The nine-member Manila Waterworks and Sewerage System (MWSS) board agreed yesterday to freeze water rate hikes for the rest of the year, but is mulling a one-time increase in January 2003.
During yesterday’s board meeting, the MWSS panel agreed to postpone approval of any water rate hike "without anybody raising opposition."
Observing that the public is already enraged by the controversial purchased power adjustment (PPA) charged by the National Power Corp. (Napocor) and collected by the Manila Electric Co. (Meralco) for electricity, the MWSS board made the decision to temporarily freeze water rates to avoid a backlash.
"Rather than aggravate the situation, we just decided to re-evaluate our decision to raise water rates," MWSS Deputy Administrator Macra Cruz said.
Reacting to petitions by water concessionaires Manila Water Company (MWC) and Maynilad Water Services Inc. (MWSI) for a rate increase, incensed militant groups have begun picketing the MWSS offices to protest the proposed water hike, Cruz said: "Already we have people marching in front of our office."
Cruz assured the public that "there may not be an increase at all. There will be no special transitory mechanism (STM) for the meantime and we may have it tied up with the rate rebasing (in 2003)."
STMs are charged to consumers to cover the losses of MWC and MWSI due to peso depreciation after the MWSS privatized its operations in 1997 and these STMs are listed in water utility bills as "currency adjustments." The MWSS retains the power to regulate water rates through its board.
Rate rebasing, the MWSS official said, is also a water rate hike — the proceeds of which are earmarked for the use of the water concessionaires for expanding their services within their areas. Using funds generated by the rate rebasing, MWSI and MWC intend to lay water pipes and increase their water output capacity to their consumers in areas where water pipelines do not presently exist.
In an earlier interview with The STAR, MWSS regulatory division chief Ed Santos said the postponement of the water rate hike is due to the latest rate re-submission of the two water concessionaires. The rate resubmission had prompted the MWSS to start all over again with their computations, Santos said.
Both Cruz and Santos said they were not pressured by Malacañang into nixing any water rate hikes for this year despite published reports that President Arroyo asked both MWC and MWSI not to raise water rates.
The water concessionaires’ decision to submit new computations for their desired water rate hikes came after the MWSS stood firm on its decision to give the two utility firms "far less" than they are asking for. MWC, covering the east zone, is seeking a rate hike of P1 per cubic meter and MWSI, which services the west zone, is seeking a rate increase of P6 per cubic meter.
"The increase could come in August or September, but, maybe if the increase is very minimal and they can be absorbed by the water companies, then there may not be an increase at all," Santos said.
"At the moment, there is a freeze of any water rate hike... But it (the water rate hike) could just be included in the rate rebasing, since they would only have a five-month interval. That way we would only have one rate increase (instead of two separate rate hikes)," Santos said.
The new round of increases in the water rates of the two utility firms was scheduled for implementation this July. It is actually the third installment of the water rate increase approved last October, known as the "staggered rate STM." This rate increase is different from the rate rebasing that will enable MWC and MWSI to gather funds for expansion projects and the improvement of their services.
Cruz said the public need not worry that the deferment of the water rate hike will drive water rates higher when the two water concessionaires maker the one-time rate hike in January: "It is just a few (centavos), so it would not have much effect."
The spokesperson for both water firms were unavailable, but MWSI Special Support Group vice president Arnulfo Ramirez said in an earlier interview with The STAR that "our plans are flexible." "Whatever it is that the MWSS would decide, we could adjust," he said, but added that the adjustment to lower the price of water services will result in slower expansion for the water companies.
"Instead of asking for any increases in their water rates, they (MWC and MWSI) should first show that their services have really improved," Echeverri said. The congressman from Caloocan’s first district said he has been receiving complaints from consumers about various excavations on busy streets that were allegedly left unattended by contractors hired by the water concessionaires."
Echeverri also warned the MWC and MWSI that he has gathered support from his colleagues in the House for the creation of a bill that seeks to cancel the congressional franchises granted to the water concessionaires: "This is only a warning, but they better not ignore this. We will not hesitate to move for the immediate cancellation of their franchises if they do (ignore us)."