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Mapping The Future

We knew the water crisis would happen

04:57 AM July 01, 2019

Our current water woes were already predicted at the start of the privatization program.

When top representatives of the International Finance Corporation (IFC) visited Manila Water in early 1997, we discussed the following: We told them they advised the Metropolitan Waterworks and Sewerage System (MWSS) on the wrong problem.

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1. Defining the problem

The MWSS faced the following in 1997: Inefficient and wasteful operation resulting in very large amount of water lost in the system; There was only one source of raw water for the metropolis and adjoining provinces: the Angat Dam. There was a need to have another dam for growth requirements, also as a safety backup.
2. The IFC Solution

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The IFC solution was basically meant for problems arising in the short term.

a. The terms of reference for bidding required interested companies to offer the lowest tariff rate vis-a-vis the rate of the MWSS. Manila Water won the East Zone with the winning bid of P2.32 per cubic meter, and Maynilad got the West Zone with a bid of P4.17 per cubic meter.

b. At that time, people were not complaining about the P8.78 per cubic meter imposed by the MWSS. They were angry about the nonavailability, unreliability of the quality of water service.

c. Expectedly, low tariff rates were welcomed, but these regularly required periodic upward adjustments to address increased costs due to foreign-denominated loans passed on by the MWSS to its concessionaires. Expectedly, too, rate increases were not without any negative reactions.

d. The guidelines did not consider the need for funding another major dam to back Angat.

3. A better long-term solution

a. The terms of the bidding should have kept the P8.78 per cubic meter rate tariff, requiring only that the bidder offer the highest “concession fee.” At P8.78, the concessionaires would be able to keep a healthy cash flow, from which they could draw concession fees.

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b. The high concession fees could then be used by the MWSS to fund the construction of the second major dam for the long-term needs of Metro Manila and neighboring provinces.

Unless raw water from the new dam is given for free to the concessionaires, consumers will ultimately have to carry the burden. Hence, the concession fees would have covered for this.

c. The IFC team did not disagree with us, yet the bidding and awarding pushed through.

d. The Laiban Dam project has been set, and the previous administration even began constructing the diversion tunnel. Somehow, that project was stopped.

MWSS privatization

Republic Act No. 8041, or the National Water Crisis Act, was signed into law in 1997.

The Act paved the way for the transfer of water distribution from MWSS to the private sector.

The terms of the bidding provided that Maynilad would get 60 percent and Manila Water 40 percent of the water from Angat Dam.

At the time of the privatization, the MWSS was losing heavily and could not provide reliable potable water service to residents.

Water lost in the distribution system averaged more than 65 percent, lost through leakages and illegal connections.

The privatization program was considered a success by analysts—based on the terms imposed by the MWSS and its adviser, IFC.

Both Manila Water and Maynilad have actually provided much better service than MWSS, providing 24 hours of potable water to almost all the residents in their respective zones.

Predictable shortage

Even with an efficient performance, the lack of raw water will prevent the concessionaires from providing continuous supply 24 hours per day.

Any solution from Manila Water and Maynilad will only be temporary. Unless another dam is put into operation, the current problem will persist.

Unfortunately, both water concessionaires will always bear the brunt of criticism and even threats from the government to cancel their contracts. The government planning and regulatory bodies should not procrastinate on the urgent need for a second dam.

Unless such a new dam is built, the whole Metro Manila and adjoining provinces face dire consequences if anything happens to Angat Dam.

Pray that our government planning and regulatory executives decide to act before it is too late.

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