Many households still persistently worry about on-and-off water supply, undrinkable water, and high rates. Water privatization in Metro Manila in 1997 – said to be the largest in the world at the time and involving some of the biggest foreign water firms around – was supposed to improve service and promote efficiency. But a quarter-century later, water access remains a major problem, especially for poor Filipinos.
The government’s water supply and sanitation map declares the need for further private sector involvement and implies more foreign participation. But will this solve the country’s water predicament? Foreign water firms in particular are always hyped to have vast experience, advanced technological and infrastructure know-how, and considerable capital. Have these factors been enough to solve the country’s water woes?
Water stress
The Philippine Constitution guarantees the right to health, and access to water is a fundamental component to this right. This is also underscored in the International Covenant on Economic, Social and Cultural Rights (ICESCR), to which the Philippine government is a signatory. It is the government’s duty to respect, protect and fulfill the right to water, including sanitation.
The country has yet to achieve universal access to safe water and sanitation. According to a Senate Economic Planning Office (SEPO) report, national water availability has declined from 2,100 cubic meters (m3) per capita in 1995 to just 1,300 m3 per capita in 2020, which is already below the 1,700 m3 per capita water stress threshold. The world average for the availability of water resources is much higher at 7,300 m3 per capita. As it is, about 27% of the Philippine population live in groundwater-stressed zones and water-stressed river basins, according to another SEPO study.
As of the end of 2023, the World Bank reports that only 48% of the Philippine population had piped or safely managed water services, while 63% had access to safely managed sanitation services. These are much lower than the East Asia Pacific region averages of 74% for safe water access and 69% for safe sanitation access.
According to the Philippine Statistics Authority (PSA), 96.3% of the population had access to basic drinking water services as of 2022. But the Department of Environment and Natural Resources (DENR) reports that some 40 million Filipinos still have poor access to water supply, with some even having to ride a motorbanca just to fetch water.
Foreign companies in Greater Manila Area water
The World Bank-financed privatization of the Metropolitan Waterworks and Sewerage Systems (MWSS) saw the MWSS entering 25-year concession agreements (CAs) with Manila Water Company and Maynilad Water Systems. The Greater Manila area was divided into the east and west zones, now covering some 20 million Filipinos.
Foreign water firms were involved right from the start and included among the world’s largest water service companies.
The East Zone went to the Manila Water Company. Ayala Corporation had the most shares (42.3%) in partnership with the United Kingdom’s United Utilities (18.8%), the United States’ Bechtel Corporation (15.1%), and Japan’s Mitsubishi Corporation (9.4%).
Mitsubishi partially divested from Manila Water in 2013 amid arbitration between the company and the MWSS but maintains a 1.2% share. Ayala Corporation bought United Utilities’ shares in 2009 but the British company maintained its voting rights through 40% ownership of then unlisted and now 19% owner Philwater Holdings Company.
Enrique Razon’s Trident Water now holds a majority stake after acquiring Ayala Corporation’s remaining stake in 2024. Current foreign stakes in Manila Water are from the United Kingdom’s West Yorkshire Pension Fund (0.31%), Switzerland’s Tareno AG (0.23%), Denmark’s Sydbank A/S (0.15%), as well as from firms in Luxembourg, Singapore, the United States, and India.
The West Zone went to Maynilad Water Systems Inc. run by the Lopez clan’s Benpres Holdings Corporation and France’s Suez Lyonnaise dex Eaux. The company went bankrupt in 2003 and only recovered after the government took over and sold it to new investors in 2007. Today Maynilad’s immediate parent company is the Maynilad Water Holding Company, Inc. of the following conglomerates: DMCI Holdings, Inc. (DMCI) with a 27.2% share, Japan’s Marubeni Corporation (Marubeni, through its subsidiary MCNK JV Corporation) with a 21.5% share, and Metro Pacific Investments Corporation (MPIC) with a total of 56.5% share.
The MWSS also has a 30-year CA with the Luzon Clean Water Development Corporation (LCWDC) for the Bulacan Bulk Water Supply Project (BBWSP) which started in January 2016. LCWDC is run by Ramon Ang’s San Miguel Corporation (80%) and South Korean K-Water Resources Corp (20%).
But water privatization has not delivered the promised benefits, even with foreign players. Rates have risen, especially for poorer households, and problems with access, affordability, and environmental concerns have persisted in MWSS areas for decades.
Poor record
Residents in the Manila Water and Maynilad service areas – especially the poor – grapple with high rates, interrupted supply and poor sanitation services with privatized water.
The pre-privatization tariff was at Php4.23/m3. Water rates have risen since privatization and become ever more burdensome especially for low-income families. Manila Water rates have increased 1,722% from Php2.32/m3 in 1997 to Php42.26/ m3 this year, and Maynilad’s 859% from Php4.96/m3 to Php47.57/m3.
The cost of water is even higher in urban poor communities lacking direct connections. In San Roque, Barangay North Triangle, low-income families face staggering rates of up to Php140/m3. Oftentimes, they incur additional cost from having to purchase containers, bottles and blue drums to store their water. Monthly water expenditures can reach up to and beyond Php1,000. This is around 7% of the income of a family supported by a construction worker, and around 15% of the income of a family supported by a pedicab driver.
These exemplify how the basic need of water is so expensive for the urban poor – the United Nations Development Programme (UNDP) says that a family should not spend more than 3% of its income on water, that the water source has to be within 1,000 meters of home, and collection time should not exceed 30 minutes.
Other urban poor consumers in the National Capital Region (NCR) complain that households with pipe leaks are fined Php10,000, and that water companies focus on disconnections when bills are unpaid rather than fixing the leaks. Also, unreliable announcements about water interruptions or shortages often lead to unnecessary water hoarding, panic, and inconvenience for consumers.
For so many years the urban poor have repeatedly raised concerns about access and affordability of services with the relevant government agencies, but their appeals have largely been in vain.
The Supreme Court has already imposed significant fines on MWSS and the two NCR water firms for not complying with the Philippine Clean Water Act of 2004 or Republic Act (RA) No. 9275. In 2018, MWSS, Manila Water and Maynilad were fined Php29.4 million for failing to install and maintain wastewater treatment facilities within five years of the law’s enactment. The water firms nearly passed these fines onto consumers, who had already been unfairly burdened for years with paying an environmental charge comprising 20% of their water bill.
Water troubles persisted despite decades of water privatization and the involvement of foreign companies.
Bad experience
At this point, any inclination of increasing profit-driven foreign participation in Philippine water utilities should be curtailed. The experiences of other countries serve as stark testaments to the negative consequences of water privatization and foreign investments in water services.
According to global watchdog Walking Water, foreign investment in Cochabamba, Bolivia, in the late 1990s – guided by World Bank advice – led to water rates soaring by up to 300 percent. The Bolivian government had granted a concession to the international consortium Aguas del Tunari, which included the American company Bechtel. Water became unaffordable for poor residents whose monthly bills increased from US$5 to US$20 – this was more than 20% of their monthly minimum wage of less than US$100.
Water privatization in Jakarta, Indonesia in 1997, also involving foreign investors, resulted in poor services and higher water rates. Through World Bank-funded water utility PAM Jaya, a 25-year concession for water and sanitation infrastructure improvements was struck with the United Kingdom’s Thames Water and France’s Suez Des Eaux. An International Consortium of Investigative Journalists (ICIJ) article by Andreas Harsono narrates that the price of water was hiked twice by an average of 35% per increase just within six years of privatization. However, poorer households were still forced to purchase drinking water from street vendors, and at that time, 70% of them still did not have access to running water.
There are many other instances where privatization involving global water companies resulted in low-income families paying far beyond their means for water. For example, rates shot up by 600% in Mauritania, and by 95% in Ghana. Despite these steep increases, millions still lack access to adequate water supply and sanitation.
These are only a few examples of the negative experiences from the privatization of water utilities involving foreign investments, from which the Philippines could learn.
People’s resource
Water belongs to the commons. Its appropriation by the profitmaking private sector through government policy has resulted in the commodification of the resource.
As it is, water and sanitation operations are protected from full foreign ownership by Public Service Act amendments or RA 11659. The amended law considers water and wastewater pipeline systems as public utilities where foreign ownership is limited to 40 percent. Water services are natural monopolies and, being essential services, require regulation. These are crucial for the maintenance of life and public welfare, and must be reliably provided on demand.
The Marcos administration’s grand plans to consolidate the management and regulation of water resources and utilization always invoke the need for private sector participation and attracting foreign investments. But what is really imperative is strong state regulation and people-centered management.
We can learn from the positive experience of other nations. In Bolivia and Indonesia, water privatization with foreign investments has failed to universally improve people’s lives and better the economy. This led to public discontent and moved civil society, communities and at times even local or national government representatives to espouse deprivatization and renationalization, mostly through the termination or non-renewal of private and international concessions.
Cochabamba renationalized water services in 2000 following persistent protests led by the Coalition for the Defense of Water and Life (La Coordinadora). Indonesia’s Supreme Court ordered the termination of water privatization in 2017 upon a lawsuit filed by the Coalition of Jakarta Residents Opposed to Water Privatization (KMMSAJ).
Assert the commons
Just this year the Implementing Rules and Regulations of “An Act Providing for the Public-Private Partnership (PPP) Code of the Philippines” (RA 11966) was released. It stipulates state recognition of the indispensable role of the private sector, encouragement of private enterprise, and provision of incentives to local or foreign investors. This is the state stubbornly adhering to a private profit-driven framework and deliberately ignoring how this has harmed the public good.
The negative experiences from water privatization including the involvement of foreign companies in the country and abroad should continuously be tackled and addressed. Advocates need to argue for people’s control over people’s resources without letup, as embodied in the Filipino People’s Water Code that awaits rewriting into legislation.