02 December 2008
The Freedom from Debt Coalition opposes the unconscionable rate hike being peddled by Maynilad Water Services, and condemns as insensitive Maynilad’s profit-oriented attempt to proceed with business as usual in the midst of a financial crisis that has left the poor extremely vulnerable to the slightest rate increase in basic necessities such as oil, power, and water.
The proposed rate adjustment is part of the rate rebasing exercise, a scheduled business mechanism done once every five years that paves the way for large rate hikes based on new business plans proposed by water concessionaires to the Metropolitan Waterworks and Sewerage System – Regulatory Office (MWSS-RO).
In its “public consultation” held last Friday, Maynilad presented an increase of P 7.10 in the basic tariff for households consuming 30 cubic meters a month. The cited amount, however, is misleading and does not fully present the impact of this proposed increase. If Maynilad gets its way and the proposed increase is approved, VAT, environmental and sewerage charges, which are all based on the basic tariff charge, will also go up. Households connected to Maynilad’s sewer lines will experience an increase of at least P11.93 per cubic meter. Those without sewer services will take on an increase of P8.75. In the final equation, the average household’s monthly bill will go up by P262-P357. With 86% of Maynilad’s consumers composed of residential connections, 20% of which belong to depressed communities, Maynilad’s proposed rate increase cannot be taken lightly.
For several years Maynilad has enjoyed tax holiday incentives from the Bureau on Investments and until now continues its attempt to retain this incentive. In the absence of this tax holiday, Maynilad insists that it is not precluded from having its consumers shoulder Maynilad’s corporate taxes. FDC believes it is only right that Maynilad reveal a breakdown of their proposed rate hike to publicly show how much of what is to be paid will actually go to the payment of corporate taxes, to the payment of MWSS loans and loan interests, and to the actual projects that they are proposing to undertake.
From the P7.10 increase, how much will go to Maynilad’s coffers as revenue? How much of the proposed increase will be allocated to corporate perks for Maynilad’s executives? These items must all be properly laid down in any consultation that purports to seek public approval for a rate increase. The people’s right to refuse paying for unnecessary extravagances must be recognized. We should know what we are actually paying for. Without such transparency in the rate proposal, the public consultation being held will amount to nothing more than a procedural farce.
Maynilad’s current rates are already being disputed as over-priced, thereby placing in doubt any moral ground to demand further increases. A civil case filed by civil society groups questioning Maynilad’s rate hike of January 2005 still remains pending until today thanks to Maynilad’s stubborn refusal to submit its rates under the jurisdiction of the National Water Resources Board, the only water regulatory body with quasi-judicial functions to look into water rates for consumer interests. To this day, the question of whether or not we are paying too much still remains unanswered.
It is therefore sheer temerity on Maynilad’s part to demand a rate hike it does not deserve. Maynilad is nowhere near the service targets it submitted in 1997 and still owes the MWSS at least $36.9 Million in unpaid concession fees, not inclusive of a disputed $18.1 Million also claimed by MWSS as additional concession fees. These fees, which should have rightly been paid years ago, have been permitted to be restructured so as to give Maynilad’s new management more room to breathe. Are we to understand then that while the government willingly bailed out Maynilad when it was in dire financial straits, that same government will now stand idly by as Maynilad demands a rate hike that the poor cannot afford?
Where is the government in all this? Government itself has also come to earn revenues from Maynilad’s consumers, and continues to insist that Metro Manila consumers should shoulder all the expenses of water provision. It has already collected more than P1.6 B in VAT revenues from Maynilad’s consumers in the years 2006 and 2007. More has been collected in prior years. As senate debates the allocation of taxes collected from the people, FDC calls on them to reconsider the moral propriety of refusing to allocate people’s taxes to something as basic as water provision.
Maynilad’s proposed water rate increase must be opposed. The welfare of millions of consumers in more than 600,000 household connections in Maynilad’s west zone must be protected from the non-transparent profit mechanisms employed by Maynilad. FDC refuses to wait until disconnections are imposed on 150,000 destitute households that cannot afford the rate hike. We call on government to do the same.