December 07, 2019 at 12:30 am
Charlie V. Manalo
"BH was like a voice in the wilderness, alone in her crusade."
Back in 2010, neophyte solon and Bagong Henerasyon Rep. Bernadette Herrera or “BH” bared in a news forum the onerous contracts entered into by former President Fidel V. Ramos with water concessionaires Maynilad and Manila Water.
Back then, BH was already crying her lungs out, pointing to anomalies in the alleged one-sided agreements with the concessionaires, which had duped Filipinos of billions of pesos.
Among them are:
(a) Misinterpretation on the treatment of the concessionaires as mere agents of the Metropolitan Waterworks and Sewerage System or MWSS, as opposed to what they truly are, public utilities. As a result, the concessionaires are able to pass on to the consumer business expenses and their own corporate income tax;
(b) Misrepresentation in the determination of the Return on Rate Base to include MWSS assets which may not be part of the system and were not properly audited and verified by Commission on Audit;
(c) Failure to adopt appropriate methods and/or practices to determine whether assets or expenses had been “prudently incurred,” as required in the Concession Agreements themselves;
(d) The so-called “innovation” of the MWSS Regulatory Office, purportedly in its interpretation of the Concession Agreement, that allowed the concessionaires to collect via the water tariff capital investment plans and programs that have not yet been implemented and/or even abandoned, where the consumers did not enjoy the benefit of its intended services, devoid of clear, legal and factual basis.
(e) Systematic, coercive and habitual acts in determining the 12% limit on investment return or profit imposed on public utilities by relying on a legally dubious idea that the Concessionaires are not public utilities but are mere “agents” of MWSS;
(f) Prematurely extending the concession periods to 2037, when their expiry would not occur for over a decade to go, and there is a clear provision in the concession agreement for a transparent transition in the event of term expiration;
(g) Contrary to the provision of the concession agreement, MWSS virtually allowed the concessionaires to engage in developmental activities outside of its main contractual obligation in the distribution and improving the level of water service in their respective concession areas, such as in the operation and maintenance of the common purpose facilities, which apparently MWSS had played a minor role. The present arrangement is a clear case of an integrated monopoly; and,
(h) Unfair provision in the concession agreement, particularly in the event of an arbitration case, that all expenses of the concessionaires associated with the case are passed on to the consumers via the water tariff while the government shoulders its own expenses.
On top of it, there is a provision in the contract, which states the government cannot intervene in the policies and decisions of the concessionaires, including proposal for rate hikes. This was the reason why Maynilad and Manila Water sought the intervention of the Permanent Court of Arbitration in Singapore, in a case where the Philippine government lost.
Unfortunately, even as BH had allied herself with the administration then, her cries just fell on deaf ears. She was like a voice in the wilderness, alone in her crusade.
According to BH, there was no way the MWSS Regulatory Office would listen to her, as they share the same office with the water concessionaires.
Adding insult to injury, the former administration extended in 2014 the contracts with Maynilad and Manila Water up to 2037, giving an additional 15 years from the originally agreed period of 1997 up to 2022.
Enter the Duterte administration.
In April this year, BH wrote to President Rodrigo Duterte, coursed through Presidential Chief Legal Counsel Salvador Panelo, asking the Chief Executive to support her House bills creating the Department of Water and the Water Regulatory Commission.
In her letter, BH suggested that the contracts of the water concessionaires be canceled.
“The President can demand for the immediate suspension of all rate rebasing and tariff increasing measures until all of the existing billed but unimplemented projects are either fully accounted, fully implemented, and/or fully refunded to the consumers. All such moneys imbued with public interest shall be placed in escrow, while those that are to be fully refunded shall be subject to interest rates as determined by the National Economic Development Authority (NEDA),” BH stated in her letter.
“The President can, by Executive Order, also cancel the suspicious premature term extension of contracts made in 2014 that extended the Concession Agreements until 2037 and make a thorough review of the Concession Agreement,” she added.
More importantly, BH stressed that the President “can demand for the creation and immediate implementation of a clear-cut MWSS policy on the Sewerage and Sanitation System, and require, as indicated in the Concession Agreements, that the concessionaires create a suitable ‘international standard’ sanitation and sewerage system, as opposed to the current situation where the concessionaires rely mainly on the unsuitable DPWH pipes.”
Early this week, BH’s crusade finally got traction. Duterte declared he would finally run after the water concessionaires, saying not only would he ignore the ruling of the PCA to compensate Manila Water and Maynilad more than P10 billion, but at the same time vowed to slap them with charges of economic plunder.
Finally, BH is no longer that lone voice. Filipinos are now rallying behind the President as he takes on companies owned by two of the most powerful oligarchs in the country.
And we owe that to BH.