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Editorial
Water woes

After the howl of protest against the exhorbitant PPA rates, another
issue appears to be gathering storm. Water, more essential than
electricity and without which there would be no life. Water, access to which should be guaranteed all. So why did government relinquish control over the maintenance and distribution of water? And why is it now condoning an unconscionable water rate formula that allows private water companies to pass on to their customers foreign debt obligations and, worse, a triple taxation that is making the cost of basic water service unreasonably high?

Don’t just look at your water bill. Scrutinize it for all the extra and hidden charges that make water seem not an essential but a luxury item for which you have to be taxed three times over and penalized for using. Even if you happen to be a mathematics professor, you will still need to call the water company to know the formula for computing your bill.

There is no one basic rate for the number of cubic meters (cu.m.) of water consumed. Computing the charges is like riding a roller coaster. The basic rate starts high then goes down then rises several times before it finally levels off. For the first ten cu.m of water consumption, the charge is P15.08/cu.m. The rate for next 10 cu.m. dives down to P1.84/cu.m; the next 20 cu.m almost doubles to P3.48/ cu.m; the next 20 cu.m. rises to P4.59/cu.m.; the next 20 cu.m. to P5.37/cu.m; the next 20 cu.m. to P5.62/cu.m; the next 50 cu.m. to P5.87/cu.m; the next 50 cu.m. to P6.13/ cu.m; and finally the rate for over 200 cu.m. levels to P6.38/cu.m.

A family of five that consumes an average of 80 cu.m. a month will thus have a basic water charge of P438.00 at an average rate of P5.47 per cu.m. On the surface, this seems okay when compared to the old MWSS rate of P8.78/cu.m.

But wait, the basic water charge is not the water charge. The water charge includes as well the Currency Exchange Rate Adjustment (CERA) and the Foreign Currency Differential Adjustment (FCDA) which authorizes the water company to pass on to consumers its foreign exchange (forex) losses.
Water is locally sourced yet CERA and FCDA are imposed on local water for each cubic meter used. Forex is never stable but a water company like Manila Water Co. has fixed its CERA at P1/cu.m. and its FCDA at a whopping 49.6% of the basic water charge.

The basic water charge, the CERA and the FCDA when put together make up the water charge. The family of five that consumes 80 cu.m/mo would then have to add to the basic water charge of P438.00 the CERA of P80 and the FCDA of P217.25 for a total water charge of P735.25!

But wait again! The total water charge is not the total water bill. There are more charges. There is the 10% environmental tax not on the basic water charge alone but on the total water charge which includes the CERA and the FCDA. It’s adding insult to injury when customers are already made to pay for the forex losses of the water companies and are taxed for the same forex losses. For the family of five, this brings up its water bill to P808.78.

Unfortunately, this is still not the total water bill. A maintenance fee is charged based on the size of water meter a family uses. The fee may be a minimal P10.00. But this is added to the total water charge and the environmental tax. Finally, for the family of five, the water bill which has already risen to P818.78 is imposed another incredulous 10% VAT for a total water bill of P900.66. Taxed once again are the basic water charge, the CERA, the FCDA and, unbelievable as it may seem, the environmental tax!

The process of privatizing one of Asia’s oldest water systems, the MWSS, began in 1995 when Congress gave President Ramos special powers to fend off what the Ramos administration argued was a “looming water crisis.” The MWSS was considered too graft-ridden and grossly inefficient to supply the water needs of Manila’s 11 million. It suffered system losses and failed to bill 58% of the water produced by its water treatment plant because of leaks, pilferage and illegal connections. It could only service 61% of Manila’s population even as it was earning P600 M to P1 B. Privatizing the MWSS, government reasoned, was a way to “ensure improved quality and coverage of water services while relieving government from the burden of paying for future capital outlay.”

In 1997, water treatment distribution, tariff collection, facility improvement and over-all management of water services were transferred to two water concessionaires – Manila Water Services which won the contract for the East zone with only a P2.32/cu.m bid and Maynilad Water Services which won the West Zone with a P4.97/cu.m bid. In the meantime, government set up the MWSS Regulatory Office (RO) to ensure compliance of the concessionaires with their obligations and responsibilities, to conduct regular, independent and technical audit of the activities of the concessionaires, and to study and recommend actions for water rates adjustments.

But how has privatization worked for the public water consumers?
Coverage has expanded, true. There are probably more residences now benefitting from improved quality of piped water. But the water companies have craftily adopted a policy of providing water connections to needy subdivisions only through a mother meter and not to individual homeowners. Unwitting homeowners’ associations end up collecting the water bill payments for the water company and absorbing system losses when pipes leak and burst from the water pressure. In this way have the water companies turned their backs on their responsibility to maintain the water pipes. In this way do they increase their profits.

And has privatization resulted in cheaper water rates? Within a span of only 5 years, the water rates have soared. In the case of Manila Water, the charges have risen from a low bid price of P2.32/cu.m to a minimum of P11.26/cu.m (if consumption is 80 cu.m) and a high of P12.74/cu.m (if consumption is more than 200 cu.m). And it is said that another rate increase is imminent.

The rate adjustments have been too easily granted by a regulatory office that is supposed to protect the interest of public consumers. The MWSS RO has too readily agreed to a roller-coasting type of sneaky charging that is tantamount to triple taxation. How ridiculous that it has even approved a VAT on the water companies’ supposed forex losses, environmental tax and on such a basic service as water.

Privatization has only exacerbated our water woes. With the way life’s essentials are being privatized, pretty soon, even the air we breathe will be taxed for forex losses, environmental levy and VAT.

Opinyon
Heresies
All in the Family, Part 2
Sapantaha
Ang pabula ng pag-inog ng buhay

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Updated June 21, 2002
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