‘All-in tariff’ to jack up rate hikes, firms’ profits
Seven leftwing lawmakers from the Makabayan bloc on Friday sought a congressional review of the contracts of two private water concessionaires after they discovered that add-on charges would jack up the rate increases sought by the two companies.
In particular, the lawmakers said, the add-on charges would raise the increase sought by Maynilad Water Systems from P8.58 to P11.41 per cubic meter, and Manila Water Co. from P5.83 to P7.81.
On top of the income tax and operating costs already passed on to consumers, the “all-in tariff” would compel some 14.2 million consumers in Metro Manila, Rizal and parts of Cavite to pay P59.41 per cubic meter for water coming from Maynilad, up from P48, and P45.81 for Manila Water, up from P38.
In their resolution, the lawmakers directed the House committee on government enterprises and privatization to conduct a comprehensive review of the Metropolitan Waterworks and Sewerage System’s (MWSS) deals with the two water concessionaires.
Pending the completion of the review, Reps. Fernando Hicap of Anakpawis, Neri Javier Colmenares of Bayan Muna, Luzviminda Ilagan and Emmi de Jesus of Gabriela, Antonio Tinio of ACT Teachers and James Mark Terry Ridon of Kabataan said the new rates should not be imposed.
The increases being sought by the two companies would also hike other tariffs that are computed based on the basic charge, including the foreign currency differential adjustment
(FCDA), an environmental charge and the value added tax.
The Makabayan bloc said the higher rates would bring huge profits to Maynilad and Manila Water at the expense of their customers, who have no choice.
“Ordinary citizens, particularly the poor, are the ones who will be affected by these high water rates and impending increases. The government must exercise its decisive political power to protect the interests of the consumers for safe, affordable and efficient water services,” the lawmakers said in their resolution.
The lawmakers said they sought a congressional probe after MWSS ignored Hicap’s “urgent appeal” to stop the impending rate hikes and the “onerous” pass-on charges.
Citing official documents from the papers submitted by the two concessionaires to MWSS, the lawmakers said Maynilad is seeking to raise the average water tariff by 22 percent or from P28.89 to P34.12 per cubic meter.
Manila Water wants an increase from P33.97 to P44.27 per cubic meter.
This is equivalent to an increase in the basic charge of P5.83 per cubic meter and P10.30 per cubic meter, respectively, they said.
But the all-in tariff is expected to jack up the increases to P11.41 per cubic meter for Maynilad and P7.81 per cubic meter for Manila Water, the research outfit Ibon Foundation and the consumer group Water for the People Network (WPN).
“Translated into monthly consumption levels, households face an increase in their water bill of P78.10 to P342.30,” said Sonny Africa, lead convenor of WPN.
“For an ordinary household consuming 30 cubic meters per month, water rates could increase by as much as P411 for Maynilad and P234.30 for Manila Water consumers,” the lawmakers said.
The MWSS had said the impending water rate hike was expected to take effect July 1, 2013 once the rate rebasing process was completed.
“The all-in tariff of Maynilad has increased by P39 per cubic meter or 547 percent, while that of Manila Water has increased by P34 per cubic meter or P850 percent. Increases were made despite bad service and failure of private water concessionaires to achieve universal service coverage,” the Makabayan bloc said.
The lawmakers noted that the water firms have conveniently used their 25-year concession agreements for their water rate hikes.
“Adjustment in basic tariffs every five years through rate rebasing is to recover historical capital, operating and investment expenditures and review of operating and investment plans. The rate rebasing process will be done throughout the lifespan of the concession agreement,” it said.
Other questionable charges, which have been unjustly double-charged and collected from consumers were the foreign exchanged tariffs, the lawmakers added.
Aside from the Currency Exchange Rate Adjustment (CERA) fixed at P1 per cubic meter, water firms are also collecting FCDA. Both tariffs are meant to allow the firms to compensate for foreign exchange fluctuations.
The Makabayan bloc also cited observations of the Bagong Alyansyang Makabayan (Bayan) and WPN that recent public consultations initiated by the MWSS on water rate hikes were “not transparent” and that water firms failed to present their grounds for their return on their rate rebasing plans and deliberately skirted legitimate inquiries from consumer groups related to the transparency of their collections and profits.
The bloc dismissed the minimal decrease in water bill starting July 2013 announced by Manila Water and Maynilad as an attempt to mislead the public and preempt public reaction that will surely result from the huge increases sought by the water firms due to rate rebasing.
The Makabayan bloc also highlighted the reminder of Catarina de Albuquerque, UN special rapporteur on the human right to safe drinking water and sanitation: “Government regulation must be biased for ensuring the right to water of the people. The state is obliged to progressively realize the right to water and sanitation. In the context of non-state service provision, this requires ensuring meaningful participation and access to information in the decision to delegate services to non-state actors… The state must put in place a regulatory framework to ensure compliance with human rights standards, as well as complementary social policies, for instance to ensure the affordability of services, where needed.”With Maricel V. Cruz