EXPLAINER: Mayor Rama's alleged 'brokering' to privatize MCWD may show motive in sacking Daluz, 2 directors. But it's not evidence the complaints against them are false. Still privatization is a crucial issue to MCWD consumers, which needs to be discussed openly, fully.

CEBU. (From left) Cebu City Mayor Michael Rama, and Jodelyn Seno and Jose Daluz III of Metropolitan Cebu Water District. (Cebu City PIO/Contributed)
CEBU. (From left) Cebu City Mayor Michael Rama, and Jodelyn Seno and Jose Daluz III of Metropolitan Cebu Water District. (Cebu City PIO/Contributed)

WHAT JUST HAPPENED. Jodelyn May Seno, one of the two MCWD directors recommended with Chairman Jose Daluz III for removal by the Cebu City Legal Office, said in a press release and media interview (published Tuesday, June 20, 2023) that Mayor Michael Rama hosted a meeting last February 16, 2023 between Prime Water Infrastructure Corporation president Fe Rebancos and some MCWD board members and technical personnel.

The purpose of the meeting, Seno said, was not revealed to her and her colleagues -- turned out to be part of Prime Water's "data gathering and feasibility study" on the prospect of privatizing the local water district. In that breakfast meeting, held at the mayor's residence in Espina Compound in Barangay Guadalupe, the MCWD group requested Prime Water's Rebancos for a letter of intent, which that company sent on February 12. Ten days later, February 22, MCWD rejected the offer.

Takeaways from the new development in the running controversy between the mayor's office and the Daluz camp in MCWD:

[1] MAYOR RAMA'S ROLE. Last May 30, Daluz repeated to me what he earlier said was one reason the mayor was pissed off and wanted him out as MCWD chairman: Daluz opposed the privatization move. That has not been denied or clarified by the mayor, even after Seno made public details of the meeting at the mayor's house.

Media used the word "broker," which refers to a person or firm that "arranges a transaction between a would-be buyer and would-be seller, for a commission when the deal is executed." Not precisely accurate on Mayor Mike because the mayor may just have been exploring the possibility of privatization to solve what he saw as MCWD's problems.

Apparently not disputed is that the mayor favors privatization and Daluz does not. In his May 30 comment to me, Daluz said that "to be clear" he's "not for wholesale privatization." Private companies, he said, "are basically profit-driven," which risks the principal mission of the water district "to ensure clean and affordable water." Daluz feared "lack of accountability and loss of public control" over the public utility.

[2] PRIVATIZATION AND VILLARS' PRIME WATER. Prime Water, the private company that MCWD director Seno said offered to study the plan to have the local water district privatized, is owned by the Villars. Along with Metro Pacific of Manny V. Pangilinan, and Manila Water of the Ayalas, it has been engaged in the privatization of local water districts.

In 2018, when the Water System Employees Response, one of the groups fighting to stop privatization of local water districts, decried the "gobbling up" by big businesses, Prime Water owned 42, and had control in other, water districts nationwide. On January 11, 2021, LWUA Administrator Jeci Lapus revealed that Prime Water already took over 100 of the 500 water districts in the country. At the time, Lapus worried over job losses to government employees.

[3] DALUZ CAMP QUESTIONS MOTIVE. In disclosing the MCWD-Prime Water meeting at the mayor's residence, director Seno lent support to Daluz's earlier claim that the mayor's moves to oust him as chairman (then, as member as well) of the MCWD board must have been prompted by the mayor's wish to push privatization.

That may explain why the mayor has been going after the MCWD board chief -- who were allies in the last two election campaigns -- and help persuade the public see Daluz as a victim of harassment or persecution, less of an official accused of wrongdoings.

[4] LWUA TO ASSESS EVIDENCE OF CHARGES. For the Local Water Utilities Administration (LWUA) to approve or reject the recommendation of the City Legal Office (CLO) -- which investigated Daluz and two directors (the third is Miguel Pato, whom the mayor installed, unsuccessfully as chairman -- LWUA is expected to look at the evidence of the charges against the board members. What evidence did the CLO find to support the recommendation of dismissal?

Daluz's resistance to privatization may explain why the mayor has been going after him. But LWUA is bound to look at the evidence, whether it proves the accusations listed by the MCWD Employees Union against the directors and investigated by CLO.

It's a long list of alleged failures and irregularities, including meddling in appointments and selection of personnel, resulting in rising cost of water and inability to meet consumers' demand for water, summed up as "deteriorating corporate health" of the water district.

Mike's alleged ill-will or spite, even if true, does not prove the accusations against Daluz and company are untrue, if the evidence LWUA will review says they are.

LWUA will decide if Daluz and his two colleagues did those acts which constituted "evident bad faith, serious misconduct, and a lot of gross things: "gross inefficiency, gross incompetence and gross neglect of duty." No allegation though of graft or corrupt practices.

[5] THE PROCESS. Mayor Mike at first just wanted Daluz to leave the chairmanship and slide to mere member. That would explain the "informal" way the mayor's "Work Force" adopted initially in the operation versus Daluz. The board chairman resisted and latched on; thus, the shift to the "legal formalities."

The initial move to ease him out as chairman didn't follow legal procedure. The board action didn't come, so they had to go through (a) the mayor's CLO order to investigate, (b) the investigation and (c) the recommendation. This time, they want him terminated not just as chairman but also as member.

[6] ARGUMENTS AGAINST PRIVATIZATION. There are a lot of reasons listed by anti-privatization movements and organizations, including Water for Life and Water System Employees Response. Among the reasons:

* It leads to rate increases;

* It undermines water quality;

* Private companies are accountable to shareholders;

* It fosters corruption;

* It reduces local control and public rights;

* Private company financing costs more than public financing;

* It leads to job losses.

* It is difficult to reverse.

* It would leave the poor with no access to clean water.

* It would lead to bulk water exports.

House Bill #7962, filed in the last Congress (on November 5, 2020), exemplifies the legislative opposition to privatization of local water districts and supports the argument that increase of rates is the immediate and most afflicting result. From P2-P4 in 1997, when Manila Waterworks and Sewerage System was privatized, basic tariff rates increased to P34-P47 in 2018, or a 970 percent increase for consumers served by Manila Water Company and 596 percent increase for Maynilad Water Service consumers. (The bill didn't pass and it's not known if it has been refilled in the new Congress.)

[7] OPEN, FULL DISCUSSION. So far, there has been little talk on the merits and drawbacks on privatization. The public, particularly the MCWD consumers, have still to know specifics of the Prime Water proposal. Is it "wholesale," which Daluz said he opposes? And what kind of variation will he support?

People obviously have been distracted by the Rama-Daluz "sabong" or cockfight, the public exchange on whether the MCWD chief must be ousted, not on what is good or bad about entrusting the water district to a private national business giant.


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