THE Sierra Madre Water Corp. (SMWC) has submitted to the Manila Water Corp. and Maynilad Water Services Inc. an offer to supply 700 million liters per day (MLD) of bulk water over 25 years conforming to a standard build-operate-own agreement for infrastructure.

Rolando Zosa, SMWC president, said if their offer is accepted, they are committing $255 million for the surface-water project that is designed to keep up Metro Manila water supply in step with increasing need. Water will be sourced from at least 11 rivers in peak rainfall in areas of Laguna and Quezon provinces.

The first 350 MLD could be available within 24 months from contract date, and the next 350 MLD, 12 months thereafter, he added. “This project, which has an estimated capital cost of $255 million, is the initial phase of 2,300 MLD total bulk-water supply project the SMWC has developed for Metro Manila.”

“Under the concession agreement, MWSS [Metropolitan Waterworks and Sewerage System] is obligated to supply 4,000 MLD to the concessionaires, which is the available supply from Angat Dam. Thus, the concessionaires may arrange for new supply directly,” he added.

He also pointed out no government guarantee is required, or “a take or pay” obligation. “The proposed supply is designed to be tariff-neutral because there is no increase in the cost of water to the consumer, other than the inflation adjustments.”

“Based on the desire of the water companies for supply that could maintain tariff rates to the consumers, the project is to be paid on capacity fee basis, matched to the provisions for new water-source development approved in the tariff. There would be performance obligations and penalties incorporated in the contract,” added Zosa.

He said components of SWMC’s initial phase include a 130-million- metric cube reservoir and two small diversion dams to harness water from five river systems in Laguna and Quezon, which now drain without economic use to the Pacific ocean. The project will also include a 11- to 12- megawatt hydroelectric facility.

“Bulk water is proposed to be delivered to Mabitac, Laguna, via tunnel and overhead pipeline to a proposed treatment facility to be owned and operated by the distributors. Treated water can be delivered by gravity across Laguna Lake to as many terminal points as needed.”

The environmental impact of the Sierra Madre project is small since the reservoir involves two small 40-meter-high dams with 735 hectares inundated and less than 100 families to be resettled. “The project will help contain floodwaters which cause landslides and floods to communities along the Quezon coastline. Water release from the dams is to the Pacific ocean.”

The investors group includes First Metro Investment Corp., which will be the principal finance arranger and will be significant investor in the project. Plocher, a German water technology company, has also agreed to participate.

Zosa added the Asian Development Bank and IFC will also be prospective investors.