18 November 2005
The Freedom from Debt Coalition (FDC) adds it voice to the clamor of civil society organizations in the Asia-Pacific region condemning the detrimental impact of the Asian Development Bank’s (ADB) involvements in the water sector. We demand that the ADB review not only its water policy but also its overall lending strategy that traps governments into poverty-inducing measures such as the privatization of water utilities.
The Philippine experience consistently demonstrates how the Bank wielded the debt of its developing member-countries as leverage to aggressively push conditionalities to ensure repayments and are made part of requisites for loan approvals and good credit ratings. With water supply being capital intensive, privatization as a loan conditionality has created an enabling environment for transnational corporations to takeover water supply systems that were previously monopolized by governments.
The Philippine experience with the so-called “private sector participation” (PSP) in providing water services, as promoted by ADB’s water policy and as enforced by its lending activities, is a cautionary tale showing that where water services hinge on profit making, the basic right to water of all individuals, particularly the poor, will always be at risk.
For over eight years of having profiteering corporations in Metro Manila’s water distribution system, undue burden has been passed onto hapless consumers. Tariffs are escalating so fast: Manila Water’s rate now read 700 percent higher than in 1997, while Maynilad’s has increased by 500%. More than 700 people were victimized (seven of them died) by a cholera outbreak in the west zone of Metro Manila due to contaminated water. The West Zone operator (Maynilad) is itself in hot water—continuously embroiled in controversy over its rate increases, mismanagement of the water company, and an anomalous corporate rehabilitation plan that obligates the government to shell out public funds amounting to US$53 million. The East Zone operator, meanwhile, revels in its new status as the Metropolitan Waterworks and Sewerage System (MWSS) declares the concessionaires as “mere agents” and not public utilities by themselves. This frees the private water operators from the 12% profit limit for public utilities, as set by laws. Manila Water, registering a 40.92% profit margin in 1999, is walking away scot-free with P281 million excess profit.
The ADB, whose lending to the Philippines already reached $3.091 billion in 1997, perpetuated this sad plight of Metro Manila water consumers. By the time Metro Manila’s water distribution system was auctioned off to the private sector, it has already funded eight water supply and sanitation projects of the MWSS amounting to US$ 344,786,11.18. One of these projects, the Umiray-Angat Transbasin Project (UATP), had an accompanying advisory technical assistance (TA) grant amounting to US$582,000 which explicitly intended introduce PSP in the operation and management of MWSS sector activities.
For the Asian Development Bank to admit the serious flaws of the MWSS privatization deal - the largest of its kind in the Asia-Pacific region and the world - would be tantamount to making a strong political statement on the failure of water privatization. But the MWSS privatization has turned into just that – a failed undertaking that is privileging private enterprise at the expense of millions of consumers.Water is a human right: public service not private profit!
Stop corporate-driven privatization of water services!Note: Some 100 members of Progresibong Alyansa ng tagapagtangkilik ng Tubig sa Kamaynilaan (PATTAK) and Freedom from Debt Coalition (FDC) this morning picketed the Asian Development Bank regional headquarters in Ortigas Center, Mandaluyong City, denouncing the Bank's 2001 Water Policy that affects millions of poor peoples of developing member countries. The ADB is currently undertaking its 2005 Comprehensive Water Policy Implementation Review.