"To say that the water supply situation today has vastly improved–clean water available 24/7–is to indulge in understatement."
"To say that the water supply situation today has vastly improved–clean water available 24/7–is to indulge in understatement."
Everything but the proverbial kitchen sink is currently being thrown at Manila Water Co. and Maynilad Corporation over the 25-year concession agreements that they entered into with the state-owned MWSS (Manila Waterworks and Sewerage System) in 1995. Not even in their wildest dreams can the officials of Manila Water and Maynilad have imagined the things to which they and their companies are being subjected these days.
It is being said that the concession agreements are violative of the nation’s sovereignty on account of certain provisions that are onerous to the government of the Philippines, including a provision that prohibits interference by the government in the rate-setting process. In addition—and most serious of all—the officials of Manila Water and Maynilad are being threatened with prosecution for economic sabotage and plunder.
Availing themselves of the resort-to-arbitration provision of the concession agreements, the two concessionaires filed cases with the Permanent Court of Arbitration of Singapore when the government disallowed rate increases sought by them. To the government’s surprise and chagrin, the court ruled in favor of Manila Water and Maynilad, awarding them damages amounting to billions of pesos. The government has refused to pay the awarded damages. Believing in the wisdom of forbearing now in order to fight another day, the concessionaires have informed the government that they are waiving their right to collect damages that they won.
Does the government have a valid and strong case against Manila Water Co. and Maynilad Corporation? Were the two companies legally correct in invoking the no-interference-in-ratemaking provision of their concession agreements and taking their case to the Singapore tribunal?
Since these questions are being debated with great intensity by the lawyers of the government—more specifically, the Department of Justice, OSG (Office of the Solicitor General) and MWSS—and of the two companies, I will refrain from trying to provide answers. What I would rather do—and what is probably more useful for an interested observer like me—is bring back to the pre-1995 era the memories of Filipinos who then were already capable of discernment. Often is it said that most Filipinos have short memories.
The memories of the people of this country—and especially the memories of the residents of Metro Manila and some adjoining parts of Rizal and Cavite—need to be jogged with regard to two things in particular. The first is the water supply situation in those areas up to 1995; the second is the record of pre-1995 adjustments in the price of MWSS-supplied water.
Up to 1995, MWSS was one of the worst-performing and most reviled of government institutions. The performance of MWSS (previously the NAWASA) as a supplier of water and manager of water resources was abominable, with the water supply of Metro Manila, Rizal and Cavite residents unstable and often contaminated. Most of the water pipes installed during the pre-Independence era remained unreplaced—with dire consequences in terms of leakage—and an estimated 30-40 percent of MWSS revenue was non-revenue water, i.e., water flowing into illegally connected pipes. Little wonder that MWSS was one of the top public-sector recipients of government subsidies. To say that the water supply situation today in Metro Manila, Rizal and Cavite has vastly improved—clean water available 24/7—is to indulge in understatement.
Water rate adjustments? Anyone who is inclined to do research on MWSS’ history will put together a chronicle of the extreme difficulties that every MWSS rate-increase proposal was approved by Congress. The legislators, heeding the claim of consumer advocates that a reliable water supply was a Constitutionally guaranteed basic right. In almost every instance the sought-after rate increase was either voted down or, if approved, was substantially reduced. Is it any wonder that Manila Water and Maynilad, knowing fully well that they would have to spend much in improving MWSS’ physical infrastructure, sought the inclusion of a no-interference provision in the concession agreements?
Two final points, which likewise partake of memory-jogging. First, the concession agreements were negotiated—repeat, negotiated by two groups of bright people acting freely, without guns pointed at their heads. And, second, MWSS was hardly the most attractive investment possibility open to the investors of that day. Is national sovereignty necessarily involved when a government is trying to unload a notoriously inefficient, subsidy-guzzling government enterprise? Weren’t deal sweeteners all that were involved in the cases discussed here?
