China Eximbank provides $211.2 million preferential buyer's credit for New Centennial Water Source-Kaliwa Dam Project

China Eximbank provides $211.2 million preferential buyer's credit for New Centennial Water Source-Kaliwa Dam Project On October 20, 2016, China Eximbank and the Government of Philippines signed a Memorandum of Understanding (MoU) on financing cooperation.

Then, on November 15, 2017, the two parties signed a financing cooperation agreement on the New Centennial Water Source-Kaliwa Dam Project.

The Government of Philippines’ National Economic and Development Authority (NEDA) Investment Coordination Committee approved the project on April 25, 2018.

Approximately five months later, on September 21, 2018, the Government of Philippines submitted a loan application to China Eximbank.

Then, on November 20, 2018, China Eximbank and the Metropolitan Waterworks and Sewerage System (MWSS) — a government agency in the Philippines that is in charge of water privatization in Metro Manila — signed a $211,214,646.54 preferential buyer’s credit (PBC) agreement [No. 142010300202018213220 and CHINA EXIMBANK PBC 2018 NO.25 TOTAL NO.48] for the New Centennial Water Source-Kaliwa Dam Project.

The loan effectiveness date was on November 1, 2019, and MWSS paid the entire management fee ($633,643.94) to China Eximbank on November 26, 2019.

The proceeds of the PBC were to be used by the borrower to finance 85% of the cost of a PHP 12,189,893,798.70 commercial (EPC) contract [No.NCWS-KDP 001-2018] between MWSS and China Energy Engineering Corporation Limited (CEEC).

The purpose of the project is to construct the Kaliwa Dam, including intake facilities and other facilities, and a 57 million cubic meter reservoir.

The project involves the construction of a water conveyance tunnel that is expected to supply 2,400 million liters per day of raw water for Metro Manila, thereby reducing dependence on the Angat Dam reservoir.

Upon completion, the project is also expected to benefit some 17.46 million people or about 3.49 million households of Metro Manila, Rizal, and Quezon.

The Kaliwa dam is located in the municipalities of General Nakar and Infanta in Quezon Province and the municipality of Teresa in Rizal Province. CEEC is the general EPC contractor responsible for implementation. EDCOP, PRIMEX, and SMEC are also involved in the project as subcontractors. An environmental compliance certificate (ECC) [No.

ECC-CO-1907-0017] for the project was issued by the Government of the Philippines’ Department of Environment and Natural Resources (DENR) on October 11, 2019.

But DENR Undersecretary Benny Antiporda was quoted as saying that “the ECC was issued because it was a priority project of the government and the agency had no recourse but to approve it.” A notice to proceed was issued to the EPC contractor on November 13, 2019.

By May 2020, there were only a few more kilometers of access road (to the planned reservoir in General Nakar town in Quezon) left to construct to reach the main dam site. As of December 31, 2020, the project had achieved a 2.48% completion rate. As of March 2021, it had achieved a 9.44% completion rate.

Then, on June 29, 2021, a formal groundbreaking ceremony took place.

A June 2021 report quoted MWSS as saying that tunnel excavation for the Kaliwa Dam would be ready to begin in December 2021, with the planned arrival of the tunnel boring machine to the Port of Manila slated for July 2021.

Construction continued throughout 2021, despite the fact that the project did not have permits from the appropriate government agencies, opened up the possibility that the ECC issued for the project would be revoked.

According to the Commission on Audit (COA), MWSS and CEEC must first comply with the requirements of the National Integrated Protected Areas Systems Act and have a certification issued by the National Commission on Indigenous Peoples. It must also identify disposal sites of excavated materials, among others.

If these requirements are not met, the COA has warned that the ECC may be cancelled, which would jeopardize the loan agreement with China Eximbank and the commercial contract with CEEC.

The project has generated a great deal of local criticism, with some people warning that the dam could destroy the ecosystems and habitats of indigenous people in several Quezon province towns.

After granting the project’s ECC, the Government of the Philippines downplayed the threat of a sizable flood occurring in the case of structural damage to the dam caused by an earthquake. Public officials claimed that there are no active faults near the dam.

The New Centennial Water Source-Kaliwa Dam Project also threatens to displace up to 10,000 members of the Dumagat-Remontado indigenous people group who live in the project area. These Dumagat communities depend on farming for a majority of their income as well as working for Sierra Madre hikers. The loss of their farmland leaves their economic future uncertain.

The project site is also the location of sites sacred to the Dumagat people. The Government of the Philippines claims that only 46 families stand to be affected by the project.

In March 2019, Marcelino Tena, President of Samahan ng mga Katutubong Agta-Dumagat-Remontado na Binabaka at Ipinagtatanggol ang Lupaing Ninuno (SAGIBIN-LN), alleged that MWSS “did not follow the right process to secure the Free, Prior and Informed Consent (FPIC),” adding that the engineering design had not been shown to them.

In contrast, then-MWSS administrator Reynaldo Velasco claimed that only about 46 families would be affected, that several consultations with those who would be affected had been made, and that the project design had yet to be finalized. The controversy led to the creation of the “STOP Kaliwa Dam” (SKD) organization.

Also known as Sectors and Peoples Totally Opposed to Kaliwa Dam, the organization claims representation from indigenous peoples, local communities, church leaders, academics, environmentalists, and social movements. The group has started a signature campaign from all over the Philippines to petition Duterte to stop the project.

By September 2019, the official MWSS website reported that three successful public hearings initiated by DENR-EMB and the MWSS had been conducted, as follows: at General Nakar, Quezon on August 23, 2019, at Teresa, Rizal on August 27, 2019; and at Infanta, Quezon on August 28, 2019.

In connection with the free, prior, and informed consent, the site has this to say: “With regard to MWSS’ compliance with Republic Act No. 8173 or the Indigenous People’s Rights Acts, the MWSS through the National Commission of Indigenous Peoples has successfully completed the community assemblies on the six (6) clusters of IP communities in Quezon Province as part of the Free Prior and Informed Consent (FPIC) process (emphasis supplied).” However, according to Mavic Conde, five out of six cluster communities in General Nakar—one of the two municipalities in Quezon province where the NCWS-KDP will be located (the other one is Infanta)— voted overwhelmingly no, effectively rejecting the project.

The five clusters consist of those in Lumutan, Baybay, Pasanghan, Umiray, and Cablao.

Also, Aaron Pedrosa, attorney for the progressive political party Sanlakas, alleged that MWSS failed to provide proof of compliance with the procedural requirement of posting a public notice and a copy of the scoping report as proof that public scoping was conducted in the area as part of the environmental impact study.

These allegations and counter-allegations have given rise to serious legal questions relating to the issuance of the ECC in the absence of a valid consultation process.

In 2011, the acquisition of Certification Precondition (CP) as part of the Free Prior Informed Consent (FPIC) process to allow project activities to commence in ancestral lands was delayed. In 2022, MWSS facilitated the provision of annual financial assistance to the IPs.

Then, the NCIP Commission En Bank approved and issued the CP for the project on September 19, 2022 and November 7, 2022, respectively. In addition, the project has triggered the NEDA's alert indicators in 2022: 1a. Ratio of actual loan proceeds disbursements to target loan proceeds disbursements is less than 70%; 1c.

Ratio of actual disbursements from the GPH counterpart to target disbursements from the GPH counterpart is less than 70%; 1d.

Difference between the time elapsed and the ratio of cumulative disbursements to the ICC-approved project cost is more than 30%; 2a. Negative slippage of at least 10%; 2b.

Project with delays of more than 6 months being experienced in its major ongoing activities in the critical path or in any ongoing component/due for completion deliverable or with some activities after the ICC approval of the extension of implementation period/loan or grant validity. As of December 2024, the dam was 24.8% completed.

In April 2025, the National Economic and Development Board approved MWSS's request for an increase in the total project cost (bringing the total cost to PHP 15.3 billion), a change in the project scope, and an extension of the loan validity and implementation period for the project. The dam is now expected to be operational in 2027.