The rants of President Rodrigo Duterte against the “onerous” and “corrupt” water concession contracts between MWSS and the Manila Water and Maynilad corporations have received widespread support among the 15 million or so water consumers of Metro Manila. The two companies announced that they are giving up the billions that the Singapore-based arbitration court awarded to them. They are also suspending the implementation of any tariff increases in January 2020.
Can the twins absorb these “losses”? As unearthed by Congress and the mass media, they can because the two giant companies are, in fact, very much in the black, with each one netting at least P6 billion a year.
This brings us to the bigger policy issue: is the government prepared to put the water distribution business back in public hands? President Duterte made the threats that, if needed, the military can even take over the operations of the twins.
To the trade union groups affiliated with the Public Sector International (PSI) and civil society organizations such as the Freedom from Debt Coalition (FDC), governments have indeed the policy option to re-assert public control over the privatized delivery of public services. Not necessarily through a violent military seizure of private facilities and operations in a privatized public corporation or service. Governments and citizens’ groups can strategize a smooth re-claiming of these public corporations and services through myriad approaches such as re-nationalization, formation of consumer cooperatives, establishment of “public-public partnerships” and so on. In Europe, they call the reversal of privatization “re-municipalization”, which essentially means re-asserting the power of government (in various municipalities or localities) and the citizens in each service area to manage and set the development directions for the de-privatized companies and services.
This re-municipalization or de-privatization process has become a global phenomenon. Per report of the PSI and Transnational Institute of Amsterdam, there were 835 cases of re-municipalization in 45 countries between 2000 and 2015. These involve a number of big cities such as Paris and Berlin.
Germany, Europe’s biggest economy, has the most number of re-municipalization cases: 347 in all, mostly in the energy sector. And surprisingly, the re-municipalization has become a joint effort of members of the conservative CDU government and the radical Green Party, meaning the arguments in support of re-municipalization (clean, efficient and affordable energy) are shared by all regardless of political or ideological persuasions. In the re-municipalized power utility of Berlin, several “participatory instruments” were also developed: formation of a Democratic Advisory Board (with representatives from the employees and the citizenry), public assemblies (for consultation on energy issues), right to initiative (meaning policy change can be instituted with the signature of 3,000 people) and appointment of an ombudsperson (to serve as the utility’s link with customers).
In summary, the re-municipalization/de-privatization phenomenon is a backlash against the dogma of privatization, which have been marketed as the panacea for the inefficiency, unaffordability, limited coverage and corruption in the delivery by government agencies of public services such as water, power, waste collection and so on. And yet, after four decades of proselytizing by the IMF, World Bank and neo-liberal economists, privatization has failed to deliver to the people the promised gains: efficient, affordable, universal and honest delivery of public service or goods.
These happen to be the same promises made in the Philippines by the proponents of privatization, from the time of President Corazon Aquino onward. These promises remain undelivered, as documented in the cases of water and power, and as reflected in the fact that water and power rates in the country are among the highest in Asia. The water companies are also accused of not paying taxes, the same charge being pinned on the National Grid Corporation (partly owned by the State Grid Corporation of China), which has a monopoly on the grid transmission business.
In addition to the foregoing privatization failures, one must include the phenomenon of deepening social and economic inequality that privatization is causing. The country’s taipans and the biggest corporations have been focusing their wealth-creating zeal on various projects that can be developed under the government’s privatization program, from the delivery of basic public goods to the construction of varied infrastructures under the government’s build-build-build program. The lure of privatization business is difficult to resist, especially if this means the transformation of a public monopoly into a private monopoly.
Right now, one major area of competition among the taipans is the so-called “privatization” of water districts that are supposed to be supervised by the Local Water Utilities Administration. Instead of developing the water systems for the underdeveloped areas and municipalities, the big water companies such as Prime Water of the Villars and InfraCapital Water of the Aboitiz’s are cherry-picking, buying up profitable and well-developed water districts in the developed cities of Luzon, Visayas and Mindanao. As former DAP official Segundo Romero put it, the local water business has become “the new battleground” among the big corporations. And as water prices and consumer complaints go up, the “developmental” mission of privatization (mentioned in various laws) goes down.
Clearly, it is high time that the policy makers and the citizenry push for an honest-to-goodness review and overhaul of the privatization program that has been in place in the last four decades. In the documentation study by PSI and TNI, re-municipalization/de-privatization does not mean a simple return to the old pre-privatization arrangement. Public service delivered by government should be raised at a qualitatively higher level. One way of achieving this is through the institutionalization of the participatory instruments as illustrated in the case of Berlin’s re-municipalized power utility. Another way is to bring back transparency and accountability in management, or in the words of the leaders of the re-municipalized energy company in Nottingham (UK): “No private shareholders, no director bonuses, just clear transparent pricing”.
Finally, there should be a clear vision on how public services and goods can be delivered for all in an inclusive, participatory, democratic, sustainable and progressive manner. The “visioning” program should be a public-public partnership, not superficial consultation with a few corporations and their neo-liberal advisers.