Hydropolitics and good governance

They might seem like disparate matters, yet the recent audit report on Kaliwa Dam and the water crisis that has been afflicting Metro Manila are facets of the same issue: hydropolitics.

From recent news reports, the Commission on Audit has raised questions on the bidding process for the China-funded Kaliwa Dam project, which is seen as the long-term infrastructure solution to ease water woes in the capital, whose residents have been experiencing the worst supply crisis in nearly a decade since March.

Hydropolitics straddles both issues, and demands adroit action from the government. Water supply is literally a matter of life and death for the citizenry; there must be sustainable and robust long-term solutions to manage the delivery of quality water services amid fast-growing demand.

The Kaliwa Dam project demands nothing but total transparency to ensure that the interests of the Filipino people prevail. The urgency of the project must be balanced with public interest, and the entire process should be able to withstand public scrutiny.

In the case of the metro water crisis, which has seen households having to endure daily interruptions owing to the shortage of bulk water from the La Mesa and Angat dams, the onus is again on the government to mobilize and engage different sectors in society, including the private sector, for solutions.

Despite criticisms against privatization, engaging the private sector in the provision of quality public services offers three basic advantages: better generation and utilization of resources, diminution of political interference and bureaucracy, and economic democracy.

The privatization and subsequent reorganization in 1997 of the Metropolitan Waterworks and Sewerage System (MWSS) yielded gains that only became possible with the government partnering with conglomerates Maynilad and Manila Water, as well as other private entities. By way of example, 98 percent of West Zone residents — those who live in Caloocan, Malabon, Navotas, Las Piñas, Muntinlupa, Parañaque, Pasay, Valenzuela, most of Manila and portions of Quezon City and Makati — now have 24/7 supply at the ideal water pressure, where before only a third of residents enjoyed such.

The same is true for 99 percent of East Zone residents, those living in most areas of Quezon City, Marikina, Pasig, Pateros, Taguig, San Juan and some areas of Manila and Rizal—a clear improvement from only 26 percent back in 1997.

The privatization of MWSS has been a successful case of public-private partnership (PPP) and of good governance, but challenges to such a scheme remain to be addressed. Raul Fabella raised the problem succinctly in his 2018 book “Capitalism and Inclusion Under Weak Institutions”: “How does a government with a reputation for nondelivery and wastage improve its prospects as a partner in development moving forward?”

A number of examples illustrate where the bottlenecks lie, such as the urgent call to address the pollution leaking into the tributaries of Manila Bay. The building of sewage treatment plants (STP), seen to be integral in cleaning up Manila Bay, is a complex deliverable that can only be done in carefully planned phases because of physical constraints on the ground. As should be obvious to regulators and planners, the simultaneous construction of STPs will cause heavy inconvenience to the public, with road excavations all over, causing a metrowide standstill. And more time is needed for sewer lines, as these require deeper excavations.

On top of these concerns are even more complications: the availability of lots for STPs, the delay of permits from LGUs, and also the problem of relocating informal settlers.

Still, “The fact alone that conglomerates compete in the same market improves welfare, no matter that their entry into these markets is profit-motivated,” said Fabella in his book. “The government’s only role is to safeguard free entry and prevent collusion… Conglopolistic competition is especially proconsumer welfare.”

The instances of success brought about by privatization are indeed very encouraging, and deserve serious consideration by the government.

Dindo Manhit is founder and managing director of the Stratbase Group.