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No Free Lunch

Wrong enemy

/ 04:05 AM December 17, 2019

Are the private water companies serving Metro Manila—and now other areas of the country as well—our “enemies”? With the vicious tirades and threats directed at them by no less than the President himself, one would think that the Manila Water Company Inc. and Maynilad Water Services Inc. are public enemy No. 1.

In my past incarnation as President Fidel V. Ramos’ chief economic planner in the 1990s, I was frequently asked to translate our “Philippines 2000” battle cry then into something the ordinary Filipino could understand. Among other ways of defining it, I used to say that by the turn of the millennium, water would come out of our faucet every time we turned it on. That was a time when getting water out of our faucets 24 hours a day seemed a distant dream for most of us Filipinos. In Metro Manila, less than one-fourth of residences with water connections got water around the clock. Worse, residents in most depressed communities either had to spend a good part of their day lining up at a public water source, or obtain their water from vendors at 10 times the unit cost of what Forbes Park residents paid for water piped into their homes.

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The Metropolitan Waterworks and Sewerage System (MWSS) had become both the object of ire and the butt of jokes for a performance (or lack of it) that left the bulk of city dwellers either underserved or outright unserved on arguably their most basic need. Non-revenue water (NRW) was at 63 percent, which meant that little more than one-third of water being delivered by the MWSS was actually paid for, with the bigger bulk either leaking out or being stolen through illegal connections. No wonder the MWSS was in financial straits and deep in debt. It was then among the persistent top drains on taxpayer money as a government corporation bleeding money big-time. It was thus in no position to make any improvements on an already dire water situation.

The government, having already seen the benefits of record economic growth and job generation that was partly an offshoot of the Ramos infrastructure privatization strategy, saw privatization of water distribution as the only logical way to go. It went into an elaborate process of bidding out Metro Manila’s water concessions, and as head of the National Economic and Development Authority then, we were part of the rigorous evaluation and decision-making process. President Ramos demanded his highest standard of “CSW” (complete staff work) that led to the eventual designation of Manila Water to serve the east zone, and Maynilad for the west zone. The bidding process was transparent and competitive, open to public scrutiny and benefited from the participation of the International Finance Corporation of the World Bank Group, applying the highest standards of economic and financial responsibility.

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What has happened since? I can speak more authoritatively on the part of Manila Water, in whose board I served as independent director (with emphasis on “independent”) years later. Just eight years into the concession, it had provided 24-hour water to nearly 100 percent of its customers, and had brought NRW down to 35 percent, well overshooting the government-set target of 43 percent then. Now it is reportedly at 11.5 percent, among the lowest in the world, where the average is 30-40 percent (Maynilad reportedly has NRW of 27 percent). Such substantial reduction in leakages has made it possible to deliver more water to more households and establishments, and in effect saved the government from having to build one whole dam to provide an equivalent volume.

I shudder to imagine how our water situation would have been now had we kept it under government management. Just looking at how it has dragged the provision of new water sources for well over a decade—leading to the water shortages we saw earlier this year, yet inordinately blamed on the water companies—I cannot muster the confidence in government to handle things better. The water companies have always been under tight government regulation, and I’d expect our regulators to know better than allow them to make “too much money” and “fleece the public.” Perhaps we’re looking at the wrong enemy?

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TAGS: Cielito F. Habito, fidel v. ramos, Manila Water, maynilad Water, MWSS, No Free Lunch, water firms
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