, though he was unable to provide a precise figure.

Given that customers will undoubtedly be impacted by the supply stoppage, the municipal chief executive met with the two parties. Young claims that the COBI promised during the meeting that its supply would not be cut off.

The senior COWD official underlined the importance of adhering to the terms of their contract, which include taking the matter to arbitration to see if they truly have to pay.

“How can I pay for something if it is not acknowledged as debt?” Young said. 

“Just in case the COA (Commission on Audit) disallows it, I’ll be liable,” he added.

Since they can modify their tariff every three years in accordance with the average consumer price index, Young claimed that their rate modification was lawful.

Given the circumstances created by the pandemic, the COWD claimed they are entitled to apply for force majeure under the terms of the Bulk Water Supply Agreement.

Young referenced a clause in the agreement that states that arbitration will be used to settle disputes if they cannot be settled within 20 business days during a press conference on January 16.

Though they were still in negotiations at the time, he did disclose that the case did not proceed to arbitration despite the deadline, and it was eventually dropped due to the pandemic’s restrictions on movement.

Young explained that before turning to arbitration, COBI will consider other options.

Sources:(1),(2)

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