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MAKABAYAN warns: New Year air travel crisis pretext to airport privatization

Like millions of Filipinos, development worker Tata Catarata went back to their home province of Cebu to spend the holiday season with their family. They booked a return flight to Manila on the first day of 2023. But like tens of thousands of other passengers, they were stranded at their airport of origin, belatedly informed that their flight had been cancelled because the country’s Air Traffic Management (ATM) system is down.

“We arrived at the Mactan International Airport at past 2 pm. Upon entering the gate towards checking in, we were barred and simply told that flights are canceled. We asked why and they could not explain. Basta lang, it’s canceled,” Tata bewailed.

Early on the first day of the New Year, just when domestic and international travel is at its peak, the Philippines was hit by an air travel crisis. As the day wore on, the government said a reported 361 incoming and outgoing flights at Manila’s Ninoy Aquino International Airport (NAIA) had either been cancelled or diverted, many of which flew all the way back to their airports of origin. About 56,000 passengers were stranded all over the archipelago yesterday, including Tata’s family.

Without providing specifics, transportation secretary Jaime Bautista said “technical issues” brought about the suspension of NAIA operations. Speculations said the radar system was down, preventing airplanes from taking off or landing. Initial and unconfirmed reports said Manila’s radar sytem was brought down by an electricity outage that has since been disputed by power supply providers. In a subsequent statement, Bautista said NAIA’s ATM needs at least Php13 billion pesos for its much-needed upgrade.

But it is not only airport operations that made the problem worse for the affected passengers. Tata said local airlines were of no help to them either.

She said they decided to follow the advice of the government to have their flights rebooked. But the Philippine Airlines (PAL) ticketing office in Cebu was already jam-packed when they arrived and they were barred from entering the premises. An airline representative told them to rebook online but repeatedly failed. Tata said she had to brave the crowd and waited to be accommodated at the ticketing office. It took her eight hours to finally be rebooked, she added.

“I asked PAL if there is food and accommodation for us as secretary Bautista said. PAL said there’s none because the situation was not their fault. But, definitely, it’s also not the stranded passengers fault, is it? So who is accountable here?” Tata said.

Respect passenger rights

Bautista said the Department of Transportation (DOTr) has directed the airlines to provide food and refreshments, transportation lodging and accommodation for all affected passengers free of charge. But this failed to prevent thousands of passengers spending the first night of 2023 at NAIA’s various terminals, the airlines refusing to heed the government’s directive.

The affected passengers should automatically be taken care of and receive compensation for the inconvenience they suffer if only the Airline Passenger Bill of Rights passed, former Representative and Bayan Muna chairperson Neri Colmenares lamented.

Colmenares said his sponsored bill had passed the House of Representatives (HOR) in 2016 but failed to become law due to lack of support in the Senate.

Colmenares explained that in case of flight delay, airlines should offer free re-booking, flight refund or endorsement to another carrier.

“For terminal delay of at least three hours, passengers have the right to avail themselves of refreshments or meals, free phone calls, text or emails and first aid,” he added.

“But from the reports we received many passengers went hungry yesterday and others slept on airports. This should be addressed immediately and the incident should not be used to justify another sale of government asset and increase in airline rates,” Colmenares said.

Incompetence or pretext to privatization?

Another Makabayan bloc Representative said the timing of the reported technical ATM glitch is “fishy”, happening as it did very closely after the DOTr announced just last December that the Ferdinand Marcos Jr. government is pursuing NAIA’s privatization.

In a briefing last Wednesday, Bautista told reporters: “We have worked with the Asian Development Bank for the preparation of the terms of reference for the privatization of the Manila International Airport.”

“Todo naman yata ang pagtutulak na muli sa pribatisasyon ng mga key assets at services ng gobyerno na wala na namang konsultasyon sa mamamayan na papasan ng dagdag bayarin o singil dahil dito. Kahapon lang din ay tinanggal na ng DOTr ang libreng sakay sa EDSA bus carousel at plano din pagsasapribado nito,” said HOR Deputy Minority Leader and ACT Teachers Party Rep. France Castro said.

(It looks like the privatization of the government’s key assets and services are being pushed to the hilt even without consulting the people who will bear the brunt of added costs. Just yesterday, the DOTr also ended the free ride service on the EDSA bus carousel that is in line with proposal for its privatization.)  

“Sa annoucement ng DOTr sa pribatisasyon ng NAIA noong Dec.30 at nangyaring ‘power outage’ kahapon ay di natin masisisi ang mamamayan na mag-isip na ito ay sinadya para mapabilis ang pagbebenta nito kahit di kinukonsulta ang mamamayan at ipaliwanag ang ireresulta nitong pagtaas pa ng singil sa pasahe sa eroplano,” Castro added.

(In DOTr’s December 30 announcement of NAIA’s privatization, we could not blame the people into thinking yesterday’s so-called power outage was staged to make the airport’s sale faster. This, even if the government has yet to consult the people and explain the impending increase in plane fares.) ###

‘NAGAUGTAS AKO’: Approval of BACIWA-Prime TOR ‘hurried,’ ‘without proper study’ – GM

Visayas Today

The decision to approve a “certificate of successful negotiation” for ongoing talks between the Bacolod City Water District and Prime Water Infrastructure Corp. for a controversial 25-year joint venture agreement was “hurried” and done “without proper study,” the general manager of the water utility said.

“Naga-ugtas ako (I am exasperated),” Juliana Carbon declared in an interview.

Carbon stressed that, while she saw nothing inherently wrong in allowing private sector participation in improving BACIWA’ s services and systems, the local utility has, given the needed funding and direction, the capacity to accomplish the task.

A joint venture, she said, “is only one of the solutions and it is not the best; there are many other options.”

From daily noontime rallies staged by the BACIWA Employees Union, opposition to the proposed deal, which many consider “privatization,” has grown steadily, joined by various sectoral organizations. As of this week, four barangay councils – those of Sum-ag, Pahanocoy, Tangub and Barangay 21 – have passed resolutions against the joint venture, with others expected to follow suit.

The joint venture, says the BEU and others against the joint venture, would turn water from a natural resource to a profit-generating commodity, to the detriment of consumers. For starters, the union says, a 12 percent Value Added Tax will be automatically tacked onto water bills once the deal is closed.

The BEU, like Carbon, has pointed to other options, most of which, it says, can be carried out by BACIWA itself – for example, entering into agreements to purchase abundant surface water from neighboring water districts like those of Murcia, Bago or Talisay.

While Carbon acknowledged that BACIWA does not have the funds for expansion, she pointed out that the Development Bank of the Philippines “has written us, offering us standby credit of P3 billion.” The Metro Bacolod Chamber of Commerce and Industry has urged BACIWA to take advantage of this.

Yet, in the end, “the board makes policy and it is their decision to go into the (joint venture agreement) as head of the procuring entity” even as she stressed that the governing body created the Joint Venture Selection Committee to study and evaluate (offers) if these are for the good of BACIWA, the people and the workers.”

Carbon said she herself has “practically no role.”

But even if a joint venture were really necessary, Carbon said, the one being negotiated with Prime Water is fraught with problems, not only for BACIWA but, more important, its employees and its consumers.

In fact, Carbon said that, in comments she was asked to make on the negotiation report following the Joint Venture Selection Committee’s last meeting on July 4, she concluded that “the negotiations are not over yet and in fact failed in some aspects.”

Despite these findings, the board approved the issuance of the certificate of successful negotiation.

While admitting she had yet to receive a copy of the certificate, “I understand that there were refinements based on some of my comments.”
However, she noted that these changes were “most likely done by the board” outside the regular JVSC meeting and should, therefore, be subject to a board decision.

The issue of BACIWA’s earnings from the joint venture readily stood out as a major problem.

Carbon said BACIWA, which she stressed “has never been losing,” had asked Prime Water for P80 million a year, “which is our current average net income.”

“But Prime would agree to only P35 million a year from year 1 to 5, and P36 million a year from year 6-10,” she said. “This includes money for wages.”

Under this arrangement, BACIWA will hardly earn anything, Carbon said, something the Commission on Audit would surely question.

Another major flaw Carbon sees is the lack of detail in many of the proposed agreement’s provisions which, she says, could make the deal grossly disadvantageous to the government.

“If they say they will build a building for BACIWA, the dimensions – the floor area, the number of stories – should be specified” otherwise, Prime Water could build a small building and claim it as compliance with its commitments, she explained.

“If you enter into a partnership, you have to lay down all your reasonable goals and then convince the partner to agree and comply with these. It cannot be only what the partner wants. We cannot leave this to Prime Water to decide,” Carbon stressed.

She pointed out that in the terms of reference, Prime Water committed to supply a minimum of 10 psi (pound-force per square inch) during the first year of the joint venture.

“But in the new TOR, this has been moved to the fourth year,” she said.

The BACIWA general manager notes that while Presidential Decree 198, which created local water districts, mandates that water districts acquire, install and facilitate water systems, the joint venture hands over management and operations to Prime Water and “relegates BACIWA to a mere regulating and monitoring unit,” a point critics of the deal raise to argue why it is privatization in all but name.

Carbon also questioned why Prime Water is not obliged to assume BACIWA’s obligations, like the P400-million balance of its original P507-million debt to the DBP.

Although Prime Water will give BACIWA the funds to meet its annual payments, “what if somehow it becomes unable to do so? Since all revenues go to Prime Water, what happens to BACIWA since, in the contract, BACIWA remains the debtor?”

In contrast, she said, Metro Pacific paid off the debt of the Metro Iloilo Water District.

Another snag Carbon saw is Prime Water’s use of BACIWA’s assets, which she said COA has opined “should be considered asset rentals and subjected to a separate agreement.”

“But the negotiation terms provide that Prime Water will pay net usufruct – a legal term meaning to use and enjoy a thing and which is usually free – payments of P25 million a year. This is really still rental,” she said.
But what riled Carbon most are the provisions covering BACIWA’s personnel.

BACIWA executives have given assurances that employees will be “absorbed” under the joint venture, a claim disputed by both the BEU and Carbon since what they say will happen is that the personnel will be transferred from government to private employment. The union says this is evident since their social security coverage will shift from the GSIS to SSS.

“I cannot understand how a mere contract can change the status of employees from public to private,” Carbon wondered.

“Under the agreement, the employees have only two options,” she said. “Be absorbed and become private sector employees, or retire.”

Also, the proposed agreement is silent on the fact that permanent employees have to resign and go through the pre-hiring process all over again, which she said is definitely not absorption.

And even if employees opt for retirement, “there is another problem.”
This has to do with “propriety – some even call it a bribe,” she said.

Carbon was referring to an admittedly generous offer of financial assistance equal to 250 percent of an employee’s current wage.

“But why should Prime Water, a private entity, give BACIWA employees, who are government workers, this incentive and then pass it on to the consumers? Is the employee even allowed to receive this?” she asked.

And then, she added, there is a third question: “What if the employees choose to remain with the district as government employees? Can BACIWA force them to resign or retire?”

Aside from these and other problems in what the BACIWA board has declared a “successful negotiation,” Carbon said “there are so many horror stories of what happened to the districts that partnered with Prime Water.”

“I wonder why the representatives of the water district did not see this and instead signed the certificate of successful negotiation,” she said.

On Consumer Welfare Month: 20 years of MWSS privatization, 20 years of violating the people’s right to water

By Water for the People NetworkThe 20th anniversary of the privatization of the Metropolitan Waterworks and Sewerage System (MWSS) in August was considered a milestone by privatization proponents. The MWSS has often been used to showcase the supposed benefits of turning over water supply services to private corporations. But the start of government-declared Consumer Welfare Month is an opportune time to note that two decades of MWSS privatization has harmed the interests of the consumers and the general public. While ensuring huge profits for Manila Water Co. Inc. and Maynilad Water Services Inc., it has violated the people’s right to water, the various ways by which are listed below:

  1. MWSS privatization has resulted in soaring water rates as private concessionaires rake in massive corporate profits

Between August 1997 and August 2017, the basic tariff of Manila Water has soared by 969 percent. The basic tariff of Maynilad, meanwhile, has ballooned by 596 percent. The all-in tariff, which counts the basic tariff plus add-on charges, for Manila Water has increased by 762% during the same period. For Maynilad, it has jumped by 548 percent.

This translated to enormous profits with a combined accumulated income of Php94.5 billion from 2000 to 2015. Such soaring rates and massive profits for Manila Water and Maynilad were made possible by the concession agreements (CA) they signed with MWSS. Tariffs reflected the impact of inflation, adjustments in the foreign exchange rate, and the concessionaires’ petitioned basic charge which would allow them to supposedly implement their business plan and achieve a guaranteed rate of return in the succeeding five years.

Privatization guaranteed the profits of Manila Water and Maynilad not only by allowing them to pass on all the risks of running a business to the consumers. Privatization also legitimized the collection from the consumers of onerous and questionable charges by MWSS concessionaires.

During the last rebasing in 2013, it was exposed that Manila Water and Maynilad had been including questionable items in their application for new rates. As in previous rebasing exercises (2002 and 2007), they passed on to clueless customers the costs of their corporate income tax (CIT), unimplemented projects, advertising, donations, and recreation.

  1. MWSS privatization has seriously undermined the power and mandate of government to regulate the private concessionaires to protect public interests and welfare

The last rebasing also exposed a key feature of MWSS privatization which is how the power of the state to regulate businesses to protect public interest is greatly undermined. When the Regulatory Office (RO) prohibited the concessionaires from passing on their CIT and other questionable charges to the consumers, Manila Water and Maynilad promptly challenged the decision through international arbitration. This is a mechanism provided by the CA to settle disputes between the concessionaires and MWSS on the interpretation and implementation of the contracts’ provisions, including on the setting of rates. It is a secretive and undemocratic process that includes only representatives of MWSS and the concessionaires and without any public participation. It is being chaired by an unaccountable foreign third party that also represents big business interests.

Filipino taxpayers now face the possibility of shouldering as much as Php82 billion in additional burden if the concessionaires are able to secure favorable decisions from international arbitration. Already, the arbitration panel that heard Maynilad’s case ordered government to pay Php3.4 billion. These amounts represent the supposed losses of the concessionaires when the RO disallowed the continued collection of the CIT and other questionable charges. As stipulated in the CA, government has committed to pay for these supposed losses through what is called sovereign guarantee.

As early as 1998 or a year into privatization, Manila Water had already sought international arbitration to compel the RO to increase the firm’s rate of return contained in its original bid. Aside from the arbitration mechanism, concessionaires also resort to blatant arm-twisting to force favorable decisions from government. In 2001, the original investors of Maynilad blackmailed government to amend the CA to allow it to increase rates or else it would terminate the contract.

  1. MWSS privatization has further weakened the people’s right to water amid questionable claims by the concessionaires of improved water services

The soaring water rates and onerous charges being imposed by Manila Water and Maynilad have effectively marginalized poor households from enjoying the right to access water for domestic use. Amid depressed wages and chronic unemployment, water services along with other basic daily necessities, have put increasing pressure on ordinary families’ budgets.

While both concessionaires claim almost universal water supply coverage, poor communities in their service areas do not enjoy the same quality of service that well-off customers like richer households and commercial areas have. Instead of individual connections, poor communities have to make do with bulk meter connections. Aside from compromising the safety and quality of water, it is also not unusual that the water supply in these poor communities is not available 24/7.

Based on the latest available data, the number of persons per connection for Manila Water is seven, and nine for Maynilad, indicating the prevalence of bulk connections – mainly among urban poor communities – in the MWSS concession areas. Thus, while the concessionaires claim outstanding performance (which the RO apparently could not even independently verify), the truth is that many households, in particular the poor, are not individually connected to the water supply system, which is supposed to be the standard. The poor also end up paying more as block tariff rates apply on these bulk connections.

Aside from universal and 24/7 supply coverage, the concessionaires also promised to provide improved sewerage coverage, which they substantially failed to do amid limited investments despite skyrocketing water rates. In their original service targets, Maynilad committed to achieve 31% sewerage coverage by 2016 and 52% for Manila Water. As of December 2013 – the latest available data – Manila Water has only achieved 12% and Maynilad, 11 percent.

  1. MWSS privatization has deepened corporate and foreign control over vital infrastructure and key services in the country

From the onset, MWSS privatization has been an agenda of big corporate and foreign interests.  Foreign creditors World Bank, Asian Development Bank (ADB), and Japan Bank for International Cooperation (JBIC) pushed for the privatization of MWSS, which then owed them some US$800 million in debt. The World Bank’s International Finance Corp. (IFC) served as government consultant in MWSS privatization and designed the concession agreement.

The IFC is now an investor in Manila Water, raking billions of profits from a contract it designed itself. Manila Water is led by Ayala Corporation and United Kingdom (UK)-based United Utilities. Aside from the IFC, other foreign investors include Japanese giant, Mitsubishi Corp. as well as First State Investments of the UK, Singapore-based global fund manager Aberdeen Asset Management plc, and US-based equity mutual fund Smallcap World Fund Inc.

Meanwhile, Maynilad is currently controlled by Manny V. Pangilinan through the Metro Pacific Investments Corp. (MPIC) and DMCI Holdings of the Consunji family. MPIC , of course, is backed by  Indonesia’s Salim group. Other foreign interests in Maynilad are MCNK JV Corp., a unit of Japanese giant Marubeni Corp., and Lyonnaise Asia Water Limited, a unit of French firm Suez, one of the world’s largest water companies.

Water privatization is being challenged worldwide – from France where some of the first water privatization took place and where the world’s largest water firms are based – to Jakarta, Indonesia which privatized its water system the same year as Metro Manila and used the same model.

Water privatization must be reversed. There is no way out of the trap of exorbitant water rates and unreliable service for the poor unless the concession agreements with Manila Water and Maynilad are junked and the operation of the water supply system is taken over by a reformed public sector. # (Ibon.org)

Health workers vow to block Fabella’s closure

Health workers and urban poor residents protested at the gates of the Dr Jose Fabella Memorial Hospital in downtown Manila today to denounce its impending closure by the Benigno Aquino government on June 9.

Alliance of Health Workers (AHW) members said that as many as 2,000 patients per day, including hundreds of mostly poor birthing mothers, will lose free medical services offered by the 700-bed hospital when it closes. Read more