CoA flags Isabela water district


The Commission on Audit (COA) flagged Benito Soliven Water District in Isabela province for using its funds intended for the payment of its regular loan amortization for the expansion of new pumping stations.
The 2023 CoA report showed that the municipality has a P702,864 allocation for the payment of loan amortizations, which was divided between the Non-Local Water Utilities Administration (LWUA) Fund and regular loan at P500,004 and P202,860, respectively.
However, state auditors discovered that there were no payments made to LWUA for the entire year of 2023.
The management of the Benito Soliven Water District informed the audit team that they had deferred the loan amortization payment to use the funds for the expansion of new pumping stations to meet the demand and a growing number of concessionaires.
CoA said the non-payment of regular loan amortization breached Sections 3 and 4 of Article V of the Financial Contract, resulting in the accumulation of unpaid loan principal, interest and loan penalties, which stood at P10,482,287.30 as of year-end of 2023.
Section 3 of Article V of the Financial Assistance Contract mandates that every month during the repayment period, the borrower, which in this case is the Benito Soliven Water District, shall deposit the interest due and an amount equivalent to 1/12 of the amount due as principal for each corresponding year of the repayment period to this non-drawing account of the lender.
Meanwhile, Section 4 of the same Article stipulates that the borrower will be charged a penalty in an amount equivalent to two percent of the amount in arrears per month once it fails to make any of the deposits cited in the preceding section on or before the last working day of each month.
CoA said the Benito Soliven Water District’s management must intensify its efforts in the collection of receivables from concessionaires in order to improve its financial viability and operational efficiency and pay its monthly obligation to LWUA.
The management, meanwhile, assured auditors that they would start paying their obligations at LWUA when the project funded under GAA 2017 was complete.
They also vowed to adhere to the CoA’s orders and committed to start paying in April 2024 to avoid incurring huge penalties on unpaid loan amortization.
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