No reason to raise water rates, nor continue water privatization

A few days ago, the Metropolitan Waterworks and Sewerage System (MWSS) approved the 12-percent and 17-percent rate increases respectively by Maynilad and Manila Water. The government agency approved it during the fifth rate rebasing held since the water utilities in the Greater Manila Area were privatized in the late 90s. This rebasing sets the water rate for the next five years. The MWSS approved the hikes despite unanswered questions from consumer groups. Chief of which is: what are the bases for the water rate increases this time?

The MWSS and the water companies did not give the consumers’ groups documents or explanations of the basis of raising water rates. Representatives of consumers’ groups repeatedly asked to no avail.

FILE PHOTO 2013: Marching against water privatization and excessive water rates, to the gates of main offices of Maynilad, Manila Water and MWSS (bulatlat.com)

Human rights lawyer and former Bayan Muna Rep. Neri Colmenares said that during the “consultations,” the MWSS at first refused to disclose how much was being demanded by the concessionaires. Later, the MWSS posted the “business plan” of the concessionaires in their website. But it gave no coherent explanation of why Maynilad and Manila Water were asking for rate increases. It did not give many details of their costing. Why and how they got the MWSS to agree to increase the water rates is not readily transparent to the public. Yet, the public has reasons to question the rates.

The water companies have billions of pesos in overbilled amounts accumulated over the years, the Water for the People Network said in many statements. The MWSS has been repeatedly urged to ask the concessionaires to return whatever income tax the public previously paid the concessionaires, for one thing. It has been told that unless a refund was implemented, there should be no talk of any increases.

Since the water companies were transferred to private operators, the water rates have increased by 973 percent and 583 percent, for Manila Water and Maynilad, respectively. The water companies have also profited more than the 12 percent they are supposed to reap, the consumer groups said.

So much so that in the previous rate rebasing in 2013, massive protests prompted the MWSS to suspend the water companies’ requested rate hikes. It became widely known then that Maynilad and Manila Water were indeed passing on to the consumers almost every expense, including luxuries in office, travels, future investments, the costs of their mismanagement, and their corporate income taxes.

With Maynilad, the consumers shouldered the costs of its apparent mismanagement, thus saving it from bankruptcy. From 1997 to 1998 the Asian crisis suddenly plunged the peso value against the dollar by 100 percent. As a result, the loan assumed by Maynilad when it took over the business from the government became twice as large also. But unlike Manila Water, Maynilad reportedly did not hedge its foreign currency exposure. It proceeded to recover the added costs of peso devaluation to the consumers. To survive an impending bankruptcy, to continue operating, profiting and repaying the loans at the expense of its consumers, it needed to at least double the approved water rate at the time of P4.96. But for some reason that consumer groups are asking up to now in Supreme Court filings, Maynilad had been allowed to increase rates of P10.27 per cubic meter since 2005. It was already way more than the amount required to bail out Maynilad. And yet, as accountant Marcelo Tecson and other consumers asked the Supreme Court, the increases piled on top of another even after Maynilad came out of rehabilitation in 2013.

On top of charging the consumers with their guaranteed profit levels, it became known that in past rate rebasing the water companies have also charged the consumers for projects that were not implemented and did not seem certain to be implemented. These multi-billion projects include the construction of new dams and rehabilitation of existing dams. Complaints against the MWSS decisions on water rate hikes asked why the water companies were allowed to “recover” what they did not spend. And in the first place, assuming they actually spent on it, why allow them to pass on the investment costs to consumers when privatization was supposed to have freed us of that burden?

In the rate rebasing in 2013, the water companies did not get their demanded rate increases as they usually did. Because of people’s protests, the MWSS conducted the rate rebasing with public consultation for the first time.

But, guided by the concession agreement that the consumers also want the government to revoke, saying it’s utterly onerous, the private water companies resorted to the next available means to them to get the pricing they demanded. They resorted to international arbitration. They filing their case with the International Chamber of Commerce, the largest, most representative business organization in the world. The views of the international business courses from this body, and it’s heard as such even by the United Nations, the World Trade Organization, the G20 and many other intergovernmental bodies, both international and regional.

Unfortunately for the consumers, an international arbitration court formed by such an organization is more a court for ironing out the kinks in the operations of big businesses than a court for dispensing justice. By being there, too, for the ‘poor’ businesses that found an ax to grind against the government of a country, the businesses get a venue to demand that their desired profit levels as agreed upon in onerous contracts are met. The court is usually composed of three members. In the case of the water companies, one was chosen by the MWSS, one by the water companies, and one by the International Chamber of Commerce. The consumers do not have representation here. And considering how the MWSS has granted nearly every demands of the water companies, they have never behaved as representatives of the consumers.

The arbitration court functioning outside of the country doesn’t feel the heat from the protesting locals. Through this body, the government who signed the onerous contract with the aggrieved big business can wash its hands off any decision that would further squeeze the consumers dry. And the big business gets what it wants in the end. It is win-win for all of them. The provision in the concession agreement allowing for international arbitration to settle problems in the implementation of the privatization deal – ‘problems’ such as consumers’ protests and even Supreme Court rulings in case the consumers secure an injunction — is clearly in the advantage of big businesses.

The latest rate hike approved by the MWSS for Maynilad and Manila Water is a solid, heavy punch to the consumers, as Teddy Casiño said in a gathering of SUKI early this month. But on top of that, he warned, there hangs over the consumers’ head the repercussions of an international arbitral court’s decision in favor of one of the water companies. It could mean more rate increases in the years to come.

“There is what we call tubong lugaw (literally profit as easy as cooking and selling porridge), and there is tubong tubig (profit from operating water companies), Casiño lamented.

Proofs are now staring us in the face that privatization is bad, very bad economics for the majority of the Filipino people. While the people are focused now, as if in an emergency, on the killings and the latest shocking cuss words of President Duterte and state security forces, the oligarchs he once badmouthed to court the masses are having a field day squeezing the same masses.

Since the privatization spree began under former President Fidel V. Ramos, the Filipinos have been steadily losing control of their water, electricity, telecommunications, roads and highways, railways, hospitals. Although the Filipinos have contributed in its construction, running, and upkeep, the Filipinos do not enjoy a share in the profits even in the form of improved and affordable services. On the contrary, every disaster and every needed expansion and improvement of the people’s original investments are being charged to the public, with interest, plus the 12-percent assured profit of the private concessionaires.

More of this privatization is happening under President Duterte. Nowadays the provincial water utilities are being privatized. The president of the Alliance for Consumer Protection says the utilities being transferred to private corporations are not even mismanaged or decrepit as was the usual excuse in previous privatization.

Following the privatization under Ramos, various administrations continued it, adding to BOT (Build-Operate-Transfer) their new names for privatization such as PPP (public-private partnership) and now, BBB (Build Build Build). In all, the Filipinos are made to shell out a huge amount of money to build a profit-generating vital installation that a private corporation operates for their own profits. Although the Filipinos pay and continue to pay in upkeep – like in the MRT – we are being made to pay increasing fares and not necessarily improving services.

As an advocate of fair electricity billing said in the same consumers’ gathering where Casiño discussed tubong tubig, “Privatization has created an intense way of squeezing the people.” He spoke of his group’s experience with the Energy Regulatory Commission (ERC). They observed how the said government body has routinely failed to regulate the prices of electricity. “Our public officials are insensitive, thick in the face, and for that, the Filipinos are paying the price.”

All these sharing of updates on what’s happening now to previously publicly-owned utilities, and to some that are currently in the process of privatization, prompted calls for more united actions. As for the impending water rate hike, the government regulators are duty-bound to justify it first to the public. They can begin the process by sharing the documents and the basis they used to approve the hike. And then they can help address the calls to junk the concession agreement, or privatization deals, once and for all. ()

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