17 September 2008
– The Freedom from Debt Coalition today criticized Maynilad Water Services, Inc. (MWSI) and Manila Water Company, Inc. (MWCI) for practicing ‘business without risk’ and ‘milking consumers dry’ as the two water concessionaires announced their plans of water rate hikes starting October to cope with the weakening of the peso against the US dollar.
In a statement, the water rights advocates also criticized the so-called Foreign Currency Differential Adjustment (FCDA) mechanism for prioritizing the financial standing of the concessionaires. FCDA is an added component of the concessionaires’ water bills which is used to cover for foreign exchange gains and losses in the foreign-denominated loans acquired by Manila Waterworks and Sewerage System (MWSS) and the concessionaires.
Edwin Chavez, FDC vice president, said the FCDA is an unwarranted safety net provided to the concessionaires at the expense of Metro Manila consumers.
“The FCDA mechanism should be scrapped. It allows the concessionaires to build up their profits at virtually zero business risk. Maynilad and Manila Water tariffs are right now set in such a way that they are completely ensured of full cost recovery and substantial profit regardless of whether or not Metro Manila consumers can afford higher rates,” Chavez said.
“Everybody else is feeling the economic crunch and other businesses are absorbing the currency fluctuations. Why are these two private corporations enjoying these economic shields? Their financial standing should not be prioritized over consumer welfare,” Chavez added.Questionable add-on charges
FDC also questioned the inclusion of add-on charges in the water bills of the two concessionaires. It said that the sewerage and environmental charges which are based on the actual water charge are thinly justified.
Manila Water currently pegs its sewer charge at 40 per cent of the actual water charge while Maynilad pegs the sewerage fee at 50 per cent of the actual water charge. The said fees are being collected from consumers who are connected to the concessionaires’ sewer services, covering 11 per cent of the Maynilad service zone and 15 per cent of the Manila Water service zone.
“Your sewerage fee is being based on your water consumption, which does not make any sense. And where is this money going?” asked Chavez. “10 cubic meters insufficient”
FDC also attacked the concessionaires’ provision to exempt households consuming less than 10 cubic meters from the proposed increase, stating that the said exemption is insufficient and ineffective in addressing the health and hygiene concerns of poor households.
According to Manila Water’s own website, an average household consumes about 30 cubic meters a month while an average person consumes an average of 6 cubic meters a month.
“Based on such data, the only households which could possibly benefit from the said exemption would be those households with only one resident and destitute households that are forced to store and reuse limited quantities of water despite sanitary and health risks,” Chavez explained. Under-regulated loans and projects
The concession fees and foreign-denominated loans which are being serviced or paid by the concessionaires were said to have been used to fund service expansion and improvement projects.
FDC, however, pointed out that these loans and the projects that are attached to them should be routinely checked for delays and anomalies.
The MWSS-Regulatory Office is the body tasked to ensure that the expenses incurred in such projects are “prudently and efficiently” incurred.
According to FDC, however, the MWSS-RO is too undermanned to thoroughly assess the acquired loans and the status of infrastructure projects.
FDC has been calling for a thorough assessment of the MWSS privatization, including the loans incurred by the concessionaires and MWSS. Maynilad earlier this year announced its acquisition of a new $365 Million loan to partially fund its pipe rehabilitation program. -30-