COA flags bulk water supply deal in Cagayan de Oro

CAGAYAN DE ORO CITY – The joint venture involving this city’s water facility for bulk water supply is in hot water yet again after the Commission on Audit (COA) flagged the arrangement for drastically inflating bulk water prices, to the disadvantage of consumers here.

In its Special Audit Office Report No. 2026-02, state auditors revealed that instead of building an independent water treatment facility as promised, the joint venture firm Cagayan de Oro Bulk Water Inc. (COBI) merely acted as a middleman.

COBI essentially wedged itself between the Cagayan de Oro City Water District (COWD) and its original supplier, Rio Verde Water Consortium Inc., the state auditors pointed out in the report.

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READ: Misamis gov’t to lend P1B to ailing CDO water firm

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The special audit report showed that Kagay-anons are footing the bill for this setup. Because of the joint venture deal, which was forged in 2017, bulk water rates jumped from Rio Verde’s P10.45- P11.52 per cubic meter to a staggering P21.60 per cubic meter by 2024.

Audit red flags

State auditors pointed out that the joint venture was highly disadvantageous to both the government and the consuming public, saying it “bypassed” the 2013 guidelines for public-private partnerships set by what is now known as the Department of Economy, Planning, and Development (previously NEDA).

Auditors also questioned why COWD settled for a measly 5% stake in the joint venture instead of the originally proposed 10%, stripping the local water district of crucial dividend payouts and management clout.

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Service on the ground isn’t faring much better. A COA survey of 290 consumers paints a bleak picture: only 33% consider the water safe to drink, 44% suffer from low water pressure, and a dismal 19% are satisfied with how their complaints are handled.

Water consumers, especially in the downtown area, have reported muck in their tap water, with one resident even finding an earthworm in the faucet while taking a bath.

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“I have to change the gauze I put as a filter for the faucet every morning because it would be full of muck and debris by four o’clock in the afternoon,” Aida Naliponguit, a resident of Barangay Consolacion, told the Inquirer.

Adding to the district’s woes, COWD is also bleeding resources, consistently exceeding the 20% limit for non-revenue water (wasted or unbilled water), which only drives up operating costs, according to the COA report.

The commission has urged COWD to take legal action against the alleged flawed contract, reduce water being wasted, and force a reduction in bulk water costs.

READ: Cagayan de Oro needs P6.7B to fix water woes

COWD initiated COA probe

Despite the stinging findings, COWD welcomed the special audit report, stating that local officials asked for the state probe in the first place.

In a phone interview with the Inquirer on Wednesday, Dr. Gerry J. Caño, COWD board chairperson, said the state auditors’ conclusions validated the current board’s own concerns regarding the contract.

“The board and the local government unit requested a special audit. In August 2025, a 10-man audit team came here. For one month, they checked our facilities, interviewed consumers, and COWD employees,” Caño said.

He pointed out that the questionable provisions flagged by COA “were not news to the water district,” saying the COWD board had almost the same findings.

He noted that state auditors attempted to include COBI (the joint venture company) in the probe, but the firm dodged the inquiry, insisting that COA had no jurisdiction over them because it was a private entity.

As of press time Wednesday, the Inquirer tried but failed to get comments from COBI.

READ: Drier summer for CDO as 3-month water plant rehab starts

Legal remedies

COA has urged COWD to pursue legal remedies against the alleged flawed agreement.

Caño said the board is already coordinating with the Office of the Government Corporate Counsel to determine their next legal moves, noting that financial and legal constraints had previously prevented them from unilaterally adopting some recommendations.

However, resolving the district’s massive water leakage and system losses will likely require Kagay-anons to dig deeper into their pockets.

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“We have a 10-year development plan to address the issue of NRW [Non-Revenue Water]. But in order to reduce NRW, we have to petition for an increase in the water bill because we don’t receive any subsidy from the local government unit or the national government. We can only use our own money,” Caño admitted./coa