To ensure the financial viability and continuous operation of local water districts (LWD) around the country, Senator Sonny Angara is pushing for the grant of a one-time condonation of the interest arrearages and penalties on the loans they incurred with the Local Water Utilities Administration (LWUA).
Over the years, several LWDs have accumulated debts, which they have not been able to settle on time. These loans have since incurred interest and penalties that have been added on top of the principal amounts.
“If these arrearages are not to be collected and paid, LWDs would be faced with the difficult choice of recovering their substantial loss either by increasing the water rate charged to their clients or by contracting new loans from LWUA. Either way, the quality of services offered by LWDs will be seriously affected,” Angara said.
Angara has filed Senate Bill 1161 granting a one-time condonation of outstanding interest arrearages and penalties assessed by the LWUA on qualified LWDs.
Qualified LWDs are those which “do not have enough financial capacity to pay on time their loan amortization as may be determined by the LWUA.”
The condonation will be undertaken only once “to assist qualified water districts in updating their loan amortizations to LWUA.”
After the said condonation, the LWDs that benefited would no longer be qualified to another condonation of similar nature in the future.
“We are not encouraging the non-payment of debts with this measure. Our intention is to keep these water districts afloat by providing them with some form of relief from their financial burdens,” Angara said.
“These water districts play an important role in our communities so we must find ways to ensure their continuous operation,” Angara added.
Water districts are local corporate entities that operate and maintain a water supply system in one or more provincial cities or municipalities. There are over 500 water districts nationwide.
The LWUA provides loans to water districts for the comprehensive development, repair or rehabilitation of new or existing water supply systems, new service connections, and watershed management among others.
In 2010, Republic Act 10026 was enacted to grant of income tax exemptions to LWDs and the condonation of their outstanding tax obligations from August 1996 up to the time the law took effect.