In 1995, the National Water Crisis Act was
enacted which paved the way for the privatization of Manila’s Metropolitan
Waterworks and Sewerage System (MWSS) in August 1997, in what was the biggest
waterworks privatization in the world. The management of the east and west
zones were awarded for 25 years to Manila Water Co Inc (Manila Water) and
Maynilad Water Services Inc (Maynilad), respectively. MWSS retained
responsibility for bulk water supply. Recently, both contracts were extended
for another 15 years. The World Bank’s International Finance Corp (IFC)
prepared the MWSS privatization strategy, and then bought a 7% equity stake in
the east zone concession.
Outside Metro Manila, some 500 water districts –
which are government owned and controlled corporations – provide water supply
services in urban areas and municipalities; most other households are served
either by their local government units (LGUs) or community-based organizations,
e.g. water coops. A significant share of the urban population also receives
services from small-scale independent water providers.
The Local Waterworks and Utilities
Administration (LWUA) is a government lending institution that promotes and
oversees the development of provincial waterworks, and is entrusted with
setting water quality and service standards for water districts. The
National Water Resources Board (NWRB) is entrusted with economic regulation of
LGU-operated systems and water districts. Water tariffs in the MWSS east
and west zones are set by a regulatory office created by the 1997 contract and
whose budget is being funded by concession payments from the private operators.
There have been several pending bills to also
privatize water districts but these had been thwarted by opposition from both
management and unions of water districts. Legislation to provide a national
regulatory framework and establish an apex water body also remain pending in
Congress. Meanwhile, Manila Water has been operating very profitably in
the east zone and expanding its business beyond Metro Manila and overseas
through O&M or leakage reduction contracts and equity buy-in , e.g.
Tirripur (India), Vietnam, and more recently, west Jakarta.
ADB’s loans and technical assistance (TAs) to
the Philippine water supply and sector (WSS) sector demonstrates its efforts to
promote privatization and/or private sector participation. In 1999, ADB
approved a $170 million loan to Maynilad – its first ever to a private water
utility– but this was cancelled when Maynilad abandoned its concession in 2003.
In 2000, a total $175 million policy and
investment loan for the Pasig River Environmental Management and Rehabilitation Sector
Development Program was approved, and a portion (~P700 million) was relent
by MWSS to Manila Water to implement the sanitation component of the loan,
thereby enabling the private operator to meet its service obligations. [Aside
from ADB and IFC’s equity investment, Manila Water also obtains loan
financing from the World Bank.]
In 2006, ADB provided Manila Water with a $0.16
million grant Small-Piped Water Networks (SPWN), a demonstration project
to show that thousands of urban poor can be quickly connected (by a private
operator) to piped water supply in less than a year. In 2009, Manila
Water received another $0.3 million TA Pasig River
Catchment Sewerage Project to help finance its sewerage and sanitation
system.
ADB also invites both Manila Water and Maynilad
as ‘expert’ twins in its Water Operators Partnerships (WOPs) program that links an
‘expert’ and ‘recipient’ twin to improve operational and financial performance
and introduce management changes in the ‘recipient’ twin. Two large water
districts were among the first recipients – Metro Cebu Water District (MCWD)
and Davao City Water District (DCWD) – twinned with public City West Water
(Melbourne) and private Ranhill (Malaysia), respectively, on nonrevenue water
reduction and asset management.
A new ADB loan ($70 million) is now being
proposed to MCWD and DCWD – Urban Water Supply and Sanitation Project (UWSSP) – to
partially meet their investment needs for water supply and waste water
management until 2022 which ADB estimates at $800 million, and says will have
to be financed by public and private debt, and equity. In 2012, the MCWD
union/AGWWAS and local NGOs voiced their opposition to the ADB loan, and the
local city council summoned the ADB officer to clarify the intent of the
project. AGWWAS linked the proposed loan to earlier twinning between MCWD
and City West Water which it criticized as non-transparent, non-participatory,
used inappropriate technology, proposed unrealistic KPIs and
changes/reorganization in MCWD with potentially adverse impacts and without
consulting the union/workers. [More fun in the Philippines without ADB ; UWSSP: Issues raised by AGWWAS & ADB Response ]
Another proposed ADB loan, $50-million Water
District Development Sector Project (WDDSP), will rehabilitate and expand
existing water supply systems in 5 pilot water districts. AGWWAS raised
issues of lack of information disclosure, lack of workers’ participation, and
lack of consultations with local communities, particularly on contentious issue
of expected tariff increases. The AGWWAS campaign was featured in Reclaiming
Public Water’s RIO+20 publication which lauds the role of workers as ‘water
citizens’ and ‘carers’ of water for all users for all time. [Five Philippine Water Districts Say NO to the Asian Development
Bank ]
The Angat Water
Transmission Improvement Project is a proposed $50 million ADB loan that
will rehabilitate the Angat transmission line and secure raw water supply
to MWSS, thereby helping it fulfill its responsibility of ensuring and
securing the availability of raw water to Manila Water and Maynilad. MWSS
will bid out the project under the government’s public-private partnership
(PPP) program.
Regards,
Bobet Corral
