THE Commission on Audit has called out Subic Water District (Subic WD) and Primewater Infrastructure Corp. for skirting rules when they implemented a 27.3 percent increase in water tariff rates in the last quarter of 2022.
In the 2022 audit report on Subic WD released last February 28, the COA cited various procedural violations against the interest of the concessionaires, including lack of information on the schedule of public hearing, absence of a comprehensive assessment and full evaluation of Primewater’s performance, and the fact that it was not the Local Water Utilities Administration (LWUA) that approved the tariff adjustment but the National Water Resources Board (NWRB).
Subic WD entered into a joint venture agreement (JVA) with Primewater in 2018.
Government auditors said Primewater-Subic applied for a certificate of public convenience with the NWRB on January 31, 2022. The NWRB then prepared a Notice of Hearing on February 7, 2022 notifying various stakeholders that the hearing was set for April 11, 2022.
However, the notice was sent via registered mail which only reached Subic Water on April 27, 2022, 16 days after the hearing was held. Despite this, the increase came into effect in September 2022.
“Interview with the CMU (Contract Monitoring Unit) disclosed that aside from the registered mail, Primewater did not personally serve notice, preventing the district from properly filing and presenting their position on the matter,” the audit team said.
Auditors said they were unable to verify if other parties affected were likewise informed and able to attend.
The COA added that since the fulfillment by Primewater of its service obligations and implementation of capital expenditure (CAPEX) are major considerations in tariff adjustments, the latter should submit the complete documentation of its performance of obligations under the JVA to justify the tariff increase.
They also noted that under Letter of Instruction No. 700, it was specifically provided that the LWUA shall implement a socialized pricing in setting up water rates whereby the more affluent users were supposed to pay more per unit than the billings for low-income customers.
In its comment, the Subic WD invoked the 2019 opinion of the Office of the Government Corporate Counsel (OGCC) that an operator of a business activity should file the application for tariff adjustment with the NWRB.
State auditors, however, said that as a GOCC, the Subic WD remains under the regulatory powers of LWUA as in fact, it was the latter that issued the Conditional Certificate of Conformance (CCC) which gave the water district authority to operate a water supply system.
