LWUA at loss to take back P2-B advances


THE Local Water Utilities Administration (LWUA) is in a quandary recovering P2.3 billion, sourced from its corporate funds, after the past administration failed to keep its “verbal commitment” to grant financial assistance for the improvement of water supply system.

The Commission on Audit (COA) bared that LWUA, after releasing P2.3 billion to 231 water districts, is now in the process of converting the 50 percent loan-50 percent grant mix to soft loans, which water districts have to pay in 25 years.

The sudden turn of events came after state auditors noticed that LWUA released the multi-billion assistance from its corporate fund—it should have not been the case, because the program was supposedly tucked under former president Gloria Arroyo’s President Priority Program for waterless municipalities or barangay.

The Utilities agency said that in 2009, the Office of the President told LWUA that it would assist the agency in a water program in the form of a P6-billion fund transfer for the Non-LWUA Initiated Funds-President’s Social Fund (NLIF-PSF).

Pending the receipt of the PSF funds, LWUA implemented the NLIF-PSF Program using its corporate funds. In turn, LWUA was to replenish its corporate funds using the PSF.

The release of funds to water districts was supported with a memorandum of understanding between LWUA and the water districts. The extension is on a 50 percent loan-50 percent grant mix “and that the NLIF loan portion shall be interest free.”

In 2009 and 2010, LWUA released a total of P1.17 billion and P1.18 billion, respectively, from its corporate funds since the PSF was not released yet. In 2011, the agency disbursed P12 million. No PSF had been received still.

However, based on a subsequent confirmation from the Office of the President, “there was no such fund for the purpose,” COA said.

OGCC opinion
In 2011, LWUA asked for an opinion from the Office of the Government Corporate Counsel (OGCC) regarding the financial assistance.

The state’s corporate lawyers said that LWUA should have not resorted into such scheme of charging the program against its corporate fund in the hope of resuscitating it again once the PSF was received.

“LWUA should not use its corporate funds, that the partial releases made to the water districts using corporate funds under the NLIF program, where LWUA should have acted merely as implementing agency, were not legally in order,” the OGCC opinion read.

The OGCC added that the memorandum of understanding entered by LWUA with the 231 water districts must be invalidated as no funds were initially released for the assistance.

Persons who processed, approved and certified the existence of PSF funds and released such amounts may be held responsible, the OGCC added.

Without PSF funds released from the Chief Executive’s office and the water program already extended, the present LWUA management converted the once dole-out to soft loans.

Through a board resolution, the LWUA made “all releases” during the time of former LWUA chairman Prospero Pichay Jr. to soft loans, which shall have a two-percent interest once the project at the different water districts have been completed.

LWUA already filed a case before the Office of the Ombudsman against Pichay and former members of the board of trustees “on the use of LWUA corporate funds for the NLIF.”

17 out of 231
According to the audit team, out of the P2.3 billion fund releases, only P140 million or a total of 17 water districts, agreed to convert the assistance to soft loans.

The P140-million converted assistance were supported with board resolutions, “but without loan agreements or memoranda to establish the existence of loan.”

The Audit agency told the water utility agency to press the remaining 214 water districts to convert their P2.22 billion fund assistance to soft loans.


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