28 November 2006
Absorption of private corporations' business risks, conducting closed-door negotiations, approval of unjust water rate increases and putting heavier debt burden to the government--could these be the MWSS Board of Trustees and Regulatory Office's idea of upholding public interest in the management and operations of Metro Manila's water distribution utility?
This question was raised in today’s press conference launching a joint campaign to stop the rebidding of government’s 84 percent shares of ownership in the West Zone water provider Maynilad Water Services, Inc.
Challenging the legality and legitimacy of moves by Metropolitan Waterworks and Sewerage System (MWSS) to re-sell its P56.4 billion worth of shares in Maynilad, Lower House representatives Mayong Aguja (AKBAYAN) and Rene Magtubo (Partido ng Manggagawa), together with water justice advocacy groups Freedom from Debt Coalition (FDC), Bantay Tubig Network, Katipunan ng mga Anak ng Bayan (KAAKBAY) and Progresibong Alyansa ng Tagatangkilik ng Tubig sa Kamaynilaan (PATTAK), denounced the government water agency for ignoring protests and demands for clarification on its motives behind the re-privatization of Maynilad.
"Are MWSS officials clueless about the meaning of holding public office? Whose interest are they serving? Do they even know what they are doing?" commented Congressman Aguja as the group pointed out irregularities and unresolved issues in the Maynilad corporate rehabilitation plan and debt and capital restructuring agreement (DCRA). These schemes allowed for the government’s buy-out of majority ownership in the West Zone water distribution company.
According to FDC, the MWSS authority to sign onto the DCRA, which prompted the agency to act beyond its mandate by borrowing $31 million dollars from World Bank as financial assistance to debt-saddled Maynilad, remains highly questionable.
“The Commission on Audit has issued its opinion explicitly stating that such undertaking is not within the acts of MWSS under its Charter. There shouldn’t have been a government buy-out and there shouldn’t have been a rebidding,” asserted Francis Isaac of FDC.
The group further claimed that the rebidding process, which is expected to culminate in the issuance of the notice of award to the winning bidder on December 13, 2006, is being railroaded and this could lead to disastrous results at the expense of public interest.Contradicting its own self
Meanwhile, Congressman Magtubo pointed out that the MWSS contradicted its 2004 resolution declaring Maynilad and Manila Water as mere agents and contractors by including in the rebidding terms of reference a requirement for 60 percent Filipino ownership in companies vying for the right to operate water distribution in Metro Manila’s West Zone.
“This only applies to corporations considered as public utilities. In fact Japanese corporation Marubeni backed out from the process because it failed to get a local partner,” he said.
Magtubo is one of the petitioners in the case pending at the Supreme Court seeking to nullify the said MWSS resolution and the affirmation of the public utility nature of the water concessionaires.Possible monopoly of new owner with dismal track record
Alain Pascua of KAAKBAY warned of possible hijacking of water service provision if Manila Water, reportedly a favored bidder, wins the right to operate West Zone’s concession.
“What happens now to the planned benchmarking of private sector participation in the water sector? Not only has the government betrayed its claimed loyalty to so-called market competition as the best mechanism to provide better water services, it subjects consumers to possible capture by a company that has raised its rate by more than 700 percent in just nine years,” told Pascua.
FDC mentioned that the public should also be wary of DM Consunji Inc., another bidder for government’s shares in Maynilad. The company is the major shareholder of the distribution utility in Subic Freeport who reportedly did not meet its service commitments in the midst of skyrocketing water rates and failed to upgrade existing water facilities.
No assurance of water service provision
According to the group, Maynilad’s rehabilitation plan does not guarantee that Metro Manila’s waterless communities will be connected to the piped water grid and actually gives the company the license to delay accomplishment of its service targets by two years.
“MWSS and the new Maynilad owner will not bring water to waterless communities,” said Bantay Tubig coordinator Estong Tomas.
He explained that funds brought in by investors and company revenues from consumers would first pay for the debts of Maynilad. If there is some money left after paying Maynilad’s creditors and when considering service expansion and water supply allocation, commercially lucrative areas will be given preference.
Nora Protacio of PATTAK added that the rehabilitation plan recommends the lowering of water pressure targets from 16 pounds per square inch (psi) to only 7 psi. This raises fears of water contamination similar to what happened in 2004 in Tondo where 800 residents were hospitalized due to diseases related to ingestion of contaminated water. Eight people eventually died.