HOW old are you when the Mexican soap opera star Thalia stupefied the Filipinos with her four Telenovelas? Upon the invitation of then President Fidel Ramos, Thalia touched down Philippines at dawn of August 16, 1996. With her skin-tight black halter top and leggings in front of about 50 cameras, she greeted the crowd “I love you all...”
When the anesthetic Thalia excitement receded, the Manilenyos were aghast to the reality that the tariff of water supplies in Manila went into series of increases. No one was mindful to the progression until President Rodrigo Duterte became furious against the two water firms in Manila.
Let me take you back to history. At first, there was a Metropolitan Waterworks and Sewerage System (MWSS) that provided 16-hour supply of water every day to two thirds of Manila. When MWSS was saddled to US$800 million debt, the Asian Development Bank (ADB) recommended with its findings to trim down the staff and correct the 60 percent not billable water supply due to leakage.
The losses turned apparent when Cory became president. She did not only assume presidency but also the debt, the massive corruption and cronyism of the previous administration that rendered many government owned and controlled corporation (GOCCs) insolvent. And so upon the advice of her lieutenants, Cory initiated a wide-ranging privatization program by selling the 122 ailing GOCCs if only to sustain its vital operations.
During the time of President Ramos, there was a “water crisis”; literally low water supply because of long drought and low tariffs that could hardly maintain the conveyance of water supply from the source, followed by the devaluation of peso to U.S. dollars. By law, at that time MWSS could not be privatized like other GOCCs.
In 1995 the government came up with the best option by passing the National Water Crisis Act of 2005 into law (R.A. 8041), to provide a legal framework for a public-private partnership. Two years later, the efforts brought to infusion of capital both from foreign and local investors. The Manila Water Co, Inc. by the Ayala Group for the east zone and the Maynilad Water Services, Inc. of the Lopez Group in the west zone. In 2008 however, the Metro pacific of Pangilinan Group took over Maynilad.
The government entered into a 25-year concession contract with the two consortia with international partners which will end on 2022. Had it not of this potent government action, Manila could not have this sort of service to more than 18 million Filipinos today.
In 2009 during the time of President Arroyo, an agreement for the extension of the deal was signed to last until 2037 for the reason that these concessionaires are still deeply plunged into debt, working hard to save the dying investment.
The MWSS as the regulating body did not grant increase in spite of many petitions of the two concessionaires who explained to regain their losses. Because of much loss, the concessionaires filed a case in the international arbitration tribunal in Singapore to protect their investment. And the rest is history.
Recently, the announcement of Malacañang to scrap the extension deal and not to pay the nearly P11 billion award ruling of the international arbitration tribunal in Singapore is altogether a reckless driving along the blind curve. The president continued his attack, threatened to suspend the writ of habeas corpus and will arrest the “two crocodiles” obviously referring to Ayala and Pangilinan for “economic sabotage” even when the broke concessionaires already expressed willingness to cooperate with the government and renegotiate the terms of the agreements.
In effect, the stock market announced P127 billion lost in eight trading days after President Duterte slammed the water firms. Pangilinan’s Metro Pacific Investment (MPIC) the parent conglomerate of Maynilad lost P53 billions.
These losses will have a domino effect to all banking institutions in the country taking into account the loans of these two water firms. Although this may not be exactly a persecution to local investors, but all the more, foreign investors will have a second thought whether or not to invest in the Philippines.
By the way, the agreement was executed in good faith after consultations; and that the concessionaire’s motive is to competently serve the 18 million consumers. Granting that the agreement was “onerous”, it was the best decision made by the government at that point in time that may not be applicable this time. Can you then charge Jose Rizal today with “jaywalking” for crossing Blumentrit when there was no anti jaywaking ordinance yet at that time?