Manila Water P79 billion demand outrageous: rescind anti-consumer CA now

December 14, 2015

by superadmin

Government should take hold of the country’s water resources and ensure public benefit first and foremost

Private concessionaire Manila Water Co. Inc.’s (MWCI) move for arbitration and demand for public compensation for the company’s projected losses is an utter display of greed, water consumer watchdog Water for the People Network (WPN) said. The company’s assertion also shows how the concession agreement between government and Manila Water severely undermines the public’s right to water.

Ayala-owned Manila Water recently filed a notice of arbitration to demand of government approximately Php 79 billion. The amount is supposedly in reimbursement of the company’s projected losses from 2015-2037 or until the concession expires. Manila Water claims that the losses will arise from anticipated decrease in the rate of return due to government’s refusal to implement its petition for a rate increase during the last rate rebasing. It is invoking a government pledge to indemnify the company against any losses brought about by any move by the Metropolitan Waterworks and Sewerage System (MWSS) entailing a reduction in rates below that which complies with the Concession Agreement (CA).

This, according to WPN, underscores the urgency of scrapping the CA. It ensures corporate profit either through government funds or from burdensome user fees. It also weakens government’s mandate to ensure safe and accessible water for all. The group recalled that since water services were privatized in Metro Manila in 1997 purportedly to make it more efficient and economical, rates have gone up by about 171% for Maynilad Water Services Inc. (MWSI) and 300% for Manila Water as of 2011. Corporate profits meanwhile have also gone up by 19% for Manila Water and 48% for Maynilad. Water services especially in urban poor communities remain insufficient and expensive.

The provision for third party or international arbitration also disregards government’s sovereign regulation of rates for more affordable water. The public is made to shoulder the cost of this facility employed by private companies to secure their profit-taking. The last time that MWCI and MWSI took to arbitration was after the MWSS ordered to cut rates on revelations that the two companies’ pass-on charges anomalously included donations, recreational activities and even the corporate income tax. Fees for an Australian expert alone cost Php 271,000 per day for services rendered in the Philippines and Php 34,000 per hour for work rendered in Australian offices. Older arbitration processes amounted to about Php 140 million.

WPN said that it is high time for government to scrap the anti-consumer CAs. Through these private water concessionaires, on top of being granted guaranteed profits, can demand for more. This practically gives private investors’ interests supremacy over public good.

Government should take hold of the country’s water resources and ensure public benefit first and foremost. Otherwise, with the Aquino administration bent on clinching more public-private partnership (PPP) deals, passing the PPP Law and entering the Trans-Pacific Partnership, public utility consumers’ woes are bound to pile up, said the group.