‘Shape up or ship out’
Credit to Author: CATHERINE S. VALENTE, TMT| Date: Wed, 20 Mar 2019 16:43:52 +0000
AN OUTRAGED President Rodrigo Duterte berated officials of the Metropolitan Waterworks and Sewerage System (MWSS) and its two concessionaires, Maynilad Water Services Inc. and Manila Water Co. Inc., for the water shortage in parts of Metro Manila and Rizal.
Duterte also threatened to fire the heads of the state-run MWSS and terminate the concessionaires’ contracts, Malacañang said on Wednesday.
In a statement, Palace spokesman Salvador Panelo said the President told MWSS officials to “shape up or ship out,” during a 40-minute meeting in Malacañang on Tuesday night.
“The Chief Executive told them he was not going to listen to their explanation as to why there was a water shortage as such would be just plain excuses. They simply did not do their job. All they care about is get profit from the water of the people and to their sufferance as well,” Panelo said.
“The President told them they could have simply anticipated such shortage and could have done something about it. They had to wait for him to threaten them with personally rushing to Manila from Davao to grapple with the crisis before they moved to end it. The Chief Executive bluntly told them to ‘shape up or ship out!’” he added.
MWSS officials were told to submit a report before April 7.
Elaborating further on the meeting, which he described as more of a “monologue” by the President, Panelo said: “In a stern message delivered without even once looking at the officials, the obviously outraged President threatened to fire the MWSS officials and terminate the concessionaires’ contracts.”
He said the President would decide “whether heads will roll or whether the contracts of the concessionaires will be terminated” after the submission of the report.
“He (Duterte) said the officials knew of the problem leading to the stoppage of the flow of water but they did not resolve to prevent it from happening,” Panelo said.
Manila Water, the east zone concessionaire, had been implementing water interruptions in several areas in Metro Manila and Rizal to ensure that water supply would last until June or the rainy season.
Another ‘sermon’
MWSS officials received another long sermon from lawmakers Wednesday morning after it was revealed that the agency was getting about P1 billion in annual fees from water concessionaires, partly to repay debts.
During the public inquiry of the House Committee on Public Accounts, panel Chairman Minority Leader Danilo Suarez said the MWSS budget should come from the General Appropriations Act (GAA) instead of Maynilad and Manila Water, which had been paying at least P400 million each year to the government agency.
“We have been suggesting that MWSS budget should come from the GAA. They perform their job as a regulatory office. The operations and expenditures of MWSS is being paid by the two service concessionaires. So the regulator is being paid by the regulatee,” Suarez said.
Maynilad Chief Operating Officer Randolph Estrellado explained: “We pay concession fees to MWSS. In my own understanding, part of that goes to payment of debts. That is comprised of cost of operations of MWSS, where their expenses are coming from. It’s now P400 million for operations, from Maynilad and Manila Water per annum.”
Manila Water Chief Executive Officer Ferdinand dela Cruz gave a different figure and said MWSS receives P522 million from each of the water concessionaires annually, factoring inflation.
MWSS Corporate Office Deputy Administrator Moro Lazo said part of the concessionaires’ fees goes to the salaries of over 150 personnel of the agency.
Lawmakers questioned the regulatory capability of the MWSS amid these hefty fees.
“To the MWSS Regulatory Office, I think you have failed in your regulatory function. We cannot expect the concessionaires to police themselves,” said Nueva Ecija Rep. Rosanna Vergara.
‘Wait for new rates’
MWSS Chief Regulator Patrick Ty reiterated to the panel that instead of administrative fines, they could only impose rate rebasing on the two utilities.
Rate rebasing is a process of adjusting water rates every five years based on performance, and is a way for the government to ensure that utilities do not accumulate profits and losses. The next rebasing is set in 2022.
For Bayan Muna party-list Rep. Carlos Zarate, the MWSS should not wait five years to charge Manila Water.
Buhay party-list Rep. Jose “Lito” Atienza said Maynilad and Manila Water should be reminded of their obligation of completing its coverage of wastewater facilities to address the shortage, before imposing hefty service fees on the public.
“I demand a refund here of all that you have paid for. People are very angry and I’m delivering the anger of the people in this committee. You have failed…and we cannot take your ‘sorry,’” an angry Atienza noted.
The committee backed proposals to get water from the Kanan River Bulk Water supply and the Sumag River diversion project to address the shortage.
“Why are we going to compete with the private sector just because we have an offer from the Chinese that they are willing to lend you money?” Suarez said, referring to the China-funded Kaliwa Dam in Quezon Province, to be built by the government starting July.
The Senate Committee on Public Services will scrutinize the loan agreement with China for the construction of the Kaliwa Dam, amid charges that a provision of the deal could effectively allow Beijing to take full control of Manila’s patrimonial resources in case of a default.
Sen. Grace Poe, the committee chairman, said she would await submissions of the MWSS administrator who vowed to forward to senators a copy of the financing for Kaliwa Dam, which was sealed when Chinese President Xi Jinping visited the country in November last year.
“We will look into that so that it could be included in our committee report that should serve as a public record that everybody can scrutinize,” said Poe, who led an inquiry into the water shortage on Tuesday.
New tunnel from Angat Dam
Manila Water and Maynilad are also planning to start within the year a P3.2-billion tunnel to increase the volume of water that can be conveyed from Angat Dam to ensure sufficient water supply in the future.
“We have been convinced by MWSS to include in the common purpose facility the building of the other tunnel to augment the capacity of the conveyance from the Angat to the portal,” Maynilad President and Chief Executive Officer Ramoncito Fernandez said at the sidelines of the Water Philippines 2019 Expo and Conference in Pasay City.
Fernandez said on Wednesday that the two companies were finishing the technical plans and detailed engineering for the project.
The existing water infrastructure has three tunnels and six aqueducts that convey 2,400 million liters per day (MLD) of water allotted by the Natural Water Resources Board to the MWSS. This then shared by Maynilad (2,400 MLD) and Manila Water (1,600 MLD).
Last week, the MWSS asked Metro Manila’s two water concessionaires to develop the conveyance tunnel called Tunnel 5, which will convey water from Angat Dam in Bulacan to the La Mesa Dam in Quezon City.
The planned tunnel will complement Aqueduct 7 being constructed by the agency, which has secured the National Economic and Development Authority’s approval and undergone a feasibility study.
The agency has already finished two tunnels that could accommodate an additional 2,400 MLD.
The project cost will be equally split between the two water service providers. The construction of the tunnel will result in savings of about 25 to 30 percent because of the boring equipment for a separate project.
“If we save about P750 million, then it will translate to savings for the tariff,” Velasco said.
Under the concession agreement signed by the MWSS with Manila Water and Maynilad, the two entities can recover the costs incurred for improving water supply and services through the rate rebasing process, wherein water tariff is adjusted every five years.
Ty said, however, that it would be risky for both entities to undertake the project because the agency does not preapprove projects.
“It was not included in the business plan. That’s why it was not included in the rate rebasing last time. So it’s not yet priced in,” Ty said.
“That’s why they are being asked to do it. They will pay for it. That’s why [MWSS Administrator Velasco] asked me to be reasonable because it would be risky on their part.
The project may be disallowed,” he added.
But Fernandez said they could recoup the cost in the fifth rate rebasing in 2022, adding that concessionaires only implement projects approved by the MWSS Regulatory Office.
Fernandez also noted that Maynilad has yet to collect P81 billion from customers in the west zone since the concession agreement commenced in 1997.
Fernandez said Maynilad would review its business plan and accelerate some of its short-term and long-term plans to eventually lessen its dependence on Angat Dam.
WITH JORDEENE B. LAGARE AND JAVIER JOE ISMAEL
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