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A Point by Point Reply to Oscar Lopez's Statement on the Maynilad Bailout
by Arnold Padilla
Wednesday, Mar. 24, 2004 at 6:22 PM
research@ibon.org
A Point by Point Reply to Oscar Lopez's Statement on the Maynilad
Bailout
1. "How can it be a bailout when the Lopez Group is completely
writing off its equity investment of $80 million?"
Government has all the right to demand that Maynilad pay P8 billion.
Yet it waived its right to collect the amount. Moreover, government
also agreed to assume almost P11 billion in outstanding obligations
of Maynilad. If this is not a bailout, what is?
If we convert the $80 million in equity investment, its peso
equivalent is only P4.5 billion. This amount is not enough to pay for
its P8-billion debt to the government. The Lopez family should be
ashamed of themselves if they ask for a reimbursement!
2. "If there was a political deal with the government, how come
in addition to our loss in Maynilad, Meralco's rates have remained
unadjusted?"
Malacañang, through the Energy Regulatory Commission (ERC), has
already granted Meralco's petition for a provisional rate hike of 12
centavos per kilowatt-hour. It was the Supreme Court and not
Malacañang that stopped the collections of Meralco's increased
rate.
Benpres gained from the Maynilad deal because it will no longer have
to pay for its debts. Yet Benpres officials will remain managing the
firm while government rehabilitates it. Thus, the possibility of the
Lopez family taking back a "commercially healthy" Maynilad is also
not entirely farfetched.
3. "We are not leaving a desolate and financially unsound
company as the misinformed wish to believe, and definitely, there was
no mismanagement of the water utility."
By its own admission, Maynilad's total liabilities have already
reached P19.1 billion as of December 2003. Its total assets meanwhile
are only P16.9 billion. Maynilad sought corporate rehabilitation
because it is desolate and financially unsound.
Maynilad has been mismanaged from the start as Benpres and Suez made
the concession a milking cow. From 1997 to 2001, it overshot its
projected expenses by around P800 million due to questionable
expenses.
To illustrate, the water firm has been outsourcing its consultancy
and management development to firms associated with Benpres and Suez.
From 1999 to 2000 alone, it spent P1.2 billion for such services. It
has also been importing computers, brass fittings for water meters,
etc from French companies affiliated with Suez.
4. "We have too seldom been recognized for the good we have
done. We are proud to have accomplished much in Maynilad in the last
six and a half years."
The basic tariff of Maynilad has already increased by 226% since it
took over in the metropolitan west zone. In spite of such huge hike,
it failed to provide efficient water services.
More than 43% of its customers do not enjoy a 24-hour water supply.
Maynilad also failed to supply water to around 1.5 million people in
its service area.
The outbreak of water-related diseases in Tondo, which claimed the
lives of several people and hospitalized many others, was due to
Maynilad's failure to repair and improve its infrastructures.
What accomplishment is Mr. Lopez talking about?
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The Water for the People Network is a broad national network composed
of the Bagong Alyansang Makabayan, IBON Foundation, Confederation for
the Advancement and Recognition of Government Employees (COURAGE),
Kilusang Magbubukid ng Pilipinas (KMP), Cordillera People's Alliance
(CPA), Center for Environmental Concerns (CEC), Kalikasan People's
Network, Gabriela, Kalipunan ng Damayang Mahihirap (Kadamay) and
other people's organizations, advocacy groups, non-government
organizations, and community-based associations. The network
campaigns for people's right to access water and water services.
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