IS the joint venture (JV) between Marilao Water District (Marwadis) and PrimeWater Infrastructure Corp. exempt from scrutiny by government auditors?
The Commission on Audit demanded an explanation from Marwadis after finding there are no provisions in the joint venture agreement that its activities will be subject to audit examination.
This observation was raised in the 2020 audit of the water district released last February 19.
The COA cautioned the water district that as a government-owned or controlled corporation (GOCC), it falls under the commission’s jurisdiction.
Under the 2013 Revised Guidelines and Procedures for entering into Joint Venture, the National Economic and Development Authority (NEDA) made it mandatory that all joint venture activities by a government corporation are subject to audit examinations to protect government interest.
“Based on law and jurisprudence, the Commission on Audit has visitorial powers over private companies especially if their business is imbued with public interest. Due to the absence of provisions… this Commission may have difficulty in imposing its visitorial powers to the JV partner,” the audit team pointed out.
In reviewing the JVA, auditors said Primewater was required by the NEDA guidelines to post P291.846 million as performance bond or 10 percent of its P2.918 billion contribution as a private sector participant.
“The performance bond should amount to around P291,846,400 compared to the posted bond of P27,392,301.10 or a deficiency of P264,454,092.90. Without the right amount of performance bond, the interest of the District in the joint venture is not amply protected,” the COA said.
It clarified that since the JVA is for a 25-year period, Primewater’s total contribution should be the basis for computing the 10 percent rather than just the cumulative yearly capital expenditure to guarantee that the private partner will perform according to the terms of the agreement.
The COA also warned Marwadis consumers that they will be paying more even if their water consumption remains the same since under the JVA since starting February 2019 their rates are to be subjected to value-added tax.