29 July 2004
FINALLY, the Metropolitan Waterworks and Sewerage System (MWSS) moves to withdraw its concurrence to Maynilad’s second contract amendment. The Freedom from Debt Coalition (FDC) welcomes this partial victory for Maynilad water consumers. However, FDC’s struggle to uphold public interest in Metro Manila’s west zone water distribution system goes on until the MWSS/government fully collects the people’s money from Maynilad and proceeds to takeover its operations and management.
FDC urges the MWSS to draw the full $120 million on Maynilad’s performance bond immediately. Maynilad’s payment for its concession fees has been long overdue since 2001 and has already ballooned to $180 million. As of now, the concessionaire’s performance bond is not even enough to cover its debt to the government!
Further, MWSS should promptly terminate Maynilad’s contract and takeover the responsibility of ensuring water service to the public. By doing this, MWSS will at long last shield water consumers from anymore wrongdoings that Maynilad is bound to commit considering its consistent failures to meet its financial and service obligations.
Maynilad brought nothing but additional burden to the Filipino people. It has not been able to provide decent service to consumers and has raised its water tariff well beyond the reach of many. It failed to bring in more money to public coffers and instead has even forced the government to incur more debt.
It should be recalled that Maynilad’s refusal to pay its concession fees drove the government to take new loans amounting to $220 million so that it could pay off its creditors and build critical water infrastructure. Concession fees are earmarked to shoulder MWSS’s old debts and ensure water service to consumers. But with Maynilad’s nonpayment, MWSS’s maturing financial obligations at hand, and the imminent danger of an exploding aqueduct, MWSS had no other recourse but to borrow money again.
It should also be noted that Maynilad has been overcharging consumers since 2002 at approximately P8.28 per cubic meter. The company continues to implement mechanisms to recover its supposed forex losses—the Foreign Currency Differential Adjustment (FCDA) and the Accelerated Extraordinary Price Adjustment (AEPA).* (FDC exposed this anomaly in March 2003 and has since campaigned against it but up to now the MWSS has failed to resolve this issue.)
Maynilad’s presence in our water system is littered with gross service inefficiency, corporate mismanagement, and double-dealings such as the company’s refusal to honor its service obligations while saddling the consumers with unjustifiable rate increases and even overcharges.
FDC maintains that water provision should stem out of the recognition that access to this life-giving element is a human right. Giving preference to the profit motives of private companies before the basic needs of the people is immoral and a betrayal of public trust.
FDC reiterates that the way forward is for MWSS to draw the full $120 million on Maynilad’s performance bond immediately. The final step is to terminate Maynilad’s contract now, bring back operations and management of the water distribution utility to public fold, and refuse to enter into anymore bailout schemes with a company that has done great disservice to millions of Filipinos.The National Executive Committee
Freedom from Debt Coalition
FDC calls:No to Maynilad bailout!
Draw the full $120 million on Maynilad’s performance bond now!
Boot Maynilad out of the water distribution sector!
Genuine government takeover of the West Zone concession!
The government-owned Metropolitan Waterworks and Sewerage System has formally informed the rehabilitation court its intention to withdraw its concurrence to the proposed Amendment 2 to the Concession Agreement between MWSS and Maynilad Water Services Inc. Maynilad is a joint venture of the Benpres Holdings, part of the Lopez Group (the Lopez Clan is an elite family whose business ranges from media, electricity distribution and generation, to water distribution) and Ondeo Philippines (a subsidiary of Suez Lyonnaise des Eux of France) to operate the West Zone area of MWSS. Members of Freedom from Debt Coalition trooped to the MWSS Compound to demand 1) the immediate and full drawing on the US$120 million Maynilad performance bond, 2) government takeover of the West Zone concession Area, and 3) an end to further negotiations to bailout Maynilad. Amendment 2 is the proposed compromise plan that will effectively bailout bankrupt Maynilad from its financial quagmire, at the expense of more than 7 million consumers as well as taxpayers.
Freedom from Debt Coalition (FDC) is a multi-sectoral, non-sectarian and pluralist national coalition of 250 organizations and individual members campaigning and advocating, among others, to stop water privatization in the Philippines.
Maynilad already got its way when Contract Amendment 1 in 2001 granted an early rate rebasing which allowed it to increase its base rate and postpone service expansion targets. The amendment further allowed Maynilad to pass on to water consumers its foreign exchange losses by collecting the FCDA and the A-EPA. Not only did Maynilad make money from these "Amendment 1-authorized collections", it went out of bounds when it continued to collect the A-EPA beyond the allowed 15 months, and the FCDA even when it unilaterally stopped paying its concession fees to MWSS.