03 June 2005
The Freedom from Debt Coalition (FDC) is utterly appalled by the news that Maynilad's newest con plan has been approved by Judge Reynaldo Daway, presiding judge of the Quezon City Regional Trial Court Branch 90. This go-signal for Maynilad's rehabilitation scheme will not only sink the government deeper in debt, it will also legalize the company's fraud and abuse of hapless water consumers in the West Zone.
Under the revised rehabilitation plan, the Metropolitan Waterworks and Sewerage System (MWSS), a government-owned-and-controlled corporation, will attempt to pull a heroic stunt of saving the mismanaged water firm by using public funds. About US$ 22 million worth of concession fees that are supposedly intended to service MWSS debts will instead be converted into 84% shares of ownership in the bankrupt company.
After the debt-to-equity conversion, Maynilad also intends to pay its outstanding and future concession fees in installments-50% in 2004, 65% in 2005, 70% in 2006 and 70% in 2007. This means that MWSS will have to source out new money to fill up the funds needed to pay its maturing obligations that Maynilad's concession fees are supposed to shoulder. To date, MWSS has already incurred additional loans-$21 million in 2001, $260 M in 2003 and $150 M in 2004-because of the Lopez-owned company's unilateral decision to stop honoring its obligations to MWSS since 2001.
Right now, the government water agency is already arranging a new $125 million loan from the World Bank. Of this amount about $31 million will be infused to Maynilad as the MWSS assumes the burden of giving it financial assistance to fund its operations.
And as if to ensure that no holes are left unplugged, MWSS shamelessly complied with Maynilad's request and granted the latter a water rate hike of P10 per cubic meter starting January this year. This allows Maynilad additional revenue of around P3 billion monthly despite reduced performance and service obligations such as lower water pressure from the promised 16 pounds per square inch (psi) to 7 psi, staggered payment of concession fees and an additional two-year delay in its expansion targets.
With the unjust rate increase, West Zone water consumers are unwittingly forced to bear the cost of a private water company's recovery from its self-inflicted bankruptcy. What is more abhorrent here is the fact that this rehabilitation plan is nothing but a camouflaged bailout, with the Arroyo government, through the MWSS, conniving with the crony-like company of the Lopezes in formulating and ensuring the approval of this deceptive ploy. This is tantamount to being stabbed in the back. Iginigisa pa tayo ng gobyerno sa sarili nitong mantika!
(The government is frying itself in its own grease!)
FDC condemns the approval of Maynilad's onerous rehabilitation plan! We demand a genuine government takeover of the West Zone water distribution system!We call on the public to reclaim water that is rightfully ours!
Termination not rehabilitation, Maynilad out now!
Public service, not private profit!