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‘Water rates immoral’

Maynilad, Manila Water hit for double-charging A civil society group has asked the Supreme Court to declare as “unconstitutional and immoral” and nullify the government’s contracts with private water concessionaires, and accused the two of charging consumers twice for foreign exchange fluctuations. The Water for All Refund Movement or WARM said for the last 16 years, Manila Water Co. and Maynilad Water Services, Inc. have been charging P1 per cubic meter because of the currency rate exchange adjustment (CERA) allowed under their contracts. At the same time, however, they also passed on to consumers a quarterly foreign currency differential adjustment (FCDA) since 2002, every time the dollar rate fluctuated. The two private companies collected and kept the money from both funds without giving consumers any extra benefit, said the group’s president, Rodolfo Javellana. “The CERA fund, just like the then Oil Price Stabilization Fund was supposed to protect the concessionaires and the consumers from inflation and cushion the negative impact brought about by the foreign exchange fluctuations. The FCDA has the same purpose, so we are being made to pay twice by these two firms which keep the money to themselves,” Javellana said. “There are 2.2 million household-consumers that now pay P1 per cubic meter on top of the quarterly FCDA charges,” he said, adding that both companies have also been passing their corporate income taxes to their consumers. “They are milking the consumers dry. This is not only immoral but criminal,” Javellana told the Manila Standard. For this reason, the WARM also sought a temporary restraining order on the new round of rate increases to be imposed by Manila Water at P5.38 per cubic meter and Maynilad at P8.58 per cu.m. Under the concessionaire’s agreement, the two firms were allowed to seek an increase in water rates every five years due to the “water rate rebasing” provision. Sonny Africa, lead convenor of the Water for the People Network, said the rate increases were intended for the two firms’ “expansion projects.” Manila Water is currently charging P38 per cu.m while Maynilad charges P48 per cu.m. In its June 7 ruling, MWSS chief regulator Raoul Creencia said the next round of increase will be computed at a zero-percent income tax to be passed on to consumers. He added that the June 7 resolution supersedes all other resolutions issued by the agency. But the two companies have refused to absorb the payment of their income taxes. In separate position papers submitted to Creencia, they demanded that the MWSS withdraw its ruling because they said these controversial terms were provided for in the contract and that the MWSS had “no sole right to revoke it.” MWCI corporate strategy and development director Virgilio Rivera Jr. said that since MWSS is exempted in its charter from paying income taxes, “MWCI could make the argument that it should not be paying income taxes as well.” Maynilad president Victorico Vargas said the MWSS set the bid price at P30.19 per cubic meter and that the contract allowed them “full recovery” of their costs that included the costly rehabilitation of facilities and assumption of MWSS loans. Rivera and Vargas claimed taking out these provisions would have an adverse impact on the viability of their firms’ operations. But Africa said the two firms had tapped the FCDA and since 2002 had been imposing steep water tariffs compared to its rollbacks when peso strengthens over the dollar. “The highest increase in quarterly adjustment by Manila Water was at P2.24 per cubic meter and the rollback was at only 54 centavos in over 30 quarters,” Africa said. “Maynilad’s highest increase was at P4.07 per cu m and the rollback at 62 centavos,” he said. “When the two firms increase the cost for adjustments, it is by the pesos. But if they are compelled to do a rollback, it is in the centavos,” Africa said. The two water consumer groups vowed not to stop putting pressure on government until the concession agreements are revoked. Senator Ralph Recto on Wednesday sought a Senate inquiry into the pass-on charges to consumers, filing a resolution asking the committee on public services to investigate the “onerous provisions” in the concession contracts. He also said there was a need to review the regulatory powers of the MWSS to ensure that consumer rights and welfare are protected. Lawmakers in the House also sought a review of the concession agreements with the two private water companies. Gabriela Rep. Luz Ilagan said she was drafting a resolution seeking a review of the “onerous provisions” in the concession agreements as well as the regulatory powers of the MWSS. “It is a scandalous and immoral act on the part of the concessionaires,” Ilagan told the Manila Standard Today. “Imagine passing on to the consumers their obligation. This is the result of the privatization of basic services,” she added. “To further allow these water concessionaries to continue extorting from the already shallow pockets of our urban poor constituents with the consent of the Aquino administration is beyond unconscionable,” Ilagan added. Isabela Rep. Rodolfo Albano III and Eastern Samar Rep. Ben Evardone also underscored the need for Congress to look into the pass-on charges to consumers. With Maricel V. Cruz, Macon Ramos-Araneta, Rio N. Araja
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