Yet another round of water service
interruptions, mounting unmet sanitation infrastructure obligations, and
looming water rate hikes highlight the failure of water privatization. It is
unconscionable that water firms’ profits continue to rise and they are even
expanding abroad despite their failure to meet their domestic service
obligations. Water privatization is failing to ensure people’s right to water
and the government needs to take over this vital public service and run it
well. Also, the cost of delivering a very vital public service as water being
passed on to consumers by private water firms is excessive and in violation of
the human right to water. Government should take charge of this public utility
in order to ensure water accessibility and affordability.
Up to 17 million water consumers in Metro
Manila and its surrounding areas again face interrupted water services from Maynilad
Water Systems and Manila Water Company. This is reportedly due to low water levels
in Angat Dam and Ipo Dam where the two concessionaires source water. The
looming interruptions follow interruptions that started in March this year which
caused monetary and circumstantial damages to millions of customers, who filed
a petition to hold the water firms accountable.
Customers can also expect much more
expensive water as Maynilad and Manila Water fully pass on the cost of sanitation
projects to comply with Supreme Court (SC) directives. The Metropolitan
Waterworks and Sewerage Systems (MWSS) stated that if approved, the two
companies’ clean water infrastructure costs will be incorporated on a staggered
basis in water bills after the next rate rebasing in 2022. The SC recently
imposed Php1.8 billion in penalties on the two firms for violating the Clean
Water Act.
Privatization-bred burdens
These problems that water consumers
face are due to the failed approach of water privatization.
Water firms have the responsibility to
ensure a continuous and safe supply of water. Yet putting water sourcing,
distribution, and services delivery in the hands of private firms mainly
concerned about their bottom-line has resulted in underinvestment in
infrastructure and facilities by the concessionaires. Water firms have reaped
huge profits through the years despite failing to ensure uninterrupted water
services and sufficient sanitation projects.
The water firms are today claiming
insufficient water supply as the reason for service interruptions. Yet Advocates
of Science and Technology for the People (AGHAM) has for instance identified
existing water sources and systems that can increase water supply by as much as
5,663 million liters per day (MLD). Even assuming some depletion of Angat, the
bigger question is why these other water sources have not been tapped or
developed.
The concessionaires’ non-compliance
with the Clean Water Act is also a case of underinvesting in vital water
services. Customers have been billed with increased environmental and sewerage
charges for the past 21 years but only 14% of the total service area has been
covered by the sewerage services of the water firms as of 2018. This is
significantly lower than the combined 64% target that Manila Water (33%) and
Maynilad (31%) should have at least already met by 2017, leaving 86% of the
total service area to be covered for the 19 remaining years of the concession
agreement (CA). The firms have also not established adequate sewerage systems
vital for the clean-up of the Manila Bay, contrary to a 2008 SC directive.
Privatization-driven
profits
And yet the water firms’
profits continue to rise. Manila Water’s net income rose from Php2.4 billion in
2007 to Php6.5 billion in 2018; Maynilad’s from Php1.3 billion to Php7.4
billion in the same period. These profits are
ensured under the CA signed between the government and the private water firms
when Metro Manila water and sanitation services were privatized in 1997.
Water customers are their main source
of profits. There is rate rebasing every five years to compute the water rates
consumers should be charged based on the firms’ past and future expenses and
their guaranteed profit. Manila Water rates have
increased by 879% and Maynilad’s by 574% between the start of the concession in
1997 to the first quarter of 2019.
As it is, potable water and water
services already take up an increasing share of household budgets, especially
of poorer and low-income families. In 2015, Philippine Statistics Authority
(PSA) figures show that families in the National Capital Region spent about
Php668 monthly on potable water and water services. Water for the People
Network (WPN) has meanwhile found that informal settlers, who have the least
ability to pay, frequently shell out close to Php1,000 or more for water which
is so vital to survive.
In their quest for profits even at the
expense of providing services, Manila Water and Maynilad have been expanding
their water businesses outside their concession areas since 2009. Manila Water
Philippine Ventures and Metro Pacific Investments, Corp. are spending billions
of pesos to set up water concessions outside Metro Manila and even abroad.
Public service over profits
The public sector has to have the key and
central role in providing water and sanitation services. These cannot be made
dependent on the narrow profit-seeking motives of private corporations. As the
Metro Manila water experience has shown, private water firms will invest to the
extent that it serves their profit-making.
The poor service of water firms
including under-investment and over-pricing in the concession areas must be
ended with government taking control of these vital water utilities. The
governments in the United States, Europe, Japan and elsewhere operated major water
and sanitation services and financed these through general taxation. These
countries were able to expand their water services and make it affordable for
decades, although this reversed with the anti-people wave of privatization
since the 1990s.
Public welfare and health demand that water services be publicly-provided and operated as a public service rather than for private profit. For a start, government should rescind the CA, which has allowed the firms to reap billions in profits despite glaring underperformance. ###
Photo from starofmysore.com
