Press Statement
PEOPLE’S FRESHWATER NETWORK
21 November 2004

Rising water costs, unmet service obligations, threats to existing community-owned-and-managed water systems, incentives for and bailouts of private corporations—these and more are the staggering result of the government’s stubborn adherence to its policy of privatizing our water utilities. A policy that helps the government escape from its Constitutionally mandated responsibility of ensuring that the people have access to safe, affordable and sufficient supply of drinking water.

The government cannot continue ignoring the suffering of the people in the hands of profit-driven, opportunistic and deceitful private water companies. The list of its violations against the people’s right to water is increasingly littered with evidences of its crimes.

Metro Manila’s experience speaks so loud that we can barely hear Mrs. Gloria Arroyo’s promises of improved water and sanitation services. Seven years of having Maynilad and Manila Water has resulted in 400% increase in water rates for West Zone consumers while those in the East Zone pay 700% more than they did in 1997. Come 2005, Maynilad, upon approval of its rehabilitation plan, will charge to consumers the cost of its mismanagement and inefficiency--an additional P7.00 per cubic meter of water consumption. Manila Water, on the other hand, will collect P2.18/m3 more despite already enjoying a very high profit rate. The Commission on Audit’s report on Manila Water’s 1999 operations testifies to the company’s enjoyment of a 40.92% profit despite existing laws limiting public utilities’ turnover to 12%.

In Subic Freeport and adjoining Olongapo City,* residents have continually protested against rising water tariffs – 465% in 1996-2001, 28% in 2003, and 15% in 2004. Taiwanese investors in the Freeport threatened to pull out because of the astronomical increases. After eight years of operation, Subic Water—a joint venture firm with UK-based Biwater and Philippine construction firm DMCI as major shareholders—failed to meet the projected targets in capital expenditures and non-revenue water. Subic Water continues to accumulate huge financial losses, due in large part to exorbitant foreign consultant’s fees and a so-called “technology transfer” fee which critics allege are merely overpriced second hand booster pumps imported from abroad. Now, these booster pumps are reportedly not functioning well. Inside the Clark Special Economic Zone, business locators also complain about high water costs. In 2000, Clark Water Corporation (CWC), a subsidiary of the France-based Veolia Water Corporation (formerly Vivendi International), won the right to operate the ecozone’s water and sewerage system for 25 years.

In Cebu, the employees union of the Metro Cebu Water District (MCWD) challenges the take-or-pay contract of the P1.8 billion Carmen Bulk Water Supply Project proposed by the Ayalas, describing the unsolicited proposal as a “backdoor method of privatization”. Lopsided provisions in the draft take-or-pay agreement include the following:
  • MCWD is to TAKE OR PAY 50,000-60,000 cu m/day of treated water from the Ayala-led consortium, whether or not this amount of water is actually sold by MCWD;
  • MCWD will buy take-or-pay Carmen water at a base rate of P25/cu m; MCWD currently produces water at P10 less/cu m.
  • AUTOMATIC (usually upward) adjustment in water rates due to inflation, power costs, and other cost adjustments;
  • When the private proponent defaults, MCWD may assume all assets and LIABILITIES of the system; but when MCWD defaults, private proponent can take-over all or part of the operations, EXCEPT its LIABILITIES. Moreover, the MCWD take-over may be occasioned by the simple failure to pay the monthly dues for allocated water. The Ayalas can then takeover the water utilty through the backdoor.
In the remote mountain town of Butong, Ronda in Cebu island, community residents pay a staggering P150 for every cubic meter of water they consume and they have to pay first before they can avail from a solar-powered, prepaid water supply system installed by US-based WorldWater (Philippines), Inc.

In Baguio, attempts to bid out a $70 million bulk water supply project to the private sector have already failed twice. In August 2004, losing bidder Benguet Corporation filed a formal protest challenging grounds for its disqualification. The company wanted to convert its idle open mining pit into a large water reservoir to supply drinking water to residents of Baguio City. In dismissing Benguet’s bid, the Baguio Water District cited the following – the firm has insufficient and non-sustainable source of water; the proposed water reservoir is inadequate; the quality of raw water is questionable; and its mining rights could not be converted to water rights. Benguet Corp., a major mining company, has moved into the water development business, with business interests in Bukidnon, Subic, Metro Roxas, San Pedro (Laguna), and Masinloc, Zambales.

Clearly, as seen from the experiences in many parts of the country, providing water to a captured market, especially with fanatical support of government, has become an attractive business proposition for private corporations with no track record in the business of delivering safe, reliable and affordable water. At the expense of public interest.

We, from the 40 organizations of the People’s Freshwater Network, condemn the government’s headlong and deceitful rush to hand over our water utilities to greedy water corporations. Private sector companies are organized to make profit, not to fulfill socially responsible objectives such as achieving universal access to water and sanitation services, especially for the poor.

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!

Water is a public good and is a basic human right!
Water is a public good that needs to be publicly financed and not given to private hands!
Water is a human right: public service, not private profit!



Philippine Freshwater Network Steering Committee: Freedom from Debt Coalition (FDC), Asian Labor Network on International Financial Institutions (ALNI), Confederation of Independent Unions (CIU), Focus on the Global South-Phils., Legal Rights Resource Center-Kasama sa Kalikasan (LRC-KSK), Kalayaan!, Kasama-Ka!, Kongreso ng Pagkakaisa ng Maralitang Lungsod (KPML), Philippine Network of Rural Dev’t Iniatiatives (Philnet-RDI), Management and Organizational Dev’t for Empowerment, Inc. (MODE), Tambuyog Dev’t Center and Ms. Violeta P. Corral

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