The water crisis
Credit to Author: RONALD S. GOSECO| Date: Thu, 19 Dec 2019 16:43:53 +0000
The water crisis has been hugging the headlines recently and it looks like the administration wants to solve this by upturning government contracts and further militarization. I have to admit that this will benefit my former military colleagues and I am truly happy for them, but this will certainly not solve the problem. It also reminds me of a populist ploy that pits business “oligarchs” against the general population. All these sound too familiar, especially for those who were around in the 1970s. But let me focus on the water problem. One may argue though that all these moves could trigger bigger business risks for all of us.
The problem remains that Metro Manila remains at risk of a water shortage for the summers of the remaining term of this administration.
As a background, Angat Dam is still the major supply source for Manila. It has a water flow or a supply of 4,000 million liters per day (MLD). And 1,600 MLD of this is allocated to Manila Water Co. Inc. but their demand franchise is at 1,740 MLD or a shortfall 140 MLD. This scenario assumes that Angat will in fact, be filled up to supply what it is supposed to deliver next year. The required water elevation of 216 meters of this dam has not been met even with the recent typhoons. According to the Metropolitan Waterworks and Sewerage System (MWSS), the Angat level reached only 196 meters as of Dec. 16, 2019. This water crisis cannot be solved with more distribution or new septic lines that have been bandied about as the reason why the franchisees have failed in their commitments and should be taken over. New water sources simply have to be built.
The Kaliwa Dam, which was announced to be completed by 2023, is expected to supply 600 MLD. It was announced that this government project will be completed by 2022 but no one truly believes that this can be achieved. In recent disclosures, Maynilad Water Services Inc. has factored in a completion date of 2026 but even that, seems optimistic. Both Maynilad and Manila Water started initiatives to develop alternative sources, particularly Laguna de Bay. The recent political developments are forcing them to re-evaluate these investments.
If you look back to 1997, then president Fidel Ramos turned to the business sector because the MWSS was incapable of maintaining viable operations due to technical inefficiencies and enormous financial debts. It was the government at that time which unilaterally determined the terms of the agreements with the business sector, which were then bidded out on a take it or leave it basis. Since then, Manila Water, according to its disclosures, has expanded water service coverage from 67 percent to 93 percent. Both water concessions improved customer service, except for the incident this year.
Once again, we simply have to analyze the basic root cause. Were the contracts that the Philippine government signed during the Ramos administration, and again reviewed and extended during the time of President Gloria Arroyo to blame for this water crisis? The answer seems simple but the solution seems to be taking on a dangerous precedent, not just for the companies involved but for the rest of us.
A common consensus appears to be emerging though and it is hoped that this approach will be adopted by reasonable minds. This will provide stability in the financial markets and will contribute to the solution of the actual problem. This addresses the demand side of the water equation or curbing water consumption, particularly wasteful water consumption.
Curbing water consumption has been suggested by cause-oriented groups like the Freedom from Debt Coalition and the Haribon Foundation. This approach was also presented to the Metropolitan Manila Development Authority, which is evaluating whether enforcing ordinances on lawn watering or car washing, similar to those enacted in California and other states, could effectively reduce water demand. I also presented an approach in a previous column, that water should be priced at a commensurate level befitting the valuable commodity that it truly is. If priced right, human motivation will simply dictate behavior. These steps have to be taken as the summer of 2020 is fast approaching. Since the supply issue cannot be addressed, we can all work together on the demand side.
Ronald Goseco is a Finex Foundation trustee.