Maynilad collecting unauthorized fees

Call it double whammy. Seven million residents are suffering from low water supply in Metro Manila’s west zone, yet are being billed billions of pesos in unauthorized fees.

Congressmen discovered last week that concessionaire Maynilad Water Services Inc. is charging customers a foreign currency differential adjustment (FCDA) and an accelerated extraordinary price adjustment (AEPA) – in violation of its contract with the Metropolitan Waterworks and Sewerage System.

The MWSS regulatory office is set to issue this week a cease-and-desist order on Maynilad. Consumer groups under the umbrella Bantay Tubig are also preparing a class suit to make Maynilad refund the billions of pesos it collected without MWSS authority.

The FCDA is collected at a rate of P4.07 per cubic-meter of consumed water; the AEPA is an additional P4.21 per cu.m.

Based on Amendment 1 of its contract, Maynilad may collect the FCDA only if it pays MWSS a concession fee of roughly P217-million per month. Citing huge operations losses, Maynilad stopped paying the fee in March 2001, and is presently in arrears of P5.2 billion. Yet it continues to collect the FCDA from customers.

The MWSS regulatory office computed that Maynilad collected P2 billion in FCDA in 2002 alone. It has yet to determine how much Maynilad took from customers from April-December 2001 and January-March 2003.

Likewise in Amendment 1, Maynilad was allowed to collect the AEPA only from January-December 2002 to offset losses incurred in 1998-2000. But it continues to collect the AEPA since January 2003, computed at already P289 million at present.

MWSS needs the concession fee to repay loans drawn before water service was awarded to Maynilad in the west zone and Manila Water Co. in the east zone. Since Maynilad is not paying, although most of the loans were used to improve its zone, the government is advancing these from tax collections. Maynilad’s P5.2-billion arrears made up part of the automatic appropriations for debt servicing, a hefty 45 percent of the national budget.

In a House inquiry last week, Reps. Joel Villanueva of CIBAC, Maite Defensor of Quezon City and Del de Guzman of Marikina demanded to know why the MWSS lets Maynilad go on collecting unauthorized billings. "Maynilad has this habit of using its influence to go around the provisions ot its contract and avoid paying its obligations," Villanueva said. "Until now Maynilad is not paying its concession fee, but collects the FCDA and AEPA. Where is it putting all that money?" Maynilad snubbed the inquiry.

The three representatives, along with Kim Bernardo-Lokin of CIBAC and Loretta Rosales and Mario Aguja of Akbayan, have asked the House committees on economic affairs and on government enterprises and privatization to investigate the overcharging.

In its meeting also last week, the MWSS board of trustees too asked the regulatory office why it was allowing the unauthorized billings. The latter office said it will order Maynilad this week to stop.

A high MWSS officer reported to the board another case of possible overcharging. Requesting anonymity, the officer got hold of a Maynilad bill from a customer who used up 98 cu.m. in one month and must thus pay a currency exchange rate adjustment (CERA) of P98, or P1 per cu.m. But the bill stated a CERA of P117. "The bills are computer-generated," the official said. "We will check if many other bills overstated the CERA."

The congressmen discovered the overbillings in the course of investigating Maynilad’s sudden cut of water supply in January, weeks after it issued notice to MWSS that it was surrendering its concession.

Residents of Novaliches-Fairview who live around La Mesa dam, Metro Manila’s main reservoir, are complaining that they ironically can hardly draw water from the tap. Customers in Tondo, Manila, told the congressmen they have no water too. MWSS administrator Orlando Honrade said he gets only one hour’s supply of water every night in his house in Cubao, Quezon City.

Maynilad field engineers at first claimed they received orders from the top to cut water supply by half starting last January because of El Niño. Confronted with US Oceanographic Service reports that the global weather phenomenon ended in March ahead of the forecast of July, Maynilad gave last week another excuse – that the MWSS allegedly cut its supply of raw water from Angat.

"That’s a lie," MWSS deputy administrator Macra Cruz said, "the last time we cut raw water was when we had severe El Niño years ago."

Agustin Bengzon, acting regulator, confirmed a slight drop of raw water to 59 percent, from the usual 60 percent of Angat stock to Maynilad and 40 percent to MWC. But an MWSS official said the drop is negligible and cannot be used as excuse for a 50-percent supply cut to households. "Maynilad will simply have to reduce its nonrevenue water, which is at 70 percent," the official said.

Maynilad has consistently failed to reduce its NRW, or water lost to theft and leaks. MWSS says this is why Maynilad has been losing billions of pesos each year while MWC netted P180 million in 2002.

Maynilad in turn claims that it is losing because of MWSS refusal to guarantee its loans and let it raise its rates from P15.46 to P34 per cu.m. Only government loans may be given state guarantees, however. And MWSS allowed Maynilad to raise its rates to only P26 per cu.m. starting January because the firm failed to plunk in P4 billion to repair leaks and go after water thieves. Unsatisfied with the approved increase, Maynilad sent word that it was returning the concession to MWSS.

The surrender of concession is subject to arbitration by a panel nominated by both Maynilad and MWSS. The panel will determine if Maynilad is entitled or not to a refund of P19 billion in capital.

MWSS chairman Bayani Fernando reportedly wants to take over Maynilad’s zone pending the arbitration, if only to ensure undisrupted supply to seven million customers.

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