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Drowning
in A Cycle of Water Rate Hikes
Come
January 2003, customers of the Manila Water Company, Inc. and the Maynilad Water
Systems, Inc. will be putting up with another round of water rate increase. As
it is, Filipino consumers could already barely keep themselves afloat in the sea
of price increases, including of basic commodities and utilities such as
electricity.
By
Alexander Martin Remollino
Bulatlat.Com
The
impending water rate increase is part of a series of water rate hikes that began
in January 2001. At the time, the Metropolitan Waterworks and Sewerage System (MWSS)
granted increases of P0.19 and P0.45 per cubic meter (cu. m.) for Manila Water
and Maynilad, respectively. This was followed by the approval of a P0.08 per cu.
m. for Manila Water.
The
main reason being given by water companies for the hikes is the need for funds
to resolve the impending “water crisis.”
Manila
Water reasons it needs to expand its services and make up for additional
expenses due to unexpected events such as the El Niño and fall of the peso.
Maynilad
argued in 2001 that rate hikes are imperative because of additional expenses
incurred from “cross-bordering flows” caused by the unfinished Umiray-Angat
project, which had been delayed by one year.
Both
companies believe that the average of P7.50 water rate increase per household in
the monthly bill is not exorbitant.
Although
Filipinos consume 310 to 507 mcm. of water everyday, not everyone has access to
water.
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Water
Statistics say…
The
Philippines has 59 natural lakes and 421 river basins, which have
drainages of 40 to 25,649 square kilometers (sq. km.). Of these, 18
river basins have drainages of 1,400 sq. km.
The
Philippines receives an annual rainfall of 2,400 millimeters (mm.). From
this, a mean surface run-off (based on 90% at a time) of 257,000 million
cubic meters (mcm.) is generated. The groundwater from this has an area
of 50,000 sq. km. and reaches up to 251,000 mcm.
In total, the Philippines receives 508,000 mcm. daily.
Everyday,
we are able to take 833 mcm. from our surface run-off and 142 mcm. from
the groundwater. These are in the dams and other water reservoirs that
may be from rivers or lakes (in this case, the surface run-off) or
extracted from groundwater. |
The
government classifies water service levels into three based on source
development, distribution system, and management arrangements.
Level
I (point source) is a protected well or a developed spring that has an outlet
but has no distribution system. Such a service is usually managed by
community-based organizations that are also tasked with operating and
maintaining it.
Level
II (communal faucet system or stand post) is a system made up of a source, a
reservoir, a piped distribution network, and communal faucets. This system is
common in the countryside.
Level
III (waterworks system or individual household connections) is a system that has
all the components of Level II except the communal faucets; instead, it features
household faucets. This is common in urban areas such as Metro Manila, Baguio,
Cebu, and Davao.
According
to the Department of Health (DoH), only 77% of all households have access to
Level III service. Nearly a third of all households, therefore, have to resort
to self-provisioning and buying from vendors--which raises the cost of water for
the urban poor.
Agham,
an organization of scientists, pegs the number of people with access to potable
water at 48 million, or 63 % of the population. This is based on data released
by the United Nations (UN) and the Presidential Task Force on Water Management (PTFWM).
In Metro Manila, only 60% of the population has access to potable water.
Studies
by the UN and the PTFWM further point out that if all the surface water could be
tapped, it would be sufficient “to meet all the water requirements of the
Philippines beyond 2000.”
The
Manila Water and the Maynilad entered the water distribution industry in 1997
when MWSS was privatized, signing a 25-year contract.
Manila
Water is owned by the Ayala Corporation (35.25% direct share and 7.05 indirect
share through Manila Water holdings), the oldest business conglomerate in the
Philippines, which also has interests in real estate, banking, electronics and
information technology and telecommunications; United Utilities BV (18.8%), a
subsidiary of United Utilities PLC, an international provider of electricity,
energy, sewer and water services; International Water S.a.r.l. (9.45 direct
shares and 4.7% indirect shares through Manila Water holdings), a joint
investment vehicle of the Bechtel (American) and Edison S.p.A. (Italian); BPI
Capital Corporation (9.4%), a wholly owned subsidiary of the Bank of the
Philippine Islands (BPI); and Mitsubishi Corporation (9.4%), a trading company
and investor in more than 600 companies dealing in chemicals, general
merchandise, foods, fuels, information systems, machinery, metals, and textiles;
its employees comprise 6% of its ownership.
The
company’s concession area includes the eastern portion of Metro Manila: Pasig
City, Pateros, San Juan, Taguig, Mandaluyong City, a small part of Old Manila,
most of Makati City, Marikina and Quezon Cities, and all municipalities of Rizal.
Benpres
Holdings Corporation and Lyonnaise de Eaux own Maynilad.
Its
concession area includes all of Manila except San Andres and Santa Ana, Pasay
City, Parañaque, Kalookan, Muntinlupa, Las Piñas, and Valenzuela Cities,
Navotas, Malabon and parts of Makati and Quezon Cities. It also distributes
water in Cavite City and the towns of Imus, Bacoor, Kawit, Noveleta, and
Rosario.
Since
1997, both Maynilad and Manila Water have suffered foreign exchange (forex)
losses from their foreign loans, their owners say. They continue to suffer such
losses and are expected to continually lose until the end of their contract with
the MWSS.
In
October 2001, government allowed the concession contracts of Maynilad and Manila
Water to be amended, enabling the water companies to compensate for their forex
losses through provisions on recovery mechanisms.
There
are three recovery mechanisms: the accelerated extraordinary price adjustment (AEPA),
the special transitory mechanism (STM), and the foreign currency differential
adjustment (FCDA).
The
collection of the AEPA began in 2001 at the rate of P1 per cu. m. for the Manila
Water and P1 per cu. m. for the Maynilad. This was included in the basic charge.
With the AEPA, the Manila Water expects to collect P325.9 million, while the
Maynilad expects to collect P2,632,940,000.
Collection
for STM on the other hand began in July this year. It was added to the water
bills as a new billing account. The petition of the water companies was P1.27
per cu. m. for the Manila Water and P6.66 cu. m. for the Maynilad.
FCDA
collection also started this year, computed at 49.6% of the basic water charge
for Manila Water and 35.73 % for Maynilad.
The
power purchase adjustment (PPA) is a recovery mechanism by which the National
Power Corporation passes the burden of its foreign loans onto the power
consumers, making them pay more than the amount equivalent to their actual
consumption. The Bagong Alyansang Makabayan (New Patriotic Alliance) could not
have been more correct when it called the AEPA, the STM, and the FCDA “PPAs
for Water.”
Aside
from these, the customers have to put up with a currency exchange rate
adjustment (CERA) of P1 cu. m. per cubic meter, which is collectible over the
duration of the concessions; an environmental charge which comprises 10% of the
basic charge, the CERA, and the FCDA; a maintenance charge of P1.50, a sewerage
charge of 50% of the water charge for all customers connected to their sewer
lines; a value-added tax (VAT) of 10%; and penalty charges of 3% for all charges
not paid on due date, except the VAT.
With
the privatization of the MWSS came the promise of better water services for
less. It is clear now that privatization has not been able to live up to its
grand promise to the water consumers of Metro Manila and its neighboring
provinces.
Scientists
say that the human being can live for weeks without food but only for days
without water. Water, therefore, is essential to life, and access to it is a
basic right.
But
as time passes, the Filipinos’ access to water, already severely limited, is
continually being limited by rising water rates. Privatization only allowed big
business to make profits out of a vital human need. Bulatlat.com
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