It’s funny and, at same time, surprising that all of the entities involved in the country’s water distribution are owning up to the recent mess that has dried up the faucets of a large swath of Metro Manila customers of the Ayala-owned Manila Water Corp. (MWC). There’s no washing of hands in the issue, probably because all the taps have dried up.
It was only Finance Secretary Carlos G. Dominguez III who was quick to point the finger at the previous administration, his accusation based on false assumptions. MWC, as well as the Metropolitan Waterworks and Sewerage System have apologized and taken full responsibility for the crisis that MWC is still trying to fix.
The declining water level of La Mesa Dam from which MWC draws its water supply is the most convenient excuse. While this is true to an extent, the public has the right to know why the water reservoir has quickly dipped below the critical level.
It’s sad to note that the Philippines has abundant water resources. Including water from lakes, river systems and groundwater, with fresh-water availability at 149.5 billion cubic meters per year. Despite this, 9 million Filipinos still lack access to safe, clean and affordable water.
Here’s an insider’s take from a close friend who once headed one of the government agencies involved in water distribution: “Water is being increasingly privatized, but access to affordable and uninterrupted water supply remains unresolved. Water privatization started in 1995 due to such issues as government inefficiency and corruption. MWC and [Metro Pacific-owned] Maynilad vowed to provide uninterrupted, cheap, safe and secure water supply. But what happened is that water becomes expensive and overpriced for corporate profit.
According to him, water rates have increased since 1995 by almost 900 percent for MWC and 600 percent for Maynilad. Net profits by the two companies have steadily increased through the years, reaching P3.3 billion for MWC and P5.6 billion for Maynilad as of 2018. The system continues to suffer from supply problems and infrastructure defects. While MWSS continues to fail in properly supervising and controlling water and sanitation services.
The Local Water Utilities Administration (LWUA), my friend says, is powerless to regulate privatization because the National Economic and Development Authority (Neda) has limited its role to a mere observer during the so-called negotiations for joint-venture agreements (JVA) between target water districts and the private proponent.
“It goes like this,” he says. “Private proponent resorts to bribing local government units to influence, force or coerce resisting local water districts to agree to a joint-venture agreement.”
As allowed by the build-operate-transfer law, JVA is just one of the many—but intriguingly the most commonly used—modes by private proponents under the public-private partnership scheme, despite the fact that other modes do not require private takeover of water-system management and operation.
He says that water-district consumers are not informed or consulted and are generally unaware that their water district has already been privatized.
“Note that before a water-district can be established, agreement of the people through a series of public hearings should first be secured and confirmed by Local Legislative Resolution. It is LWUA that confers the water districts their sort of franchise through a conditional certificate of conformance. By what legal authority is the privatized water district operating now? That is the big question because, as private entities, they are no longer under LWUA.”
So what is the cause of the sudden crisis? Based on the admission of the MWC itself, as confirmed by the MWSS, what triggered the crisis was the lowering of the water level at the La Mesa Dam, which is the MWC’s main source of water.
The crisis was precipitated by the MWC’s aggressive expansion to more areas under its concession in the absence of a new water source. MWC’s Pililla water treatment plant, intended to source and treat raw water from the Laguna Lake, is still under construction and will be operational only by the latter part of the year at the earliest.
My friend says that what should worry Metro Manilans, including those in the West Zone under Maynilad, is the possibility of a more massive water crisis around this time next year. The reason? Another private sector player, San Miguel Corp. (SMC), has scheduled its Bulacan Bulk Water Supply Project to go full stream later this year. The bulk water project will also draw water from the same Angat Dam in Bulacan, which has been the main and sole source of water for domestic use in Metro Manila, and also for irrigation and hydroelectric power.
The SMC project is intended to provide treated water supply on a take or pay basis to at least a dozen water districts operating the coastal and central parts of Bulacan, including the capital Malolos City. This would require an allocation of millions of cubic meters of water from Angat Dam, which would further put a strain on an already limited water-supply resource that usually reaches critical levels during the long dry season.
Unbeknownst to many, creeping privatization is also ongoing in many parts of the country, especially in Central Luzon, particularly in the provinces of Bulacan, Pampanga and Tarlac. At the forefront of this assault is Primewater, owned by the Villars. Among the big-earning water districts already in the bag include those of the Cities of Cabanatuan, Tarlac and San Fernando; San Jose del Monte, and Marilao and Malolos City in Bulacan, where malls, subdivisions and industries using huge volumes of water are located. As of the latest count, around 100 water districts have already been taken over, while another 30 or so are under so-called negotiations, including Angeles and Mabalacat. A number of water districts, such as Metro Cebu, Cagayan de Oro City and others in Bicol, the Visayas and Mindanao, have already entered into some form of arrangements with private companies, which place them on the verge of outright takeover.
My friend says LWUA is helpless to stem the tide, since it has been having difficulties getting its capitalization, which has drastically increased from the measly P2.5 billion in the 1970s (when the peso-to-dollar exchange was still 4:1). LWUA has also exhausted its cap of $500 million in foreign borrowings. The agency therefore has no sufficient funds to lend to the water districts, prompting the latter to either source money for capital projects in the open market, or enter into so-called joint-venture agreements with private companies, chiefly Primewater, MWC, Hiyas and a few others. In the latter option, almost all cases led to private takeover, job losses and dislocation.
The bottom line is that the government is not only defaulting on its responsibilities to provide water in major urban areas, but also failing to regulate and hold accountable the private-sector players who have been raking in billions in profits, even if they may not actually and fully fulfill their part of the agreement to provide customers with excellent water and sanitation services. Real big losers here are the consumers, particularly the poor who have to bear the ever-increasing water bills to satiate the profit-making orientation of private business.
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