Weighed down by the recent pandemic no-disconnection policy, the management of the Virac Water District is seeking a two-step water rate increase that would bring the cost of a cubic meter of potable water from the current P80 to P130 by January 2022.
Last Friday, March 19, 2021, General Manager Gabriel Tejerero and the board of directors explained to Virac Mayor Sinforoso Sarmiento Jr. the necessity of the rate hike, considering that as a government-owned-and-controlled corporation, it does not receive allocations out of the General Appropriations Act for its annual operating requirements.
Its funding for its operating expenses for maintenance and personnel as well as capital expenditures are sourced from its receipts or collections as well as loans.
But since the community quarantine began in March last year due to the coronavirus pandemic, its collection efficiency has dwindled from a high of 95 percent to its lowest of just 68 percent last February 2021 when its total collection from water billings were lesser than its regular expenditures.
As a result, VIWAD management began a disconnecting the water service of consumers with outstanding bills over the past year, including a member of the Sangguniang Bayan who was reportedly in arrears for nine months.
Several government agencies have also unpaid bills for their water consumption, including the Regional Trial Court and the municipal government of Virac which has about P450,000 in outstanding payables to VIWAD.
GM Tejerero said the district’s water rates are set through a socialized pricing scheme, with big water users such as industries and commercial establishments charged higher rates, which in effect subsidizes smaller but more numerous water consumers.
Among the factors affecting the rates are cost of systems expansion, operation and maintenance cost, operating efficiency, number of connections, debt service and reserve funds.
The water district spends most of its collections for its personnel’s salaries and the payment of power and fuel bills for pumping stations, chemicals and other costs.
In August 2016, the Local Water Utilities Administration (LWUA), which supervises water districts, recommended that VIWAD implement a two-step increase: 50.55% by July 2017 and 10.91% by January 2019, but the board decided to forego the planned rate hike.
Among the five water districts in the province of Catanduanes, VIWAD has the lowest water rate per cubic meter at P80.00, compared with P135 per cubic meter in Bato WD, P150 in Viga WD, P162 in Pandan WD and P170 in San Andres WD.
The existing water rate has kept VIWAD’s operating efficiency below par, with its operating ratio pegged at 89%.
Ideally, the ratio of total expenses to total income should be less than 75%, it said.
On the other hand, its net income ratio, or the ratio of net income over operating revenue, for 2020 is a low 2%, compared to the benchmark of more than 8%.
For its staff productivity index or the ratio of active service connections over the total number of employees, VIWAD was at 209:1 instead of the benchmark of 120:1.
To make matters worse for the district, the provincial government of Catanduanes has been trying to collect from VIWAD franchise tax dating back to 2016 and now reaching nearly P2 million.
The Virac LGU, in a measure approved by the Sangguniang Bayan, is also demanding that the district pay the so-called in-lieu share of the LGU equivalent to 3% of its gross income, or about P900,000 per year.
Late last year, super typhoon Rolly and typhoon Ulysses brought heavy flooding that damaged 400 meters of parallel transmission pipes at its Cawayan source, with water service restored only by late December.
Fortunately, the 12-inch transmission pipes installed under a project of the Department of Public Works and Highways (DPWH) began delivering water to previously waterless areas in upland barangays of Cavinitan, Bigaa, Valencia and San Isidro Village.
The national infrastructure agency has also funded the construction of VIWAD’s Tagkalo Pumping Station, the Calatagan Tibang parallel distribution pipeline, Cavinitan pipeline extension and rehabilitation, and the Cauayan-Bigaa transmission and distribution pipeline.
Apart from installing district metering and meter clustering in some areas, VIWAD is drilling a well and constructing a pumping station in Angeles St., Cavinitan, with funds coming from its meager savings
It is currently serving 31 barangays, including six subdivisions, with Palta Big, Antipolo, Pajo Baguio and Sto. Domingo as proposed expansion areas.
Among its proposed projects are the construction of filtration tanks in the three water sources at Cawayan, Padurog and Sibanhan to reduce turbidity during heavy rains and new water sources at Mislagan, Danicop, Imperial Homes Subdivision and Sto. Nino.