CoA calls for review of Pangasinan water JV after losses

THE COMMISSION on Audit (CoA) asked a water district in Pangasinan to review the terms of its joint venture (JV) with a private company after the JV caused it to incur a P1.81 million loss in 2021.

CoA flagged the JV after the district’s bottom line deteriorated from a profit of P4.6 million a year earlier.

In a 2022 audit report dated March 30, the state auditor said that “the management and board of directors of the San Manuel Water District (SMWD) did not take into consideration the total impact on the operation of the district of the terms and conditions of the joint venture agreement, thus, resulting in a net loss of P1.81 million for 2022.”

SMWD distributes water to 10 barangays in San Manuel, Pangasinan. On Sept. 10, 2021, it entered into a joint venture agreement with Panama Water Corp. (PAMANA) to develop the district’s water supply.

CoA recommended that the SMWD renegotiate and increase its share of the JV as well as create a “realizable projection plan to address the impact of the joint venture agreement on its financial condition.”

CoA also noted that the PAMANA has not reimbursed the district for the P2.43 million cost of a drilling project in Barangay Flores, reducing the funds SMWD had available for operations.

CoA also said SMWD’s provisioning levels for impairment on its accounts receivable was inadequate at 5% because of the high percentage of receivables from inactive accounts as well as the “absence of specific guidelines in the computation of estimates.”

CoA said it is unable to to audit the JV’s activities because the SMWD did not submit a report on the water bill collections and expenses incurred by PAMANA. SMWD has 4,161 active service connections, while 395 remain inactive, CoA said. — Beatriz Marie D. Cruz