Firm offers Sierra Madre as alternative to Laiban

Posted at 11/05/09 3:11 AM

MANILA - Little-known local firm Sierra Madre Water Corp. (SMWC) is offering an alternative to the controversial $1 billion Laiban Dam bulk water supply project: a cheaper and more environmentally friendly source of water.

In a press briefing on Wednesday, SMWC officials said their offer, which is based on sourcing water supply from the Sierra Madre mountain range, were sent directly to private water supply concessionnaires Manila Water Corp. (east zone) and Maynilad Water Services Inc (west zone), effectively bypassing the regulator Metropolitan Waterworks and Sewerage System (MWSS).

The MWSS previously dropped SMWC's proposal for lacking financial muscle. Instead, MWSS pursued a joint venture deal with a unit of diversifying conglomerate San Miguel Corporation that taps water supply from the Laiban Dam. The project, however, became scandalous for its government guarantee requirement and take-or-pay provision.

SMWC's proposal, on the other hand, is designed to be "tariff neutral" at a price of P9 per cubic meter of raw water, SMWC President Rolando Zosa said. In other words, there is no increase in the cost of water to the consumer aside from inflation adjustments.

The offer involves the construction of two 40-meter dams, which will source water from 5 rivers surrounding Laguna and Quezon provinces.

The first phase of the SMWC's proposed project--delivering the first 350 MLD--is expected to take 2 years to complete, and the next 350 MLD in the succeeding year. The additional volumes would be delivered in increments, as needed by the water utility firms. Zosa said the dams have the capacity to supply as much as 2,300 MLD.

In contrast, construction for the Laiban Dam project would take about 5 years, and has a projected capacity of 1,900 MLD.

A 1,600 MLD shortfall is expected by 2015. The present supply is 4,000 MLD.

SMWC also stressed that its smaller dam construction involves a capital cost of about $255 million. On the other hand, San Miguel's proposal, based on MWSS' estimates, would cost about $1 billion.

SMWC's proposal also has smaller environmental footprint--smaller dams, less than 100 families to be resettled, 11-15 megawatt hydroelectric power plants to supply clean energy to surrounding communities.

"Our dams are small and low, and the release of water is to the Pacific, so there's no risk of flooding to the surrounding communities," said Zosa.

Talks with water firms

Zosa said they are in "early discussions" with Maynilad and Manila Water for business-to-business or private sector agreements.

He noted that the 2 water utility firms--both have 25-year concession agreement with MWSS--may be able to arrange for direct supply from SMWC. Currently, MWSS is sourcing its required water supply to the 2 firms from the available, but expected to be insufficient, supply from the Angat dam.

Zosa said, "Talks are still in early stages. Part of the problem is their attention was diverted after Ondoy and the effects of the catastrophe on their service stations. But Ondoy also helped open eyes to alternative distribution systems."

Zosa and other local investors founded SMWC in 1995. It had been vying for several bulk water projects with MWSS in the past. - with a report from Michelle Orosa, ABS-CBN News