Bu-lat-lat (boo-lat-lat) verb: to search, probe, investigate, inquire; to unearth facts Volume 3, Number 9 March 30 - April 5, 2003 Quezon City, Philippines |
A
Failed World Bank-Funded Privatization Project By
Arnold Padilla While
Metro Manila residents are burdened with unabated increases in water charges
since the Metropolitan Waterworks and Sewage System (MWSS) was privatized in
1997, the people of Magdalena, Laguna, face not only onerous water tariffs.
Worse, the water that the municipal government forces them to pay for is unfit
for human consumption. Magdalena
is one of the municipalities that availed of a World Bank loan under the Local
Government Unit Urban Water Supply and Sanitation Project (LUWSSP). It is
located in the western part of the province of Laguna and is approximately 105
kilometers away from Metro Manila and six kilometers from Sta. Cruz, the
provincial capital. Old
Water Supply Magdalena
used to source its water requirements from the nearby municipality of Liliw. On
July 27, 1953, the municipal governments of Liliw and Magdalena forged an
agreement allowing the residents of Magdalena to use water from the Sungi Spring
in Barangay Oples in Liliw. The said contract was supposed to end in 2003 (or
after 50 years) but can be renewed upon agreement. Other
barangays not serviced by the Sungi Spring such as Cigaras, Saladsad, Maravilla,
and Buenavista have their own water supply system with deep well as their
source. Others obtain water from rivers, streams, and irrigation canals for
domestic and laundry purposes. According
to the feasibility study prepared by the Engineering and Development Corporation
of the Philippines (EDCOP) for the Magdalena water system project, the old water
supply system (supplied by Sungi Spring) in Magdalena was unsatisfactory due to
the deterioration of the water supply facilities constructed in 1926. It
also cited inadequate water supply and very low water pressure. The municipal
government used to ration water to supply a large portion of the service area
(as of 1997, total service connections of the old water system was pegged at
1,097). The
said feasibility study projected Magdalena’s population to grow to 26,447 by
2010, or a 66% increase from its actual level (15,927) in 1995. Consequently,
total water consumption was expected to grow from 778 cubic meters per day in
1998 to 1,546 in 2010. Apparently,
the old water system could no longer meet the increasing demand for water of the
growing municipal population. Thus, the need to establish a new water system
that was supposedly more efficient. The
World Bank’s Role In
1998, the municipal government of Magdalena, through Mayor Pablo Agapay and
Municipal Treasurer Antonio Cabantog applied for a World Bank loan under the
LUWSSP to finance the water system project. The Development Bank of the
Philippines (DBP) Board in March 1999 approved the loan application worth P24.22
million. The
LUWSSP, funded by the so-called adaptable program loans (APL) of the World Bank,
is a 12-year (1998-2010), $283-million water privatization program that intends
to attract private capital in around 1,000 LGUs that manage water systems
outside Metro Manila. The project is divided into four phases. In
November 1998, APL 1 (worth $23 million) was released. Originally, APL 1
envisioned completing operations in 35 towns, where bidding was completed for
the engagement of 23 private operators under lease and design-build-lease
contracts. But water services were extended to only nine municipalities at an
investment cost of $28 million. Aside
from Magdalena, some of the areas covered by the first phase of the LUWSSP are
Aurora, Cabatuan, Luna, Maliig, Quezon, and San Mateo in Aurora; Ta-buk in
Kalinga Apayao; Batarasa, Magsaysay, and Cuyo in Palawan; and Padre Burgos and
Buenavista in Quezon. In Mindanao, the covered areas include Cabanglasan,
Lantapan, Kalilangan, and Manolo Fortich in Bukidnon; Talisayan and Initao in
Misamis Oriental; and Iligan City in Lanao del Norte. APL
2 (worth $30 million) was scheduled to be released in September 2001 to scale up
the project to an additional 40 cities and municipalities. Some of the areas
covered by phase 2 are Bayombong, Solano, Sta. Fe, and Villaverde in Nueva
Vizcaya; Bansud and San Teodoro in Mindoro; Alicia in Bohol; Calduba, Lopez
Jaena, Orquieta City, Panaon, and Sinacaban in Misamis Occidental. APL
3 (worth $133 million, with the World Bank accounting for $100 million and other
sources, $33.00 million), meanwhile, is scheduled for 2004. It is intended to
change the role of government finance institutions and the Land Bank of the
Philippines (LBP) from retailers to wholesalers of loans, including private
sector banks to invest in LGU-based water supply and sewerage systems. Finally,
APL 4 (worth $230 million, with the World Bank accounting for $130 million and
other sources, $100 million) is programmed for 2006. The last tranche is meant
to finance water supply and sanitation services in about 130 water utilities
nationwide, with World Bank financing used by the DBP and the LBP to influence
private sector financing in the water sector. The
Magdalena Water Project After
bidding the project, Mayor Agapay entered into a contract with RODMAN
Construction and Development Corporation, which offered the lowest bid at P18.92
million, in August 1999. Construction started in September of the same year. The
project includes digging three deep wells and the construction of pumping
stations (the Pronove Pumping Station, the Agapay Pumping Stations, and the
Booster Pump Station). It also involves the construction of an elevated
reservoir (an elevated water storage tank built inside the Poblacion
children’s mini-park), the rehabilitation of existing pipeline and reservoir
(the Cistem Tank in Burlongan), the construction of 15.62 kilometers of
distribution pipelines, and the provision of disinfection facilities for wells. The
new waterworks system is expected to achieve 24-hour a day availability of water
supply; the installation of 1,950 service connections by the civil works
contractor, with service to 1,712 consumers. Furthermore, the system is also
expected to achieve non-revenue water of 20%; employee per connection ratio of
1:130; collection efficiency of 97%; and 100% service coverage by 2004. While
the ownership of the system will belong to the Municipal Government of
Magdalena, Bayan Water Services Inc., a joint venture between Benpres Holdings
and the Montgomery-Watson New Zealand Ltd., will handle its operation and
maintenance. Such operation and maintenance, as agreed upon by Bayan Water and
the municipal government of Magdalena in a 15-year, P70-million Lease Agreement
signed on August 4, 1999. Unfit
for Drinking Under
the contract with RODMAN, the new water system was agreed to be operational by
September 2000. However, it was only on June 18, 2001 that a Certificate of
Project Completion (CPC )was issued by the municipal government of Magdalena in
favor of RODMAN. The said certificate was issued without the knowledge of the
municipal council. Even
prior to issuance of the CPC, municipal council members have been questioning
Mayor Agapay over the issue of potability of the water coming from the
project’s wells. In a number of tests conducted by the Department of Science
and Technology (DOST) and the Department of Health (DOH) Regional Office in
Southern Tagalog, the water in Magdalena has consistently failed to pass the
quality standards for potability. In
a special session of the municipal council on October 16, 2001, Ms. Elenita P.
Bagsit, a chemist and DOST representative argued that the water coming from the
new water system exceeds the maximum permissible limit allowed by the Philippine
National Standards for Drinking Water (PNSDW). The said chemist maintained that
because of the water’s high level of total dissolved solid, total hardness,
and turbidity, she would not recommend it for drinking. Furthermore,
the local Center for Health Development (CHD) of the DOH found, in a separate
test in December 2001, that the water coming from the Magdalena water system was
“not fit for drinking”. It recommended that “drinking of water is
prohibited unless it passes the criteria on standard parameters set by the PNSDW
and after issuance of the certificate of potability.” The said office
reiterated such position in June 2002. But
as early as March 4, 2002, Mayor Agapay declared that the water coming from the
Magdalena water system was already “100% potable”. The announcement was made
even without a certificate of potability of the new water system that should
have been issued by the Rural Health Unit of the municipal government in
Magdalena. To date, Magdalena residents refuse to use the water from new water
system for drinking and even cooking purposes because of the dangers it poses. Interestingly,
even the World Bank is trumpeting the supposed “success” of the Magdalena
water project. In an article published in September 2002 in its newsletter In
Touch, the WB claimed that “clean, safe water” is now available 24 hours
a day for Magdalena folks. According
to some residents, many people in their community have already experienced
illnesses due to the poor quality of water coming from the new system. Even the
daughter of the vice-mayor of Magdalena was reportedly hospitalized for drinking
the contaminated water. Children are more vulnerable to the dangers that such
water poses on the health of Magdalena people because they are not particular or
careful with where they get the water they drink. Onerous
Rates Worse,
Magdalena residents are forced to pay for the water coming from the new system
even if it is unfit for drinking. In July 2001, the municipal government ordered
the residents to pay P20.54 per cubic meter of the water consumed from the new
system to cover for the costs of electricity used by the water pumps. The
order was only effective for two weeks (July 16-30) since the objective was just
to recover electricity costs and many residents were still using the water
coming from the old system. In fact, as early as July 2001, the residents have
already made a request that the old system be maintained until such time that
the water coming from the new system has met the necessary quality requirements.
But
on September 10, 2001, the municipal government again issued an order requiring
the people to pay for the water consumed coming from the new system until the
facilities are turned over to Bayan Water Services Inc. On September 17,
Magdalena residents staged a protest rally in front of the municipal hall
demanding that the tariffs be lowered and the old water system be maintained.
The response of Mayor Agapay was to cut-off the water supply coming from Liliw,
as requested by Bayan Water. The
people of Magdalena are now paying 156% more for water services in their
community. Before, under the old water system, the residents were only charged
P8 per cubic meter of water consumed. And because the water is unfit for
drinking, residents are also forced to spend extra money for drinking (bottled
or distilled) water. In some cases, residents also buy water for cooking and
cleaning purposes from vendors. A
case in point is the situation of Mr. Nestor Sy and his family. Sy, who has two
sons, is the secretary of the Magdalena municipal council. In January 2003, his
household consumed 15 cubic meters of water from the new system and was billed
P308.10. Under the old system, he should have been charged P120 only for the
same amount of water consumed. But
his water expenses do not end there. His family also buys distilled water and
spends P48 per gallon, which only lasts for two days. They also buy water from
vendors, which they use for cleaning and cooking. Such water costs P6.00 per
gallon and Nestor’s family consume four gallons per day. Overall, they spent
around P1,748.10 for water consumption in January. Legal
Actions These
issues prompted two members of the municipal council, Mr. Maximo Sotomayor and
Mr. Arnel Sune, to file a complaint against Mayor Agapay before the Office of
the Ombudsman. The councilors argue that Mayor Agapay entered into an agreement
that is disadvantageous to the people of Magdalena. They also question the
failure of the water project to provide clean and safe drinking water as well as
the onerous rates charged to consumers. Aggravating
the problems of the municipal government is Bayan Water’s decision to back out
of the project. In February 2002, the said water company resolved to terminate
their lease agreement with Magdalena because of the local government’s failure
to complete the construction of the facilities and turn them over to Bayan Water
before the System Start-Up Date (not later than August 4, 2001). Bayan
Water Services Inc. also cited the decision of Magdalena’s vice-mayor to
reopen the old water system in October 2001, which was contrary to the lease
agreement. The decision of the vice-mayor came amid intense pressure from the
people of Magdalena and some local officials due to the unacceptable condition
of the new water system. But in February 2002, the old system was permanently
cut-off except in three barangays. On
April 24, 2002, Mayor Agapay and representatives from the World Bank, DBP, and
DILG agreed to dissolve the contract with Bayan Water Services Inc. They also
permitted the Municipal Government of Magdalena to rebid the project as soon as
possible. As of this writing, no private firm has taken over the operation of
the Magdalena water system. Meanwhile, the people continue to shoulder the
burden of repaying World Bank loan. The
legal issues confronting Mayor Agapay continued to pile up. On June 17, 2002,
RODMAN Construction, the private contractor, filed before the Construction
Industry Arbitration Commission of the Department of Trade and Industry (DTI) a
complaint claiming that the municipal government of Magdalena still owes the
construction company some P3.69 million, which the said LGU refuses to pay. Amid all this, the people of Magdalena continue to shoulder the burden of repaying a loan that did not benefit them at all. IBON Features/Reposted by Bulatlat.com We want to know what you think of this article.
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