Trickier than water

For a moment there, we thought that certain bright boys of the Aquino (Part II) administration, in cooperation with certain bright guys in Congress, were able to waylay the two major water concessionaires in the country—Manila Water and Maynilad.

Then along came these prominent business groups, voicing their concerns over the recent media storm, which centered on the supposed “consumer abuse” committed by the water companies.

They were the Philippine Chamber Of Commerce and Industry (PCCI), the Foundation For Economic Freedom (FEF), the Management Association Of The Philippines (MAP) and the Employers Confederation Of The Philippines (ECOP).

From what I heard, these highly influential groups really labored hard over their joint statements, an apparent reaction to the government officials who, without much ado, joined the recent media lambasting of the water companies.

News reports quoted the joint statement of the groups, which at one point described as “reckless” certain statements coming from government officials, including executives of the MWSS, the agency enforcing the government contract with the water companies.

“Such statements could reinforce perceptions that there are risks to investing under the Philippine PPP program,” the joint statement said. Aray!

Well, the business groups actually remarked—pointblank—on the banner program of our leader Benigno Simeon (aka BS): The much-talked-about, but yet-to-take-off “public-private partnership” program.

Upon their assumption into office way back in 2010, or some three long years ago, the administration boys billed the resurrected PPP as the answer to the country’s severe lack of government funds for infrastructure.

Today—surprise—not even a single digging has started in any of the PPP projects under our leader BS.

To think, the Palace boys were proud to point out that the country jumped in the World Economic Forum competitiveness index for some 144 countries, from 75th in 2010 to 65th place in 2011, a year into the Aquino (Part II) administration.

But then, nobody dared to point out that the same WEF index put our country in the pathetic list for infrastructure development: 87th place in road system, 94th place in railroad, an ominous 112th place in airport, and a miserable 120th place in seaport.

To think, this is a country made up of more than 7,000 islands that need hundreds of airports and seaports. Go figure!

Anyway, the PPP deal in water service came about a long time ago during the term of former President Fidel Ramos (aka Kuya Eddie).

The four business groups noted that, after 16 years, the project actually showed vast improvement in water service.

For example, households with water connections more than doubled, enjoying 24-7 service, extending even to poor communities (i.e., slum areas).

Moreover, according to the joint statement, the two water companies invested a combined amount of more than P100 billion for the expansion and improvement of the water system and the sewage network.

In fact, as the business groups pointed out, water service PPP under the administration of Kuya Eddie earned praises abroad from important institutions like the World Bank, the International Water Association and the World Economic Forum.

Now, the recent media bombardment against the two concessionaires seemed to have been provoked by their bid with the MWSS to increase water rates, which was opposed by a consumer group called Water for People Network, or the WPN.

The group revealed that, in the past five years, the water companies tucked into their rates even their income tax payments, amounting to about P15 billion, under an agreement with the MWSS done during the cute administration of Gloriaetta.

As media took hold of the issue, government officials came out with what the business groups termed as “reckless statements,” even hinting at revocation of live contracts between the government and the water companies.

And so we heard comments from our government officials about “grossly unjust payments,” or from our lawmakers like Sen. Ralph Recto who used terms such as “consumer abuse” or “bilking their clients” or “shadow of illegitimacy.”

It was as if they already adjudged—beyond any doubt—that the contract between MWSS, on the one hand, and the water companies, on the other, was nothing but a one-sided agreement.

Such a claim would always be debatable, of course, and any dispute over contracts could only be settled in court—not in Congress and certainly not by the officials of MWSS that was one of the parties in the very same contracts.

Technically, whether the MWSS like it or not, without the court decision nullifying the existing water service contract, the MWSS remains the one and only agency that should deliver on the government obligation under the contract.

What if, by some chance, it would turn out that, after everything would have been said and done in the congressional hearings, the committee reports would support the contracts? What would the public think? That the lawmakers were bought?

And that is perhaps the reason why the business groups called the statements of government officials “reckless,” precisely because dealing with contracts is actually trickier than what our officials—through media—seemed to project as rather simple.

As in any contract, including those between the government and power generating companies, or between the government and tollroad operators, the terms and conditions were laid down to avoid problems in the future.

In the case of the contract between MWSS and the water companies, they must first agree to renegotiate the terms of the concession. The MWSS cannot do the changes by itself, even if it enjoys all that noise from protesters and the like.

It will be like telling those other PPP investors, ready to risk hundreds of billions of pesos in some infrastructure projects like seaports, airports and road networks, that their contracts can—one day—also go through unilateral revisions.

Perhaps the statement from the business groups is worth considering:

“We, therefore, urge Philippine authorities to faithfully adhere to the terms of the Concession Agreements, including following the provisions on dispute settlement that call for international arbitration in the event of differences.

“Demands for tariff adjustments need to be framed strictly within the agreements, and be mindful of the public’s need—not just for reliable clean water, sewage and sanitation services—but for other sorely lacking infrastructure—mass transport, toll roads, ports, power, and others—which would be affected by any ill-considered decision on this case.”

In other words, the water issue is much trickier than what our beloved government officials want us to believe.