News Release | 22 March 2013 | Multisectoral alliance Bagong Alyansang Makabayan (Bayan) alleged that private water concessionaires in Metro Manila have collected about P7.2 billion from consumers due to double-charging of foreign currency adjustments. The allegation stemmed from the concessionaires’ collection of the fixed P1 per cubic meter (cu. m.) in currency exchange rate adjustment (CERA) alongside the foreign currency differential adjustment (FCDA).
Bayan made the statement as it marked the World Water Day with a protest rally in front of the main offices of Maynilad Water Services Inc. and Manila Water Co. in Quezon City.
The protest came ahead of a substantial increase in water rates is looming due to the scheduled rate rebasing of the concessionaires, also a mechanism established by the privatization Concession Agreement. Maynilad is reportedly asking for an increase of P10.30 per cu. m. while Manila Water is seeking a P5.83-per cu. m. rate hike. This despite unresolved allegations that the concessionaires charged their consumers in the last rebasing in 2008 for projects that were never implemented.
The P7.2 billion from forex recoveries represent the P1-per cu. m. CERA charged on the volume of water billed by Maynilad and Manila Water from 2002, when they began collecting the FCDA, until September 2012 (latest available data). Of the said amount, Maynilad accounted for P3.4 billion and Manila Water, P3.8 billion.
The FCDA was introduced in the 2001 amendment to the Concession Agreement. It allowed the concessionaires to automatically adjust their rates every quarter to reflect changes in the foreign exchange (forex). It was meant for Maynilad and Manila Water to recover losses due to peso devaluation that increases their foreign loans and payments of dollar-denominated concession fees to the MWSS.
“This is doubly oppressive for consumers. It’s bad enough concessionaires are allowed to recover forex adjustments, but to have two automatic recovery mechanisms for this? This shows the folly of privatization and its drive to ensure the profits of the investors,” said Bayan secretary general Renato M. Reyes, Jr.
“Given this situation, the recent water rate adjustment is a token measure,” Reyes said.
A recent rate reduction was implemented by Maynilad and Manila Water, amounting to16 centavos and 44 centavos per cu. m., respectively.
Aside from the FCDA and CERA, Maynilad and Manila Water are also allowed to impose the so-called extraordinary price adjustment (EPA) which is triggered by practically anything that could adversely impact the profits of the concessionaires.
“Today is World Water Day but the there is really nothing to celebrate as water in the Philippines has become such an expensive commodity controlled by private corporations. We are being subjected to so many onerous charges and taxes. This will be the situation for years to come unless government steps in and regains control of the water system and fulfil its mandated duty to the people,” Reyes said.
“We will definitely oppose any plan to increase water rates in the coming months. We will take this battle right at President Benigno Aquino III,” he added. ###