Tieza to sell stake in Ayala-led BIWC

THE Tourism Infrastructure and Enterprise Zone Authority (Tieza) will be divesting its stake from the Ayala-led Boracay Island Water Co. (BIWC), the pioneering water supply and sewerage system services on the world-famous beach destination.

Tieza Chief Operating Officer (COO) Pocholo Paragas confirmed this to the BusinessMirror, as he also announced the appointment of the government corporation as sole regulatory authority over utilities in Boracay and other tourism destinations.

“We are conducting the exercise, reviewing the process of how we could divest completely [from BIWC],” he said, but could not yet give an approximate period when the actual divestment would happen.

“We still have to study how to do it,” he added, indicating Tieza’s shares have to be priced accordingly, and there should be a proper timing on when to divest so the government doesn’t sell its stake at a loss. Tieza, formerly the Philippine Tourism Authority, is the infrastructure arm of the Department of Tourism, and owns 20 percent of BIWC.

The decision to divest its shares in BIWC was contained in a Tieza board resolution dated July 24, 2018: “The Board approved and authorized COO Paragas to initiate studies and coordinate with offices, whether government or private, on the different ways Tieza can treat its shares in BIWC including the divestment of its shares in it.”

The issue of Tieza owning shares in BIWC arose as the Boracay environmental issue came to the fore, with members of the interagency Task Force Boracay and lawmakers pointing to an apparent conflict of interest, as it is both a “regulator and the regulated.” Said conflict of interest was also affirmed by the Government Commission on Government-Owned and -Controlled Corporations, prior to the July 24 meeting, government sources said.

As this developed, Paragas expressed optimism that Tieza can work with the two water concessionaries on Boracay “to pursue sustainable reforms that will ensure delivery of high quality of water standards for the tourists and residents in the island.” Other than BIWC, the other water concessionaire is Boracay Tubi Services Inc., owned by MacroAsia Development Corp.

Last September 5 the Office of the President struck down the National Water Resources Board’s motion for reconsideration  “for lack of merit.” In its appeal in August 2017, the NWRB insisted that OP had jurisdiction of the Department of Justice’s decision (OSJ Case No. 04331-11) in 2012, which gave Tieza the sole and exclusive right to regulate all utilities in Boracay and other tourist zones. Said DOJ decision was already upheld by the OP in July 2017.

“We welcome this decision as it finally resolves the issue on regulatory authority on water utilities in Boracay. It offers a good opportunity to promote sustainable tourism through effective management of utilities,” Paragas said.

He added this development will enable Tieza to monitor and enforce standards of service of BIWC and BTSI, and ensure compliance to environmental standards. Prior to the OP decision, Boracay Tubi and Boracay Water had been separately supervised and regulated by NWRB and Tieza, respectively.

With the DOJ decision affirmed, the Tieza Regulatory Office is tasked to formulate customer service standards and policies applicable to all water service providers in the island, the COO explained.

“These standards and policies will cover regulation of water supply as well as wastewater or sewerage system,” he said.

Lawmakers had expressed their serious concern on the confusion created when there was no single regulatory office in charge of the island’s utilities. In the Senate Hearing of the Committee on Environment and Natural Resources last June 20, Committee chair Senator Cynthia Villar reiterated the need to delineate the service areas for the two water companies. She asserted that a single regulatory office was necessary to avoid confusion and improve the wastewater management in the island.

The Ayala Group’s Manila Water Co. forged a joint venture agreement with Tieza in 2009, for the operation, management and expansion of the facilities of the Boracay Water and Sewerage System, the entity, which used to be managed and operated by the government firm. BIWC was granted the exclusive right to operate, manage, and expand water and used-water facilities for a period of 25 years, renewable for another 25 years. It has a billed volume average of 13.55 million liters per day and a total sewerage treatment plant capacity of 11.5 million liters per day.

 

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