Some leaky story

The privatization of the Metropolitan Waterworks Sewerage System (MWSS) in 1997 was hailed as one of the “success stories” of the first public-private partnership (PPP). It featured in the best lights the good governance in the Philippines when this was carried out during the administration of former President Fidel Ramos.

Through Republic Act No. 8041, or the Water Crisis Act of 1995, this law authorized the transfer of financial burden of the MWSS to the private concessionaires with the aim of improving service standards, increasing operational efficiency, and minimizing tariff impact.

The Philippine government hired the World Bank affiliate, International Finance Corp. (IFC), as lead transaction advisor for the privatization of MWSS. The IFC helped design, manage, and implement a competitive and transparent bidding process for two parallel 25-year concessions. The IFC also helped the government establish a Regulatory Office within MWSS to monitor and enforce the terms and conditions of the concession.

Following IFC’s detailed review of the technical, financial, economic, and political considerations, the government a year later entered into a concession agreement with two private groups. It divided the operation of Metro Manila’s water and sewerage system into two concession areas, east and west zones starting in 1997.

The concession of the east zone was awarded to the Ayala-owned Manila Water Co. The west zone was originally awarded to the Lopez-owned Benpress’ Maynilad Water Services. Lopez subsequently sold its concession right to Metro Pacific-DMCI joint venture.

From that time on, we consumers have benefited a lot from the much-improved quality and supply of water in our house taps that we now enjoy 24/7. Sixteen years later, however, the MWSS obviously has not kept up with developments. In fact, the MWSS has even come in to the picture too late when both Manila Water and Maynilad were under fire already for things that are clearly provided for in their concession agreement with the government.

Angered by alleged “illegal” charges passed on to our monthly water bills, we consumers await the decisive move the MWSS would take on these alleged questionable collections. With obvious rabble-rousing, it seemed to have artificially created demands to bring down water rates and punish the two water concessionaires for allegedly burdening them with unnecessary additional charges.

Many are puzzled as to why the MWSS “acting” chief regulator Emmanuel Caparas has spoken on the issues hounding the concession agreement only a couple of weeks ago. What took MWSS so long to discover and disclose to the public their position on the recovery of corporate income taxes enjoyed by Manila Water and Maynilad and other issues like alleged unimplemented projects?

This is rather disconcerting when all the while the Water for All Refund Movement (WARM) has been raising this issue since last year. Then left-leaning groups Ibon Foundation and Bayan added noise to the rabble-rousing. This triggered what appears now as a major public outcry against the concession agreement between MWSS and the two concessionaires.

Where will the MWSS bring this controversy and how will it act on the clamor for the reduction of water rates and if it is time or ready to renegotiate the concession agreement? This should interest President Aquino who has his own PPPs in the making.

Thus, last week we saw full-page ads one after the other of the Manila Water and Maynilad re-stating, among other things, they were abiding by the terms and conditions of the concession agreement with the government.

Are there unseen hands for the government to fall in a trap to change the rules in the middle of the game? Is public interest served by left-leaning groups decrying alleged questionable transactions to force the renegotiation of the concession agreements?

The public appreciates that MWSS tries to project it has acted on the public’s concern over questionable charges being passed on to our water bills. In sum, Caparas has made enough public statements to raise hopes that the MWSS will eventually rule a reduction in water rates. And maybe, even order the concessionaires to refund. But why only now?

The MWSS cannot say that it did not know what WARM knew more than a year ago. After all, the data and statistics being shown to media by WARM seemed to be so reliable and accurate. The information can only come from the very data bank of the MWSS itself.

It must also be noted the new leadership of the MWSS has been in place for three years now. It will be lamentable to think that it took them that long to find out that the concession agreement is “unjust and unfair,” as Caparas puts it.

Caparas has been in position to spot the aspects of the concession agreement he is now berating publicly. It will be recalled that before he was named acting chief regulator, Caparas served as a member of the MWSS board of trustees and its consultant.

Speaking of consultants, MWSS president Gerry Esquivel admitted last March that he did hire some 24 well-paid consultants for the agency. He repeated this admission in a radio interview recently. We are not faulting him for bringing in the brain resources into the MWSS to help him do well his job. But the question is, didn’t the well-paid consultants discover these questioned provisions early on?
Incidentally, Esquivel is facing graft complaint at the Ombudsman in connection to his alleged involvement in the agency’s alleged irregular disbursement of P14.9 million in government funds to pay for the services of consultants and job order personnel.

We hope Caparas and Esquivel will get their act together and come up with a common stand on the corporate income tax recovery issue. Caparas labeled this arrangement unjust, unfair and later on, illegal. Esquivel, on the other hand, deemed it is “legal” and merely expressed the hope the MWSS can find a way to stop this practice.

The consolation to the public is that both Esquivel and Caparas have now positioned themselves against the interests of the two concessionaires. In so doing, they have allied themselves with the public. Never mind that the MWSS is coming in like too late the hero.

With the MWSS and the militant groups forming a solid phalanx to stand up against the concessionaires, the people’s hopes are high the chief regulator will thumb down water rate hike petitions of Manila Water and Maynilad.

Pardon the pun but this is one leaky story. It just holds no water.