Rudy Aranjuez, chair of the Nagkahiusang Mamumuo sa DCWD, the water district’s labor union, told reporters the loan is unnecessary because the water utility firm is liquid.
Aranjuez presented a copy of financial reports from DCWD showing its liquidity as of December 2006.
He said DCWD has a net margin of at least P376 million so the loan is not needed.
He said DCWD has temporary investments floating in its banks amounting to P300. 3 million; Cash and cash dividends of about P69.3 million; and special deposits at P7 million.
"Borrowing despite liquidity is suspect," Aranjuez said.
DCWD has decided to avail of the P100-million loan, part of a total package of P685 million to upgrade major pipelines in the city.
He claimed the loan could get DCWD deep in debt due to exorbitant interest charges which he said is detrimental to the consumers. He also warned this could lead to bankruptcy.
Frankie del Rosario, spokesperson of the Bagong Alyansang Makabayan (Bayan), a convener of Consumer Alert, said LWUA had used the scheme of loans with other water districts elsewhere in the country.
Aranjuez cited the water districts in La Union province and in Tagbilaran City, which he claimed, privatized after obtaining big loans from LWUA.
He said LWUA is believed to be backing privatization of water districts citing a senate bill favoring privatization in the next five years.
He said DCWD was lured to avail of the loan as a trap to bigger loans in the future. The P100 million estimated value of the initial phase will cover only about eight priority areas. DCWD announced it needs around P700 million to overhaul the city's water pipelines considered rife with leaks.
Aranjuez said they have no objection to the modernization plan, maintaining opposition only to the loan.
The groups under Consumer Alert feared privatization would lead to inaccessible water distribution service.
Dr. Jelieta Ruca, spokesperson of the Association of Concerned Teachers likened the privatization of water utility to commercialized education, which the poor can hardly afford because of high fees.
The Davao City Water District clarified the loan is being availed of to change major pipelines to cut volume of pumped water put to waste due to pipe bursting.
Imelda Magsusi, DCWD spokesperson, told MindaNews in a telephone interview Wednesday the firm loses P31 million per month to wastage.
She said they can save by P61 million every year if they change the pipes. She said with its existing condition they lose 30.5 percent of the water pumped through the pipes.
She admitted that, indeed, DCWD has P376 million net margin as of December 2006. "But most of it is no longer in the disposition of DCWD. This money is either allocated for payments or earmarked for other existing projects," she said.
Magsusi said P240 million of the amount has been earmarked for existing projects.
Aranjuez pointed out that the allocation was excessive and could not be actually used in full at the end of the year.
He said for DCWD's capital expenditure of P284.6 million, only 63.3 million or about 23 percent was spent last year for two combined projects.
Magsusi said they cannot just easily realign allocated budget to other projects as it is governed by the rules of the Department of Budget and Management. She said the allocations were not all expended because the project is still on-going.
She denied they are lured unwittingly into privatization.
She said DCWD is opposed to privatization adding it is not the solution to the country's water supply problem. (Walter I. Balane/MindaNews)