Government to pursue reform policies on privatization

Trade and Industry Secretary Manuel Roxas II said over the weekend the government will continue to pursue its reform policies on privatization and deregulation.

Roxas, however, admitted government is currently experiencing some problem with the privatization of public utilities. He assured, though, that "the basic principle underlying these reforms remain firm," adding that "government should not venture into areas where the private sector is more capable of running things."

The privatization program of the government, especially of the major utilities, have hit some snag.

In the case of water, government had been able to successfully bid out the Metropolitan Waterworks and Sewerage System (MWSS).

The MWSS franchise area was divided into two zones — the east and west sectors.

The east sector franchise was awarded to the Ayala-led consortium Manila Water Co., while the west sector was awarded to the Lopez-owned Maynilad Water Services, Inc.

The Lopez-controlled Maynilad is now threatening to return its franchise to the government following difficulty in adjusting its rates.

Maynilad claims that is experiencing severe losses due to the huge expenses outlay to repair and service its franchise area.

The Ayala Manila Water Co. has also sought government approval to raise its rates, but is not in as dire straits as Maynilad.

In the power sector, government is supposed to privatize the National Power Corp. (NPC) as part of its commitment to the International Monetary Fund and the World Bank.

A delay in the passage of the energy reform bill has derailed government’s privatization plans for NPC.