The Commission on Audit has flagged as “unnecessary expense” the Puerto Princesa City Water District’s acquisition of a P74 million Ultraviolet Hydro Optic Disinfection last year.

This was contained in the Commission on Audit’s (COA) 2022 report.

“The Water District continuously incurred rental and preventive maintenance expenses for Ultraviolet (UV) Hydro Optic Disinfection systems which accumulated to P51, 902, 802 and P3, 084, 987, respectively, as of December 2022 and procured additional three units of UV disinfection system amounting to P74,987, 257 in February 2022, despite its capability to produce potable or safe drinking water for its customers compliant with the quality standards set in the Philippine National Stadards for Drinking Water of 2017,” the COA findings stated.

“Furthermore, the amount of P290,764 for monthly preventive maintenance expenses which were beyond the contract period while liquidated damages in the delivery of UV Disinfectant amounting to P3,740, 032 remained uncollected at year-end,” the report added.

The COA stated that Puerto Princesa City Water District (PPCWD) General Manager Walter Laurel must submit the risk assessment reports and test results indicating the presence of contaminants in the water sources of the District that require UV treatment and are not treated by chlorination. This submission is necessary to justify the expenditures incurred on UV disinfection systems.

“In the absence thereof, we recommend that the Management discontinue the rental and procurement of UV disinfection system,” COA said.

It also noted PPCWD’s “failure to strictly implement the new policy adopted on the collection of inactive accounts and accounts receivables”, noting that it had posted an increase in its receivables to P8,928,549 from the balance of P69,952,269 in 2021.

The audit body stated that the General Manager must instruct the Assistant General Manager for Operations of the PPCWD to make efforts to intensify the collection of the District’s past due accounts receivables.

COA also mentioned that the PPCWD had acquired “high-end or expensive models or brands of” service vehicles for use in their regular office functions. This action is considered unnecessary expenditure, contrary to the guidelines outlined in COA Circular 2012-003 dated October 29, 2012.

“Submit a justification as to the necessity of the equipment purchased citing among others the features of the certain brand of equipment where the output of the department could greatly be affected if that certain feature is absent,” COA said.

COA stated that the expenditure of P39,968,373 for the programs, activities, and projects of the Gender and Development Plan and Budget (GPB) for 2022 does not clearly address gender issues and concerns, and contradicts the provisions set by the Philippine Commission on Women, the National Economic Development Authority (NEDA), and the Department of Budget and Management (DBM).

“Thus, gender responsiveness of the PPCWD’s programs for the year was not achieved,” COA said.

COA also rendered a “qualified opinion” on the accuracy of the recorded balances of inventories, property, plant and equipment (PPE) and “other assets accounts in the total amount of P1,933,676,198 is doubtful due to discrepancy between the stock cards and book balances of various inventory accounts.

COA said that a loss arising for the derecognition of disposed unserviceable properties during the year amounting to P11,008,517 was not reported in the Statement of Financial Performance for the year ended December 2022 but was recorded instead as a direct debit to the retained earnings account, thereby resulting in the overstatement of the net surplus by the same amount.

Responding to the audit, Laurel said in an interview with Palawan News that he had already submitted a written justification to COA on June 30, 2023, including a risk assessment report of the PPCWD.

In a 3-page justification, Laurel said that the installation of a UV disinfection system should not be considered an unnecessary expenditure.

“The quality and safety of the drinking water supply is the utmost priority of the Water Distict and we are committed to sustain water quality standards as public safety is the top consideration. The multiple barrier approach closes the possibilities of contamination thus, should not be taken lightly and lowered to second priority,” Laurel said.

Laurel said that the PPCWD was requesting the Audit Team to consider and put emphasis on the quality of water being supplied.

“The PPCWD is implementing the project that would render the water quality equal with the water sold by refilling stations regulated by the Department of Health where use of UV light sterilization to kill bacteria is the main disinfection system being used, thereby benefiting the consumers who are the very reason for the existence of the PPCWD,” Laurel said.

Laurel added that the utilization of the UV disinfection system “does not only ensure 100 percent protection from microbial contamination in the water source but also improved the odor and taste of the supply which are important considerations in water potability”.

“The use of chlorine in high dose affects the taste and odor and consumers residing near the pumping stations are complaining. With the installation of the UV Disinfection System, it is concluded that the PPCWD is able to achieve the improvement of its water supply,” Laurel said.

On the matter of the P290,000 monthly contract extension of UV and liquidated damages in the delivery of UV Disinfectant amounting to P3,740, 032 remained uncollected at year-end, respectively, Laurel said that the PPCWD issued a letter to Texin Inc. dated March 17, 2022 that the extension was due to failure of first bidding and the re-bidding process would not be completed within the period of existing contract period.

On the liquidated damages, Laurel said that they had a previous request for the re-evaluation that the Premium HMI Controller was an additional request of the PPCWD and not part of the technical specification requirements originally published during the bidding and was a replacement to the standard B&W Controller.

“It was delivered by the supplier in response to our request without additional cost. Further, even without the said additional feature requested, the system was fully functioning and has been meeting the required parameters. The PPCWD is again requesting for re-evaluation and to reconsider the recommendation of collection of liquidated damages,” Laurel said.

Laurel said that “to consider the gains achieved by the PPCWD in terms of water quality management as unnecessary is a total discouragement for the management to improve its services”.

On the matter of plant, property, and equipment (PPEs), “other assets accounts in the total amount of P1,933,676,198 that was found doubtful due to discrepancy in stock cards and book balances, Laurel said in his reply-letter to COA, that the matter was already discussed within the management few years ago and it was the consensus of the management that only those that are exposed to insurable risks were applied for insurance with Government Security Insurance System (GSIS).

“It is difficult to process an insurance claim with the GSIS even though we have complied with all of their requirements,” Laurel said.

Laurel attributed the problem to tropical typhoon Odette that ravaged Puerto Princesa city in December 2021.

“We experienced this again in our claim for the damages caused by typhoon Odette last December 2021 to our insured properties. Until now we have not received any claims from GSIS. The amount paid for the insurance premium could have been used instead for the repair and rehabilitation,” Laurel said.

Laurel said that if the PPCWD would procure insurance for all the PPEs, the insurance premium would be too high and it would result in additional expenses on the part of the Water District.

“We do not contest the wisdom behind the procurement of insurance policy for all assets of PPCWD but, considering the cost of the insurance premiums, it is not a wise business decision,” Laurel said.

Laurel said that only those that were exposed to high risks were procured with insurance policy.

“We hope that the Audit Team will consider the comment of the (PPCWD) management on this matter,” Laurel said.