BY KATRINA MENNEN A. VALDEZ Reporter

THE government has scrapped San Miguel Corp.’s (SMC) bid to put up a huge dam that was supposed to supplement the water supply of the Philippines’ capital region.

In a press conference, Diosdado Allado, administrator of state-run Metropolitan Waterworks and Sewerage System (MWSS), on Wednesday said the agency had written to SMC, informing the food and beverage giant that the government would terminate the negotiations for the project, which has drawn flak from the National Economic and Development Authority (NEDA), Metro Manila’s two private water concessionaires, and a host of non-government organizations.

“This announcement will end all the speculation. The negotiation for the joint venture to develop the Laiban Dam has bogged down. We have terminated the negotiation. Thus, San Miguel is no longer being considered by MWSS as [a] partner,” Allado said.

He said both parties were unable to have a “meeting of minds,” even on the basic terms and conditions of the contract.

A key criticism to the project was a “take-or-pay” provision, which would require MWSS’ two private water concessionaries—and ultimately, the consuming public—to pay for unused water flowing from the dam.

This was similar to a contract clause included in power purchase agreements the government of then President Ramos signed, allowing generating plants to charge consumers for unused electricity they generate.

Those power supply contracts were forged at a time when the country suffered blackouts resulting from the Aquino administration’s failure to build new generating capacity.

The Laiban dam Project also was foisted as a long-term solution to Metro Manila’s water supply, with the proposal raised ahead of the onset of the current El Niño dry spell.

Allado said MWSS has opted to scale down possible projects that would address the water shortage forecast in the next five years.

“We are looking at choosing among the next top prospective projects after Laiban, one of which is the sourcing of 300 [million liters a day] from Laguna de Bay,” he said.

The cost of the said project ranges from $150 million to $170 million.

“But the problem there is the water quality,” Allado said.

The Laiban dam’s projected capacity of 1,900 MLD is expected to stem an anticipated shortage of 1,600 MLD by 2015. Before the current El Niño, water supply in Metro Manila stands at 4,000 MLD.

Allado said the MWSS Board will convene next week to determine which among the back up plans would be the most feasible.

“The 300 MLD in Laguna de Bay is what we consider the ‘band aid’ solution, in order to stop the gap in water supply and demand come 2015,” he said.

The other alternative is tapping the Pampanga River, Wawa dam, and Sierra Madre water, which will be sourced from seven different rivers in Laguna province.

Allado said the projections of the Angat dam water level after June “do not look promising,” adding the forecast is still below the lower curve.

As of Wednesday, the water level in Angat stood at 190.85 meters, or below the water curve rule. The normal water curve rule is at least 201.95 meters.