CEBU CITY — The Metropolitan Cebu Water District (MCWD) asserted that it remains "financially sound" amid criticisms about its "unsustainable" pricing scheme and water service performance.
The statement came after Cebu City Mayor-elect Nestor Archival warned that the water utility could face bankruptcy within two years if it continues to rely on its current operational model, which he described as unsustainable.
Archival pointed to MCWD's reported practice of buying bulk water at P65 per cubic meter from suppliers such as Cebu Manila Water Development Inc. (CMWDI) while selling it to consumers at P28 per cubic meter.
"That is unsustainable," he said, warning that the agency may eventually collapse or even be privatized.
Archival made the remarks following complaints from consumers who say they are paying more despite experiencing unreliable water service.
"There's a mismatch between the cost and the quality of service," Archival said, noting the public's growing frustration.
In response, MCWD clarified on Wednesday that its water supply is not solely dependent on costly bulk water.
It said it uses a "blended cost" model that combines lower-cost in-house water production with externally sourced supply.
The agency said that in 2024, its revenue per cubic meter sold exceeded its operating costs.
It said the trend continued in the first quarter of 2025, where the effective rate paid by consumers remained higher than the blended cost, enabling the agency to sustain its operations.
The MCWD is a government-owned and controlled corporation (GOCC) created under Presidential Decree 198. It operates on a non-profit, self-sustaining basis and reinvests all of its revenues into water service operations and infrastructure.
MCWD does not receive financial subsidies from either the local or national government.
MCWD services the cities of Cebu, Mandaue, Lapu-Lapu and Talisay as well as the municipalities of Consolacion, Cordova, Liloan and Compostela.
It sources water through both internal production facilities, such as the Buhisan Dam and reservoirs in Minglanilla, Talisay and Consolacion as well as private bulk suppliers like CMWDI.
The blended sourcing model is central to its efforts to meet rising demand in Metro Cebu.
MCWD said the 38 percent provisional tariff adjustment implemented on March 1, 2025, and approved by the Local Water Utilities Administration (LWUA), was critical to sustaining operations.
The agency originally applied for a 60-percent adjustment in 2022 to fund its 10-year strategic plan but has yet to receive full approval.
Under the new rates, the minimum charge for residential consumers using 0-10 cubic meters of water increased from P152 to P209.76.
However, MCWD said many households actually saw lower bills after the Purchased Water Adjustment (PWA) and Power Cost Adjustment (PCA) were integrated into the base rate and reset to zero.
Despite these reforms, MCWD admitted that escalating costs continue to strain its finances.
These include expenses for water treatment materials, infrastructure rehabilitation, pipeline expansion, and securing sustainable water sources.
The utility stressed that it cannot earn more than 12 percent per cubic meter and that every peso collected is reinvested into operations.
It added that support from local governments is essential to fast-track permits, secure right-of-way access, and facilitate the development of new water sources such as desalination and surface water facilities.
Archival said he intends to coordinate with Cebu Governor-elect Pamela Baricuatro to review the joint venture contract with CMWDI and clarify the water sourcing arrangement.
He noted the reported increase in CMWDI's supply rate from P24.59 to P65 per cubic meter and raised questions about the current concessionaire after the Ayala group sold its stake in the firm.
The joint venture between the Cebu provincial government and the Manila Water Consortium, which formed CMWDI, sourced surface water from the Luyang River in Carmen, northern Cebu.
It supplied 35 million liters per day to MCWD, servicing areas including Cebu City and Mandaue City.
However, the contract was reportedly terminated in 2023, after CMWDI exited over tariff disagreements, further complicating the region's water supply situation.
Archival said he will push for transparency in how water contracts are awarded, especially in light of allegations of overpriced supply rates and unresolved service issues.
As a short-term measure, he plans to educate barangay (villages) on water meter monitoring and consumption management to help households manage their bills.
While he has no immediate plans to overhaul the current MCWD board, chaired by Miguelito Pato, Archival said he wants the board to be more open to public scrutiny.