17 June 2009
– The Metropolitan Waterworks and Sewerage System should immediately reject the application of Maynilad Water Services, Inc. for a 15-year extension of its concession contract as a way to mitigate projected water rate increases in Metro Manila West Zone, according to the Freedom from Debt Coalition.
“It doesn't make any sense at all why the MWSS is even entertaining the proposal. It’s a nonsensical solution,” said FDC vice president Edwin Chavez.
In a public consultation held today, Maynilad presented its proposed contract extension which projects a mitigation of water rate increases from P10.67 between 2009-2012 to a little more than two pesos for the same period.
FDC's Chavez, however, cautioned that real solutions to mitigate water rate increases should not be built on promises that have long been shown to be easily broken, but on the renewed control of the MWSS and the public over decisions pertaining to expenses that are being billed to the customers.
“Maynilad has only recently exited from corporate rehabilitation, it doesn't have the track record or performance record to justify a contract extension, nor is there a semblance of assurance that Maynilad would even make good on its promise to mitigate rate increases,” Chavez said.
According to Chavez, the MWSS must step up in protecting consumer interests and reject proposals such as the proposed contract extension which only serve to further the profit interests of the concessionaire.
“At the end of the day, it is the MWSS that has the power to mitigate rate increases for the benefit of consumer interests, not through any contract extension, but by actually doing the task of ensuring that these concessionaires are not allowed to pass on the costs of overpriced projects, corporate income taxes, corporate bonuses and perks, as well as foreign currency losses accumulated from the payment of foreign loans, infrastructure contracts and consultancies.”
FDC pointed out that Maynilad continues to burden consumers with its corporate income tax despite a 2003 Supreme Court ruling declaring it illegal for public utilities to pass-on their corporate income taxes to consumers.
According to FDC, salary bonuses and perks for corporate executives were also being included among the operational expenses that consumers are shouldering, but the amount of such bonuses are not being disclosed to the public during public consultations similar to the one conducted by Maynilad and MWSS today.
Allegations of overpricing in some water and sewerage projects that are to be charged to consumer billings were also brought to the fore last year by MWSS' former administrator Lorenzo Jamora but these have been left unresolved. A Senate bill authored by Sen. Jamby Madrigal directing the investigation of these anomalies remains pending to this day.
Foreign currency losses allegedly incurred by water concessionaires from foreign debt payments and business contracts with foreign contractors and consultants are also charged automatically to the consumers on top of the basic water rate, and are not to be covered by the concessionaires' promise to temper their rate increases in exchange for a contract extension.
FDC stressed that the resolution of the above issues as well as the effective regulation of costs being passed on to Maynilad consumers would go further in mitigating water rates than the contract extension being sought by the water company.
“For as long as the MWSS remains as the weak-willed regulator that it has shown itself to be, promises of lower rate increases will only be used by Manila Water and Maynilad to manipulate everything to their favor,” Chavez said. -30-