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.

Two mechanisms

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.  ###

 

 

 

Water for the People Network joins people’s organizations in clamoring for lower water rates and a halt to water privatization on World Water Day 2013 in a mass action in front of the MWSS. WPN plackards read: Water is a human right! Reverse MWSS privatization!

IBON NETWORKS | Water for the People Network | 22 March 2013 | Access to safe water and efficient water services does not have to be costly for consumers.

Water consumers under the Water for the People Network (WPN) called the recent water rate reduction due to the foreign currency (forex) adjustment nominal especially amid the pending request of water firms for a big rate increase due to rate rebasing.

Water concessionaires Maynilad and Manila water are seeking to hike the average basic water tariffs by 22% in the west zone and 15.2% in the east zone as part of the rebasing process. This will increase the basic charge by Php10.30/cu.m for Maynilad and by Php5.83/cu.m for Manila Water. According to government agency Metro Manila Waterworks and Sewerage System (MWSS), the review of the rebasing process will be completed by July 1.

Based on their concession agreement, the water firms may adjust average basic tariffs every 5 years through the rate rebasing to recover historical capital, operating and investment expenditures, and review operating and investment plans. The rate rebasing process will be done throughout the lifespan of the concession agreement.

Consumers also hit the double-charging in the forex tariffs, saying that Maynilad and Manila Water have been unjustly collecting a fixed rate of Php1 per cubic meter in currency exchange rate adjustment (CERA) on top of collecting the foreign currency differential adjustment (FCDA). Both tariffs are meant to allow the water firms to recover or compensate forex movements arising from MWSS loans and concession fee payments.

Before the takeover of private water firms, the MWSS used the CERA to recover forex losses. But with the inclusion of the FCDA in the water tariffs, the CERA no longer serves any purpose. Thus, water groups such as the WPN are seeking an investigation of double-charging by at least Php1/cu.m and more rollback in water rates.

Moreover while water rates continue to increase, the promise of universal coverage has been largely unmet. The group noted that less than 60% of Maynilad’s service area in the west zone has 24-hour water service, while Manila Water claims 99% water supply coverage in the east zone but does not distinguish areas with direct household connection from those serviced by private water suppliers.

According to the group, access to safe water and efficient water services does not have to be costly for consumers. Water should be affordable, and this is possible when people and not private business exercise effective control over the water system. (end)

The WATER FOR THE PEOPLE NETWORK (WPN) is a broad national network in the Philippines that campaigns for people’s control over water services and resources. It has more than 100 member organizations from all over the country. Research group IBON is one of the convenors of WPN. 

IBON NEWS | 20 March 2013 | The concession agreement provides various means that the water firms can use to hike water charges, which both Maynilad and Manila Water have taken full advantage of.

Water consumers in Metro Manila will experience lower rates starting April 1 due to the foreign currency adjustment, since the peso is appreciating against the dollar. However, research group IBON said that the decrease in tariff is meaningless because water firms are charging consumers doubly for foreign currency adjustments.

Based on the concession agreement, the Metropolitan Waterworks and Sewerage Systems (MWSS) may allow the private firms to make price adjustments so they can recover losses from foreign exchange and inflation through charges such as the foreign currency differential adjustment (FCDA). Both concessionaires Manila Water and Maynilad have dollar-dominated loans. However while this is already an onerous clause, the two water firms are even allowed to collect the currency exchange rate adjustment (CERA) to recover forex losses on top of the FCDA , doubling the unnecessary charge to water consumers.

Both Maynilad and Manila Water are allowed to charge consumers a fixed rate of Php1.00 per cubic meter for CERA. Thus, even if there is a recent decrease in the FCDA of Php0.33 and Php0.12 for Manila Water and Maynilad households respectively, the water firms have still been able to compensate forex movements through the CERA. The water firms started collecting the FCDA since 2003 after amendments were made on their concession agreements.

According to IBON, a co-convenor of national alliance Water for the People Network (WPN), among the promised benefits of privatizing the MWSS are more affordable water rates, but the anomalous charging exposes how privatization has actually resulted in onerous charges that consumers are forced to bear. The concession agreement provides various means that the water firms can use to hike water charges, which both Maynilad and Manila Water have taken full advantage of. In fact, the water firms have increased their basic charge since 1997 by 585% for Maynilad and 1,119% for Manila Water. Since the privatization of the MWSS, Philippine water rates have also become among the highest in Asia.

As the World Water Day nears, IBON and WPN reiterate their call to review water privatization as a framework in ensuring the access to clean and safe water. Water rates become excessive when placed in the hands of private firms that seek profits over public welfare. (end)

November 20, 2012
Bulwagang Tandang Sora
College of Social Work and Commnity Development
Water System Employees Response
Water for the People Network
All-UP Workers’ Alliance