Water concessionaires collecting in advance

It is not only Meralco that is overcharging its customers.

The two water concessionaires, Maynilad and Manila Water, are not only overcharging their customers but also unlawfully collecting from them in advance the projected costs for two water projects that have been cancelled or mothballed by the Metropolitan Waterworks and Sewerage System (MWSS). These are the Laiban Dam and the Angat Dam Water Source Replacement Project. The Laiban Dam will cost P48 billion. As of December 2011, the two concessionaires have collected P6 billion from their customers.

The Laiban Dam was planned in 1979 as the next major water supply source for Metro Manila. It was envisioned to supplement the long-term water supply of Metro Manila and nearby areas that are included in the two concessions, with a projected total capacity of 3,900 million liters per day, utilizing the Kaliwa-Kanan rivers in Tanay, Rizal. Phase 1 of the project was supposed to have started in 2010 and completed in 2015. The project was not pursued under a supposed joint venture agreement with SM Bulk Water Co. Inc., a subsidiary of San Miguel Corp.

But even before the first stone in the construction of the dam has been laid, the water concessionaires started collecting from their customers the capital that would be needed for the project. And even after the project was cancelled, they continued to illegally collect charges for it. It is still included in your current water bills.

The Angat Dam Water Source Replacement Project is a replacement for the raw water allocation for the National Irrigation Administration (NIA) from the Angat Dam. In early 2008, the NIA, MWSS, and the two concessionaires formed a technical working group (TWG) to pursue the project development. The MWSS and the concessionaires were tasked to finance and implement the project.

On March 31, 2009, a private firm submitted an unsolicited proposal for the project. As the period to act on the proposal had lapsed by then, the proposal was referred to the Office  the General Counsel for a legal opinion. As of Nov. 26, 2010, the MWSS and the concessionaires were still waiting for the TWG to “hire a consultant to evaluate the most viable and best replacement source and to prepare the selected source biddable by 2012.”  In other words, the Angat Dam project has not even gotten off the ground. Nevertheless, the concessionaires are already collecting from their customers charges for the project, in violation of their respective concession agreements.

Under these agreements, expenditures must first be efficiently and prudently incurred before these may be recovered and collected from water consumers. However, even as the projects have been cancelled or mothballed, the concessionaires included the projected costs of the projects in the water tariff being charged to consumers. Worse, there is no certainty as to whether the projects will ever be implemented. But consumers are already paying for their costs in advance.

It is elementary that before capitalists can collect from their consumers, they must be providing services to the latter. They must invest their own capital for the projects. Only after the projects are finished and are benefiting the consumers do they have a right to collect from the latter. In this case, however, Maynilad and Manila Water are already collecting for the water to be collected by the Laiban and Angat dams although nothing is being done by them to pursue the projects. In other words, consumers are being made to provide the capital for the projects. After these projects are finished, the concessionaires will pocket the profits without having to invest a peso.

The MWSS board of trustees has directed the water concessionaires to stop further advance collections and to put in escrow the amount already collected, for eventual refund to consumers.

Having no right to collect in advance for the projects that have been either cancelled or suspended, the concessionaires should immediately account for and refund the collected amount which, as of December 2011, totaled about P6 billion. This amount, being wrongfully collected by the concessionaires, is by law supposed to be held in trust for the consumers who are the lawful owners of the fund.

A group of consumers, the Water for All Refund Movement, has filed a complaint of plunder and violation of the Anti-Graft and Corrupt Practices Act at the Office of the Ombudsman against past and present members of the MWSS board of trustees, officers of the Regulatory Office, and officials and directors of Maynilad and Manila Water.

Until now, despite knowing that they have no right to collect, the two water concessionaires have refused to refund the wrongfully collected amounts. They insist that all amounts are owned by them, thus effectively admitting to the crimes charged by converting and treating the illegally collected amount, held in trust by them, as their own and for their own benefit and gain, unjustly enriching themselves to the prejudice of the complainants and the rest of the water consumers.