Monday, November 20, 2006

Water is an election issue, too

POLICY PEEK
By Ernesto F. Herrera http://www.manilatimes.net/national/2006/nov/21/yehey/opinion/

CANDIDATES running for next year’s election should take a page off the campaign tactics of Sen. Juan Ponce Enrile, who banked on public-utility issues to make his name a byword among voters. Who can forget Enrile’s Kontra PPA (the power purchase adjustments of the Manila Electric Co.) advertisements? His advocacy against the PPA and the subsequent Supreme Court decision that ordered a refund on electric bills practically won him a seat in the Senate.

Of course, after he won, he was deluged with complaints about the high cost of electricity, which is the second highest in Asia after Japan. People expected him to do something about it as he promised; to live up to the rhetoric of his crusade.

If candidates are brave and honest enough to walk their talk then a very good public-utility issue for them would be water, or specifically, water rate increases.

Since the water distribution function of the Metropolitan Waterworks and Sewerage System was sold and turned over to Maynilad and Manila Water in 1997 under a privatization scheme that was recommended by the World Bank, people in the metropolis have had one more thing bleeding their pockets dry aside from the high cost of electricity, and that is these seemingly incessant and unconscionable water rate increases.

The promise of privatization was made clear to the public: more efficient water distribution through better infrastructure, which meant no more waterless communities, lower rates and more efficient management. The new water concessionaires were supposed to absorb the ballooning debt of the MWSS, which at the time was around $800 million. They were also supposed to undertake the massive infrastructure repair (estimated at $7.5 billion), which was imperative in order to avoid a water crisis in the metropolis.

Everything was hunky dory at first. People were ecstatic at the lower water rates and the improved service delivery. But the honeymoon was short. Now, after nine years of privatized water distribution, government has to take a long hard look if people are really better off. Water rates have increased many times over even as many communities remain waterless, and those that are not have to buy safe drinking water, because they can’t get it from their taps.

In the case of Maynilad, it has increased water rates in the West Zone by as much as 700 percent and still it lost money. Moreover, it refused to pay its concession fees (easily more than P10 billion by now) and even returned its concession to the MWSS in 2003. The debt-burdened MWSS has had to shoulder the obligations of Maynilad when it should have been the other way around.

On the other hand, Manila Water is raking it in. Based on the first quarter of 2006 alone, the water contractor’s net earnings reached P599.74 million, and its revenues stood at 1.51 billion. Nobody can fault it for making money (it is a business after all) but the company is still well short of meeting its target to supply water to 4.2 million residents.

Questions about water rates have struck a chord among consumers, and they are justified in asking about the real nature of these rate hikes. What do these acronyms on their water bills, these CERAs, FCDAs and environmental and sewer charges stand for? How are they being used? How can consumers be sure that rate increases are actually being spent in the right place, so they don’t need to buy safe drinking water from water businesses? Most importantly, when can they expect a break on their water bills?

There are more questions to be asked especially with the impending takeover of the government equity in May­nilad by a new water contractor after the scheduled MWSS rebidding in December.

For instance, if Manila Water wins, it will have a monopoly of water services in Metro Manila. What would be the broader and long-term implications of this? Would they be able to do what they’d like with water rates and services? Shouldn’t there be changes in the regulatory framework of the MWSS regulatory office with such a monopoly?

One of the NGOs playing close attention to the rebidding of Maynilad also raised questions about the qualifications of one of the bidders.

According to Kaakbay, the consortium Karunakaran Ram­chand of India is identified with a certain Cesar Quiambao, who has a dismal performance record when it comes to meeting his obligations with government.

Kaakbay noted that Quiam­bao was involved in the unfinished Skyway project. His group also bagged the computerization projects of the Land Transportation Office, the Land Registration Authority and the Department of Foreign Affairs, all of which have not been completed. He also won the bidding for the toll management of STAR highway (the Southern Tagalog Arterial Road). But while he collected fees from motorists out of STAR, not a single meter of road was added to connect STAR up to Batangas, which was stipulated in the contract.

Kaakbay is asking how such a failure can still be pre­qualified to bid for the May­nilad equity? I guess being a water contractor is so profitable that the opportunity to be one naturally attracts all kinds of characters, but it is the government’s responsibility to secure the people’s best interests by weeding out unreliable bidders, especially on such an important service as water distribution.

Going back to my point though, water is such a hot button issue that candidates better pay attention. And they better back up their rhetoric by doing something about those water rates, which continue to eat into ordinary Filipinos’ budget for food, clothes and other basic necessities.

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