COA flags Dumaguete Water District for P24.38-M water revenue loss

CEBU CITY, Philippines – The percentage of non-revenue water (NRW) to total water production in the Dumaguete City Water District (DCWD) was recorded at a high 41.35% in 2023, the Commission on Audit (COA) said.

This exceeded the 20% allowable NRW set by the Local Water Utilities Administration (LWUA), according to COA’s annual audit report (AAR) of the water district.

DCWD services Dumaguete City, composed of over 134,000 people, as well as nearby communities, according to MetroPac Water Investments Corporation (MDW).

“This resulted in an estimated water revenue loss of P24,388,523.46, casting doubt on MetroPac Water Investments Corporation’s (MDW) capability to comply with its service obligation to reduce NRW,” government auditors said.

COA pointed out that the joint venture agreement between DCWD and MDW provides for the upgrading, rehabilitation, replacement, and maintenance of existing distribution networks as well as other measures to lower the NRW.

Government auditors said that based on the agreement, the NRW in 2023 should be 30%.

Auditors also said MDW “did not submit detailed reports on the causes of NRW including the complete information and timeline of the projects related thereat cast doubt on the transparency, efficiency, and effectiveness of the NRW-reducing activities that could affect the financial viability of its operation.”

During the management conference, auditors and management agreed on the following measures:

• “Submit detailed reports on the causes of NRW including the complete information and timeline of the projects related thereat to provide transparency, efficiency, and effectiveness of the NRW-reducing activities implemented by the MDW;
• “Ensure that the projects and activities included in the NRW Reduction Program are being implemented; and
• “Establish further effective measures to address the cause(s) of not meeting the commitment to NRW reduction.”

The Agency Action Plan and Status of Implementation trackers that now come with each audit report on the COA website indicated that as of October 17, the measures remain unimplemented.

COA also pointed out that the water district has not executed a memorandum of agreement (MOA) with the Bureau of Fire Protection (BFP) on the maintenance of fire hydrants. Auditors said the lack of maintenance could have contributed to the NRW. Management agreed to coordinate with the BFP and set up protocols.

The implementation tracker, however, said “execution of the MOA remains unaddressed.”

Auditors also noted in the AAR that the water district continued to grant financial assistance and subsidy to its officers and employees amounting to P2.12 million despite notices of disallowance. The water district told auditors they will stop the practice and indicated in the tracker that compliance was “fully implemented.” 

The implementation tracker indicated that COA will verify the implementation by the end of 2024 to cover all transactions for the year.

COA also called out the water district for the “excessive” communications subsidy to directors and officers totaling P597,000 in 2023. Auditors said this was “without legal basis and proper documentation.” COA noted that mobile networks were offering unlimited calls, text, and mobile data for much lower than what the district granted board directors and officers. 

During the exit conference, they agreed that the water district explain and justify the grant of communications allowance and ensure that these are supported by documents. The tracker indicated that the water district fully implemented agreed measures, including the lowering of communications allowance to officers.

Auditors also noted that the Property, Plant and Equipment (PPE) for 2023 totaling P157.76 million could not be ascertained because of the absence of a physical count. There was also no list of PPEs leased out by the joint venture. After the validation, COA said there was still no complete physical count of PPE.

Management has also still not submitted a separate list of PPEs used by the joint venture. – Rappler.com

Max Limpag, a freelance journalist based in Cebu, is an Aries Rufo Journalism Fellow of Rappler for 2024.