Review of MWSS Privatization Contracts Must Benefit Consumers : QC IMC

Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director General Romulo L. Neri’s proposal to extensively review the Metropolitan Waterworks and Sewerage System’s (MWSS) Concession Agreements with Maynilad and Manila Water provides hope that the new Arroyo administration would seriously pursue a more pro-people policy on water services.

This recommendation from the country’s chief economist is a step towards the right direction.

To ensure that the review of the Concession Agreements would translate to actual benefits for MWSS customers, we suggest that Mr. Neri and other concerned government officials consider the following measures:

1. The review of the Concession Agreements must be made public to encourage the broadest possible participation of all stakeholders especially MWSS customers.

2. The objective of the review should not be limited to simply resolve the ‘deficiencies’ of the Concession Agreements. There should be enough flexibility to allow the presentation and serious consideration of alternatives to the MWSS privatization such as complete government takeover.

3. The review must include the various pricing mechanisms sanctioned by the Concession Agreements like the foreign currency differential adjustment (FCDA), accelerated extraordinary price adjustment (AEPA), and extraordinary price adjustment (EPA) that Maynilad and Manila Water have used to hike their rates. While the review is ongoing, MWSS can impose a moratorium on rates increases.

4. Water rates must be rolled back to pre-FCDA and AEPA levels. The FCDA and AEPA are products of the questionable first amendment to the Concession Agreements. These mechanisms allow Maynilad and Manila Water to recover foreign exchange losses through rates adjustments and comprise around 40% to 70% of the total hike that the two concessionaires have implemented.

5. In the case of Maynilad, government must demand that the said water firm refund its customers around PhP7.5 billion in illegal collections of FCDA and AEPA. It will be recalled that Maynilad billed its customers the said items even if it has failed to meet the requirements of MWSS, which is the payment of concession fees.

The MWSS case has bared all that is wrong in water privatizationexorbitant rates and poor services, powerless government and pampered private business. Meanwhile, 12 million hapless consumers bear the brunt of a defective government policy.

It is high time that government rethinks its position on water privatization. Mr. Neri’s proposal is an encouraging sign. The people, however, should make certain that it would lead to meaningful reforms.