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Tuesday, November 22, 2005
Ong: Corporate greed over public welfare
By Ted Aldwin Ong
I BELIEVE, and so as the majority of water consumers all over the world, that w ater is a human right. This is the reason why water distribution companies is classified as public utilities because government agencies monitor their operations and regulate their rates and charges to consumers.
But the privatization program of international financial institutions like the Asian Development Bank (ADB) is pushing the services sector to corporate hands that are profit driven. So the civil society in Asia-Pacific region are clamoring against privatization of water services and condemns the detrimental impact ADB's involvements in the water sector.
M any people and communities are demanding that the ADB review not only its water policy but also its overall lending strategy that traps governments into poverty-inducing measures such as the privatization of water utilities.
The Philippine experience consistently demonstrates how the Bank wielded the debt of its developing member-countries as leverage to aggressively push conditionalities to ensure repayments and are made part of requisites for loan approvals and good credit ratings. With water supply being capital intensive, privatization as a loan conditionality has created an enabling environment for transnational corporations to takeover water supply systems that were previously monopolized by governments.
The Philippine experience with the so-called "private sector participation" (PSP) in providing water services, as promoted by ADB's water policy and as enforced by its lending activities, is a cautionary tale showing that where water services hinge on profit making, the basic right to water of all individuals, particularly the poor, will always be at risk.
For over eight years of having profiteering corporations in Metro Manila's water distribution system, undue burden has been passed onto hapless consumers. Tariffs are escalating so fast: Manila Water's rate now read 700 percent higher than in 1997, while Maynilad's has increased by 500 percent.
More than 700 people were victimized (seven of them died) by a cholera outbreak in the west zone of Metro Manila due to contaminated water. The West Zone operator (Maynilad) is itself in hot water-continuously embroiled in controversy over its rate increases, mismanagement of the water company, and an anomalous corporate rehabilitation plan that obligates the government to shell out public funds amounting to $53-million.
The East Zone operator, meanwhile, revels in its new status as the Metropolitan Waterworks and Sewerage System (MWSS) declares the concessionaires as "mere agents" and not public utilities by themselves. This frees the private water operators from the 12 percent profit limit for public utilities, as set by laws. Manila Water, registering a 40.92 percent profit margin in 1999, is walking away scot-free with P281 million excess profits.
The ADB, whose lending to the Philippines already reached $3.091 billion in 1997, perpetuated this sad plight of Metro Manila water consumers. By the time Metro Manila's water distribution system was auctioned off to the private sector, it has already funded eight water supply and sanitation projects of the MWSS amounting to $ 344,786, 11.18.
One of these projects, the Umiray-Angat Transbasin Project (UATP), had an accompanying advisory technical assistance grant amounting to $582,000, which explicitly intended introduce PSP in the operation and management of MWSS sector activities.
For the ADB to admit the serious flaws of the MWSS privatization deal - the largest of its kind in the Asia-Pacific region and the world - would be tantamount to making a strong political statement on the failure of water privatization. But the MWSS privatization has turned into just that - a failed undertaking that is privileging private enterprise at the expense of millions of consumers. (Comments to tao.ssi@gmail.com)
(November 22, 2005 issue)
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