Water conflict heats up

We are a nation often criticized for our short memory. This could have been a good thing in a sense that it has helped (and continues to help) us to survive tragedies and misfortune with equanimity and the least rancor. But it can also lead to contentious situations.

Take for example, the metro’s water systems. Now the water companies are agitating for an upward revision of water rates claiming that investments are needed to maintain and upgrade the water distribution system in Metro Manila.

When this was greeted with howl of protest from various consumer groups, the water companies were quick to remind Metro Manila households about those years when somebody had to stay up all night to wait for drums of water to be filled. Or the long queues at the public deep-well pumps just to be able to take a bath.

We had forgotten that water in the past couldn’t flow to the second or third floors faucets unless you had a pump – of course, attached to your own well. Or that water trickling from the tap was generally unsafe to drink because of widespread contamination from busted or cracked pipes.

Probably in response to public clamor, the Metropolitan Waterworks and Sewerage System (MWSS) recently decided to reduce the water rates charged by its two concessionaires. The water concessionaires immediately cried foul and charged MWSS of reneging on the contract it had signed in 1997 when government had decided to privatize water operations and management in Metro Manila.

Going to international arbitration

The two affected MWSS contract holders, Manila Water and Maynilad, expressed at the most their disappointment by carefully worded press releases about their options in view of the obvious disagreement with MWSS over the contract terms.

When MWSS stood firm in its decision to revise water rates and disallow recovery of certain items in determining the appropriate new rates, the two companies resorted to an international arbitration process as provided for in their respective contracts. Based on latest information, the preliminary hearing for Manila Water is on December 11, 2013.

Manila Water is owned by the Ayala group, and services the so-called East Zone comprising of Makati, Mandaluyong, Pasig, Pateros, San Juan, Marikina, Taguig and parts of Quezon City and Manila.

Maynilad, on the other hand, is with Manny V. Pangilinan’s Metro Pacific group. The area assigned to Maynilad is Caloocan, Pasay, Paranaque, Muntinlupa, Las Pinas, Valenzuela, Navotas, Malabon, and the remaining parts of Manila and Quezon City not covered by Manila Water.

Flip-flopping history

Those supporting the position of Manila Water and Maynilad are saying that the MWSS action is another example of how the government flip-flops on issues to cater to public clamor even if this means going against very explicit terms of a contract.

They cited the experience of independent power producers who were enticed to invest in turnkey power plant projects, the sweetener being the take-or-pay provision. When power rates had to be increased due to the take-or-pay provision, there was public outcry against the independent power producers.

They also pointed out that in 1997 when the government bid out to the private sector the contract to operate and manage Metro Manila’s water system, it needed to make the terms attractive enough – not only because there was a water crisis, but also because the government could not afford the billions of pesos needed to bring a water utility system running in tip-top shape.

Tax incentives

In their various press releases, Manila Water and Maynilad that their respective contracts have been in force for years, with the terms available for scrutiny by anyone. In fact, both companies have been including income taxes in their rate computations, as allowed by the contracts.

Income tax holidays, and other forms of tax incentives, are not unique to the MWSS contracts, or for that matter, to many government contracts with the private sector. These tax rebates are an acceptable form of any government for attracting investments in certain areas.

Jarring consumers’ memory

The Wallace report which supported the position of the water concessionaires was published to remind the water consumers of the situation in the past when one had to queue for much needed water.

The report pointed out that Manila Water and Maynilad have brought safe drinking water to Filipino homes in Metro Manila and surrounding districts 24/7. To do this, these companies had to spend heavily on new pipes, pumps, meters and other necessary infrastructure.

Since 1997, the private concessionaires say that they have spent more than P105 billion to comply with their part of the contract. And they are committed to spend much more for the rest of the contract term until 2037.

The Wallace report also made a strong case for the government to honor the sanctity of the contracts it entered into with Manila Water and Maynilad. To do otherwise would jeopardize future contracts with foreign and private investors.

Champions League 2013 National Collegiate Championship

The cast of the Final Four of Champions League (PCCL) 2013 National Collegiate Championship is complete with the entry of the FEU Tamaraws as the Luzon-Metro Manila leg champion joining UAAP champion De La Salle U Green Archers, NCAA champion San Beda College Red Lions, and Overall Southern Islands champion Southwestern U Cobras.

The Final Four round robin starts on Monday, December 9, at the Loyola Blue Eagle gym. The other games will be played at FilOil Flying V Arena, San Juan City. At stake is the possession for one year of the M. V. Pangilinan Perpetual Bronze Sculpture, “Abutin ang Tagumpay,” the symbol of collegiate basketball supremacy in the country.

All games are aired live by ABS-CBN Sports over channel Studio 23 starting at 2 pm to 6 pm. Tickets are also available from SM Ticket at SM outlets and at the gates of Ynares Sports Gym, Pasig City and FilOil Flying V Arena, San Juan City.

Visit the PCCL website (CollegiateChampionsLeague.net) for more details / information on the National Collegiate Championship, like our official Facebook fan page (Philippine College Champions League), and follow us on Twitter (@pccleague2013).

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.