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Pakil residents protest construction of hydropower plant

Townsfolk fear loss of ‘nurturing, healing spring water’ from nearby mountains

By Elmer Nev C. Valenzuela

PAKIL, Laguna — Residents of this small Southern Tagalog town oppose a hydropower plant project they fear may endanger the supply of clean spring water that has always nurtured their community.

Pakileños have formed an organization to oppose the $1.1 billion Ahunan Hydropower Project they say poses a great threat to their community by potentially altering their water supply of natural spring water from the Sierra Madre or may totally stop their flow.

Mamamayan Nagmamahal sa Pakil (MANAPAK) members in a meeting.

Calling itself the Mamamayan Nagmamahal sa Pakil (MANAPAK), the group demands a stop to all fieldworks on their mountains, particularly near Mt. Ping-as, traditionally regarded as sacred by Pakileños.

A joint venture of billionaire Enrique Razon’s Prime Metro Power Holdings Corp. and JBD Water Power Inc., the Ahunan project aims to generate 1400 megawatts of electricity for the Luzon grid.

Estimated to affect 299 hectares in four Pakil barangays—Baño, Burgos, Rizal and Taft—the project requires the construction of an upper basin to serve as reservoir for power generation.

Town of healing water

Located at the mountainous part of Laguna province, Pakil and its neighboring towns on the east bank of Laguna de Bay are blessed with free-flowing spring water residents have enjoyed as drinking water and for irrigation for as long as they remember.

In the town’s famous public bathing pools, such as the old Turumba Spring, the waters are appreciated for their reputed healing properties and have become pilgrimage sites of sorts.

Pakil’s famous public pool from spring water sources.

Resident Melquiades de Cadiz said they are starting to see signs of water disruption since Ahunan hydropower project pre-construction activities have started upstream.

He said further degradation of water quality is imminent should the earthworks continue.

Cadiz added the project’s other socio-cultural and environmental impacts may include the destruction of the town’s mountain, displacement of affected families, desiccation of spring water, as well as damage to cultural and religious sites and heritage.

MANAPAK member Nora Macapanpan said they are concerned that the Ahunan dam is to be built along a stretch of four active fault lines in the area that are characterized by authorities to have moderate to high seismicity.

Macapanpan’s group also warned of agricultural impacts, floods, landslides as other potential risks posed by the project.

“Marami pa ang mga panganib na kaakibat ng proyekto, tulad ng pagbaha at pagguho ng lupa. Maapektuhan din ang mga magsasaka at mangingisda, ang Turumba sa Birhen, at ang ating tubig inumin,” MANAPAK official Teresa ‘Ka Tessie’ Sanchez added.

(There are more dangers connected with the project, such as flooding and landslide. The farmers and the fisher folk, the spring pool, and our drinking water.)

Ka Tessie appealed to the Department of Environment and Natural Resources for support and to deny the permits the project proponents seek to be able to move on to the next phases of the project.

Posters opposing the hydropower project in Pakil.

Initial victory

Pakil’s Municipal Council has issued a “No Objection Resolution” to the Ahunan project last September 14, however, a vital first step leading to the issuance of the prerequisite Environmental Compliance Certificate.

Ka Tessie says they were unaware the resolution was being discussed. She said they were shocked to learn of it only last March, five months after its approval.

“Talagang parang, ano na pala ito, tuloy na! Sabi ko, ay kailangan na eh tumayo,” she said.

(It seems the project is really to be implemented. I said, it is time to stand up.)

MANAPAK has since gathered six thousand signatures from fellow Pakileños and engaged the Municipal Council in a series of dialogues.

Citing the dam proponents’ poor consultation with the town’s various stakeholders, the Council has revoked its No Objection Resolution last August 9.

Salamat naman sa Diyos at pagka tumayo ka sa isang bagay na ang paniwala mo ay mabuti, talagang laging may sumusunod, tumatayo din kasama mo,” Ka Tessie said.

(Thanks to God. When one stands up for something she believes is good, others will follow.) #

Right to water activist arrested, accused with illegal gun possession

The wave of search warrants served in the dead of night that lead to charges of illegal possession of firearms and explosives victimized another activist, this time a government employee based in San Pablo City, Laguna.

Ramir Endriga Corcolon, an officer of the Confederation for the Unity, Recognition and Advancement of Government Employees (COURAGE) and an employee of a local water utility, was arrested by the police at 4:30 AM this morning.

Corcolon, a campaigner against the privatization of water services, is a COURAGE national council member and secretary general of the Water System Employees Response (WATER).

The federation of government employees unions said in an alert that Corcolon’s house was raided and searched by Philippine National Police Criminal Investigation and Detection Group (PNP-CIDG) operatives.

Corcolon was taken to Camp Vicente Lim in Canlubang town at 8:30 AM.

Corcolon in a police detention cell. (COURAGE photo)

A search warrant alleging the activist possessed a rifle grenade was issued last February 23 by Sta. Cruz, Laguna Executive Judge Divinagracia Bustos-Ongkeko.

The search warrant used to raid Corcolon’s house. (COURAGE photo)

Pictures posted by COURAGE on its Facebook page show that a handgun and ammunitions were also allegedly found in Corcolon’s house.

Guns and ammunition the police allege were found in Corcolon’s house. (COURAGE photo)

Dozens of activists had been issued similar warrants and charged with violation of Republic Act 9516, the anti-illegal possession of firearms and explosives law, in a sustained crackdown against Leftist critics of the Rodrigo Duterte government.

COURAGE demanded the immediate release of Corcolon and condemned what it calls the terror-tagging of activists.

“Corcolon is an employee that vehemently opposes the privatization of water districts. He also stands for the advancement of the rights of employees and the people,” COURAGE said. # (Raymund B. Villanueva)

‘Evil and crooked’: Councilor, employees unions condemn dismissal of 60 Bacolod employees

A Bacolod Councilor opposed the termination of 60 employees of the city’s water district, saying the move is a grave abuse of authority by the directors of the local water utility.

In a privileged speech Friday, January 8, Councilor Wilson Gamboa said the Board of Directors of the Bacolod City Water District (BACIWA) unjustly and illegally terminated the workers in collaboration with the private water utility company PrimeWater Infrastruture, Inc.

The local legislator was reacting to the Board’s decision to terminate the workers effective December 31 by declaring their positions “redundant” after the public water utility signed a controversial Joint Venture Agreement (JVA) with PrimeWater.

PrimeWater is owned by the family of Senator Cynthia Villar.

Gamboa said the firing of the employees hammered the final nail of a total “takeover” of BACIWA by PrimeWater.

“These members of the BACIWA Board of Directors believed that they are the absolute authority by issuing arbitrary, capricious, and illegal resolutions and orders which completely gave PrimeWater total supervision and control over its management, operations, collections, and the trampling of employees’ rights. Now, they have evolved as the henchmen of PrimeWater,” Gamboa fumed.

Gamboa said the BACIWA Board could not declare the workers’ positions as redundant when PrimeWater would hire private employees as replacement, including the fired employees who would be “reabsorbed” should they take Option 2 of the proffered retirement package.

The legislator also said the “evil and crooked” BACIWA directors failed to conduct proper consultation with the affected employees.

“[The workers’] rights and tenure must be protected against an unjust, inhuman, and illegal order of the Board of Directors of BACIWA who acted as the corporate carpetbaggers and collaborators of PrimeWater,” Gamboa said.

First dismissed government employees of 2021

Employees union president Leny Espina, who was among those dismissed, said the affected workers were barred from entering the BACIWA premises since Monday, January 4.

Espina said the union will continue to stage actions in front of the BACIWA office every day along with other Bacolod City supporters in protest of their dismissal and the takeover of the public water utility.

The Confederation for the Unity, Recognition and Advancement of Government Employees (COURAGE) and the Water System Employees Response (WATER) also launched a nationwide campaign to have the dismissed employees reinstated.

COURAGE National President Santiago Dasmariñas, Jr. said the dismissal violated the constitutional and legal rights of government employees to security of tenure.

He added that the dismissal was also meant to quell legitimate protests against the privatization of local water services.

“We ask the Duterte government to stop privatization of local water services and put laid off public sector workers back to work!” Dasmariñas said.

Ramir Corcolon, WATER secretary general, asked the government to put the welfare of people above business interests.

“Experience has shown that privatization of water only led to more expensive but still poor, or even poorer, water services. Greed should not reign over the right of the public to affordable and quality water services,” Corcolon said.

Water district unions and national agency employees unions all over the country also posted photos of solidarity activities in support of the BACIWA workers Thursday. #(Raymund B. Villanueva)

Four reasons why the Kaliwa Dam Project loan is onerous

by IBON Media & Communications

The loan agreement for the New Centennial Water Source-Kaliwa Low Dam Project (NCWS-Kaliwa Low Dam) is onerous and should be cancelled. President Duterte has reportedly ordered a review of loan agreements to determine if any are onerous and disadvantageous to the Filipino people. Yet the Kaliwa Dam project which has come under fire for its unfavorable Chinese loan agreement has already started.

The Php10.2 billion (US$211.2 million) loan agreement financing most of the Php12.2 billion NCWS-Kaliwa Low Dam has the following questionable provisions:

1. Costly to pay. The commercial loan agreement has a 2% annual interest rate, commitment fee of 0.3% annually, management fee of US$633,600, and a 20-year maturity with a 7-year grace period. The nominal interest rate is higher than other recent loan agreements with Japan or Korea which range from 0.08-0.26 percent. The loan is also not necessarily the cheapest loan even if US dollar equivalent interest rates are used.

2. Project is exclusive to Chinese contractors. While a Philippine project,only Chinese contractors are qualified to bid and Philippine corporations were excluded from the process. The China Energy Engineering Company, Inc. (CEEC) bagged the project. The contract is between the Metropolitan Waterworks Sewerage System (MWSS) and Chinese corporations.

3. Loan agreement is biased for Chinese laws. Article 8.4 of the loan agreement stipulates that Chinese Law will govern disputes pertaining to the agreement. Meanwhile, Article 8.5 says that disputes will be dealt with under the auspices of the Hong Kong International Arbitration Court.

4. Philippine patrimonial assets and property may be compromised in case of default on the loan. In the Article 8.1 Waiver of Immunity, the country “waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration proceeding”.

The loan agreement is financially disadvantageous, tied to Chinese contractors, and an affront to Philippine sovereignty. These issues are also on top of other issues raised by the Dumagats and Remontados, farmers and community folk, environmentalists, engineers, hydrologists, scientists, public servants, consumers, and many more. The dams projects will displace communities, inundate ancestral lands, and destroy the environment.

The Philippine government should not enter into loan agreements having such terms whether with China or any other sources of official development assistance (ODA). The Filipino people bear the burden of paying these onerous loans. This is even getting worse under the Duterte administration which is imposing new and higher consumption taxes while lowering taxes on the rich and on corporations. #

Water you up to, Mr. President?

By Sonny Africa

Pres. Rodrigo Duterte is posturing against oligarchs again. This time, the tough talk is against corporate water giants Manila Water and Maynilad. It is a popular and justified stance – the firms make billions of pesos every year while consumers suffer expensive water and incomplete services.

The hope is that this comes from a real understanding of water as a human right where the oligarchy’s profit-seeking is seen as hindering the realization of this right. Or it might just be populist posturing against some oligarchs rather than the oligarchy.

Presidential threats

Pres. Duterte tapped into public outrage against the country’s water barons when he threatened the Ayala family and businessman Manny Pangilinan. They helm concessionaires Manila Water and Maynilad, respectively. At a speech in Malacañang, the president angrily said that Filipinos are poor because oligarchs dominate the economy.

He said he would take action against them even if this made the country a pariah in the international community and among investors. Anyway, he said: “We can start from the beginning… nandiyan naman si Villar” (Villar is there). The uneasy reference to richest Filipino Manny Villar, whose rapidly expanding PrimeWater venture makes him the country’s fastest-rising water baron, only fueled criticisms of cronyism in play.

The president also called on his audience – including senators, cabinet members, and business folks – to stop this “business of milking the people.” At the end of his short speech, everyone rose to their feet clapping.

The government seems serious about going after the two Metro Manila water concessionaires. The Solicitor General said it will pursue ‘all remedies’ to contest the water arbitral rulings that worked against the government. The justice department identified a dozen provisions making the water concession agreements (CAs) ‘onerous’. To remedy this, the finance department is drafting replacement contracts supposedly more favorable to the government and the public.

The Metropolitan Manila Waterworks and Sewerage System (MWSS) said that it will cancel the irregular 15-year extension of the CAs beyond 2022 to 2037.

Pres. Duterte himself threatened to file economic sabotage cases against the water firms and government officials involved in the disagreeable water deals. When the new water contracts are drafted, he said the water firms can basically take it or leave it. He reportedly also promised to make the lives of the Ayalas and Pangilinan “very, very, very miserable”. Among others, he threatened to slap each of the billionaires and offered this as some kind of catharsis to Filipinos.

The posturing seems to have paid off. The water firms are reportedly waiving the Php10.8 billion awarded to them by their respective international tribunals – Php3.4 billion for Maynilad and Php7.4 billion for Manila Water. The firms will also defer higher water rates scheduled for January 1, 2020 and renegotiate their contracts.

Still, water privatization

So are things, finally, all settled on the water front? Unfortunately not, if the government still sticks to its water privatization policy.

Many of the issues raised by the Duterte administration echo issues raised long ago by the Philippine mass movement (which includes many organizations now being vilified and attacked by the government). Progressive groups criticized water privatization and the CAs from the time that they were being negotiated in 1997. The Water for the People Network (WPN) meanwhile was at the forefront of civil society campaigning in 2013 against water rate hikes bloated by corporate income tax, non-implemented infrastructure projects, and a host of other irregular items.

Thus government’s apparent epiphany is welcome to the extent that it moderates corporate water profiteering. This relief is long overdue. Since the start of water privatization, water rates have increased seven-fold in the West Zone under Maynilad (573% increase) and ten-fold in the East Zone under Manila Water (871%). These rate increases far outpace inflation over that same period.

Water privatization proponents often justify expensive water with the argument: “The most expensive water is no water.” Yet beyond the catchiness, the reality is that water has become unaffordable especially for lower income families. The United Nations Development Programme (UNDP) suggests that water costs should not exceed 3% of household income. Yet WPN, in its studies in 2013, found poor families in Metro Manila paying as much as 7-22% of their household income for water which is so basic to survive.

The rate increases support huge profits. In 2013, WPN noted that the two water firms had returns on investment conspicuously higher than in telecommunications, power and housing. In the last 15 years, Maynilad made around Php68 billion in profits and Manila Water some Php61 billion. In 2018 alone, the water firms raked in around Php6.6 billion in profits each. Profits are also boosted by increasing water demand from explosive Metro Manila urban over-development – meaning that the Ayala group, also a major real estate developer, profits twice over.

Water rates and the water firms’ profits would be even higher if large water rates hikes had not been stifled following citizen- and mass movement-driven protests and campaigning in 2013.

The ‘losses’ claimed by the water firms and brought to arbitration are largely about the corporate income taxes that they were disallowed from charging to water consumers. These are potentially enormous and, in the case of Manila Water, would have summed to around Php79 billion passed on to consumers from 2015-2037.

Under an unchanged framework of privatization, there are reasons to doubt whether government’s renegotiated concession agreements will be able to completely rectify these problems. The basically profit-driven approach is inappropriate and will inevitably result in contracts still unnecessarily skewed towards ensuring private profit even at the expense of social objectives.

Privatization means having public utilities and social services run by the private sector. The private sector is assumed to be inherently more efficient than the public sector and, hence, able to provide the utility or service better. The better services, it is argued, justify the more expensive prices and resulting profits.

The new renegotiated contract terms are still undetermined so it is hard to say how far two decades of expensive water and unmet sanitation targets can be corrected. Still, the global experience with water privatization may provide some clues of the prospects.

Reversing water privatization

By now, many may believe that water privatization is commonplace. Yet water privatization really only started in the 1990s and the 1997 privatization of MWSS was actually one of the first and the biggest at the time.

Privatized water is actually a minority worldwide and even in retreat.

There are around 500 large cities worldwide with a population of over one million, including the big cities in Metro Manila. Despite the wave of water privatization starting in the 1990s, 82% of these cities and their populations are actually still served by public providers.

Moreover, privatized water has been in retreat in the last decade or so. Many of the reasons for this happening abroad are familiar to Metro Manila residents: steep water rate increases, inadequate service coverage, insufficient infrastructure investment, opaqueness, and lack of accountability.

Driven by the incompatibility of the human right to water with privatization, more and more water services have been nationalized since the mid-2000s. Erstwhile privatized water services in at least 267 cities in 37 countries have returned to, or are in advanced stages of returning to, public sector hands. Nearby, this includes Jakarta in Indonesia and Selangor in Malaysia.

Elsewhere in Asia, water services are being nationalized in India and Kazakhstan. This is also happening in countries from Argentina to Uruguay in South America, from Ghana to Tanzania in Africa, from France to Sweden in Europe, and even in the US and Canada. Uruguay and the Netherlands have even gone so far as making water privatization illegal.

The nationalization of water services – or ‘remunicipalization’ as it is also called – occurs at many levels. It has been literally national in Uruguay, regional as in Argentina, city level as in Indonesia, and at the municipal or community level as in France and the US.

Water for the people

Nationalization is the real alternative to water privatization. It is the best way to ensure that water is provided as a service instead of operated as a business.

The concession agreements should be terminated as the starting point for returning Metro Manila water services to full public ownership, management and control. Government officials and the water firms should also be held accountable for over two decades of water service misdeeds.

There is a seemingly powerful counterargument to renationalizing water – why return Metro Manila water services to the government which did such a poor job of running it over two decades ago and was the reason for privatization to begin with? Privatization is flawed, it is argued, but public water is worse.

The concern is legitimate. Metro Manila water services in the 1990s certainly needed much improvement. Yet the Metro Manila and global experience these decades past are strong arguments that water should be run as a public service rather than as a business.

The drive for profits is so powerful as to override social concerns. Businesses are inherently profit-seeking and will necessarily put profits above social considerations – otherwise, they would not be businesses any more. Governments on the other hand are supposed to put social considerations above all.

Businesses will always charge a profit premium. Apparently, they will also underinvest if this will make their profit-seeking risky. In effect, water businesses will give people the water services they want as long as these are water services the business wants to give. If forced to do otherwise they will not also not hesitate to bring the State to court.

Which raises the question – how can the government improve how it runs water services? First of all, we can rule out privatization for that. The MWSS has overly relied on the water concessionaires over the past two decades. Not only has it foregone building capacity over that period, it even eroded whatever capacity it already had.

The government should seriously consider options not relying on profit-maximization. Profit-seeking underlies all variants of privatization and public-private partnerships (PPPs). There are, for instance, public-public partnerships (PUPs). These are collaborations between two public authorities on the basis of solidarity and the spirit of improving public services.

The Public Services International Research Unit (PSIRU) already reports 137 water service PUPs in around 70 countries as of 2018. PSIRU even observed that “the number of implemented PUPs largely exceeds the number of privatized contracts in the global water sector”. Such not-for-profit partnerships to build non-commercialized water and sewerage systems are the most appropriate capacity-building arrangements for realizing water as a human right.

Democratic public water

Giving citizen groups a greater role in water services can also help check corruption, abuses and inefficiency. It is already well-established that civil society organizations are vital for reflecting needs of local communities, mobilizing these to support policies and projects, and holding governments accountable. Democratic and transparent governance is not easy – but it is necessary and possible.

The political and economic interests behind neoliberalism understandably oppose nationalization of water services. This would be a direct rebuttal of their claims that corporate profit-seeking can deliver the public service that people need and deserve as a matter of human right – and on such a huge and profitable flagship privatization project as Metro Manila water no less. It is also inconsistent with the market-biased and foreign investor-friendly preferences of economic policy elites.

There is however more than enough reason to let go of the cherished neoliberal dogma that pursuing private gain through free markets is the best way to achieve optimal social outcomes. The last few months have already seen protests and uprisings around the world. Although appearing to be on disparate issues, their common root is the neoliberal economic model imposed on populations worldwide for nearly four decades. This has caused such dire consequences for so many.

In the Philippines, nationalization of water services would be a significant beachhead to advance the counterattack against neoliberalism and reclaim the economy for the people. Which is exactly why the Duterte administration, for all its posturing, is most unlikely to go in that direction. As always, sustained social and political dissent is the key to upholding the interests of the majority –indeed, more than ever in these times of neoliberal authoritarianism. #

Renegotiation of CA not enough without renouncing privatization –WPN

by Water for the People Network

The Water for the People Network (WPN) said that government should renounce water privatization and assert water as a human right whose provision should be under effective public control. This is the most important basis for terminating the concession agreements (CA) between the State and private water firms. The vital public utility should be returned to the public sector, WPN said, and not remain in the hands of profit-seeking water oligarchs.

President Duterte recently ordered the CAs between government and water firms Maynilad Water Systems Inc. and Manila Water Company to be renegotiated. Department of Justice (DOJ) Secretary Menardo Guevarra said that certain provisions of the water CAs are onerous and disadvantageous to both government and consumers. The DOJ began reviewing the CAs upon the instruction of President Duterte at the height of the water crisis during the first quarter of this year.

The onerous stipulations recorded by the DOJ include prohibition against State interference in rate-setting, indemnification for revenue losses due to this interference, and irregular extension of contracts by 15 years. These are issues that have been raised by water rights advocates, WPN said, in the more than two decades since water in Metro Manila was privatized.

“The WPN has long and repeatedly called for the scrapping of the CAs. The CAs are the very epitome of water privatization, which has failed to deliver promised cheaper, cleaner, and more secure water services,” WPN spokesperson Prof. Reggie Vallejos said. Water utilities have to deliver water as a human right, he stressed, and mere renegotiation of the CAs will not truly ensure public interest objectives over private profits.

“The government has not yet revealed its points for renegotiation but we doubt that these will be enough to uphold the public welfare if they are still within the failed water privatization framework and biased towards profitability for water oligarchs,” Vallejos said.

WPN recalled that water privatization has only resulted in more expensive water, with rates increasing seven-fold for Maynilad and ten-fold for Manila Water from the start of the concession in 1997 to the third quarter of 2019. The CA-directed rate rebasing every five years since privatization allowed firms to make profits by charging consumers increasing tariffs including, among others, for projects that fail to push through. WPN added that the CA gives government a key role in rate-setting (judging whether enumerated expenses were prudent and just in the interest of consumers), but nonetheless allows the companies to sue the State should its regulation affect their profit-making.

The water firms also face Supreme Court-imposed penalties for violating the Clean Water Act, with poor sewerage services performance versus targets as of 2018. Meanwhile, water service interruptions have been hounding Manila Water and Maynilad consumers since March 2019.

These problems bring us back to 1997, WPN said, when the Ramos administration invoked a national water crisis and handed over water sourcing, processing and distribution to the private sector. The huge socially-sensitive water utility was handed over to the Ayalas and Lopezes. The biggest water privatization until then was perfectly in tune with the Ramos government’s grand promotion of globalization policies including deregulating the oil industry and liberalizing Philippine agriculture, said the group.

Public sector water operations should be re-established in Metro Manila and the rest of the country as soon as possible, said Vallejos. “These should be returned to the public sector to ensure that profit-seeking does not get in the way of delivering cheap, clean, and secure water services to the public,” he said.

WPN cited the growing global trend of water remunicipalization reversing water privatization. This has already happened in over 231 cities in some 37 countries around the world for instance in Spain, Germany, Argentina, and even in France, home to water multinationals. The poor experience with water privatization is making governments choose public water sourcing and distribution over private control, the group said.

Government’s continued implementation of water privatization is seeing additional oligarchs taking over public control of water, said WPN. Specifically, these are big business interests close to Duterte, for instance, Manny Villar and Dennis Uy who are also in the water business through Prime Water Infrastructure Corp. and Udenna Water and Integrated Services, respectively. Prime Water has been striking joint venture agreements with local water districts in areas nationwide but undermining water services according to a Commission on Audit report, WPN observed.

Simply renegotiating the CAs to let more oligarchs keep profiting from the water business will not remove the ill effects of privatization on the public and may even make it worse, WPN said. Government must bravely decide to take control of the vital public utility and run it as a service rather than for profit, the group said. #

‘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.

Govt should be transparent, release 9 signed foreign loan agreements — IBON

Research group IBON said the Duterte administration should immediately release to the public all nine foreign loan agreements it has already signed for infrastructure projects, especially for the upcoming Kaliwa Dam project with China.

The group raised concerns of government’s transparency since it has denied IBON’s previous requests for copies of the loan agreements.  

The government has an obligation to disclose these contracts as a matter of public interest and protecting the country’s sovereignty, the group said.

The nine foreign loan agreements signed by the government include the Chico River Pump Irrigation and New Centennial Water Source-Kaliwa Dam with China; Pasig-Marikina River Channel Improvement, Cavite Industrial Area Flood Management, Metro Manila Subway, and North-South Railway with Japan; Panguil Bay Bridge; and the new Cebu International Container Port with Korea.

IBON research head Rosario Bella Guzman said that there is lack of transparency of government offices to disclose loan agreements signed by the government. 

IBON wrote a letter to the Department of Finance (DOF) in June 2018 requesting copies of the loan agreement for the Chico River Pump Irrigation Project.

The DOF responded that the contract has a confidentiality clause and that the agency is not allowed to disclose details of the contract to any third party.

Loan agreements should be disclosed since the projects are public infrastructure which are supposed to be serving public interest, said Guzman.

The Chico River Pump Irrigation Project, with the provisions that could be disadvantageous to the country, may become the gold standard of other loan agreements, Guzman added.

Guzman said that the contracts for other Chinese loans such as the one for the New Centennial Water Source-Kaliwa Dam Project would follow the template of onerous provisions found in the Chico River Pump Irrigation Project.

The loan agreement for the Kaliwa Dam which was signed in November 2018 is yet to be made public and IBON has yet to receive a copy of the loan agreement it requested from concerned offices.

Guzman added that the Php12.2-billion Kaliwa Dam will be 85 percent funded by China official development assistance (ODA), in other words, debt that will be paid for by the public in the future.

“China loans are one-sided and impose onerous conditions, which could result in the Philippines virtually giving up its sovereignty,” said Guzman.

IBON previously raised questions on the Chico River Pump Irrigation loan agreement being governed by China laws, and that any arbitration or suit shall be heard at the China International Economic and Trade Arbitration Court (CIETAC).

“Natural resources, including water, are the subject of these loan agreements, which makes it more problematic if conditions are lopsided in favor of foreign governments, creditors and investors,” Guzman added.

Instead of prioritizing the attraction of one-sided foreign investments and loans for its infrastructure program, the government should put national interest and public welfare first over local and foreign big business interests.

Government can start by subjecting the loan agreements it is signing to public scrutiny and declining those that are not mutually beneficial and do not contribute to the country’s domestic economic development, IBON concluded. #

Suspend rate hike, scrap concession agreement with water firms, govt told

The Water for the People Network (WPN) said that government should not accede to the ruling of an international arbitral court granting the Maynilad Water Systems, Inc. petition to collect its corporate income tax (CIT) from consumers. 

The water rights group agreed that any impending water rate increase amid the ongoing dispute on pass-on CIT should be deferred.

The group likewise urged the scrapping of the concession agreement (CA), which it said allows onerous grounds for price hikes.

The Singaporean Supreme Court finalized an International Chamber of Commerce (ICC) arbitration decision that Maynilad may recover its CIT through pass-on charges.

Maynilad has demanded that the Philippine government pay Php3.4 billion in indemnification for non-recovery of its CIT for the period March 11, 2015 to August 31, 2016.

This is after the Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS-RO) refused to honor an arbitral decision favoring Maynilad while that for Manila Water remained pending.

As per CA with the Philippine government, both Maynilad and Manila Water took to international arbitration in 2013 to contest the RO’s rejection of their petitioned rate increases for the rate rebasing period of 2013-2018.

The firms’ petitions included CIT recovery and other expenses unrelated to the delivery of water services.

For the period of 2018-2022, the MWSS Board has already approved the RO’s rate rebased tariffs, which again reportedly disallows CIT recovery. The MWSS-RO announced a staggered Php5.73 per cubic meter (cu. m.) rate increase for Maynilad and Php6.22/cu. m. for Manila Water.

These are lower than the firms’ petitioned rates, wich for Maynilad still included the CIT.

The WPN urged the MWSS Board in a letter to uphold the decision to prohibit CIT recovery because it is unjust to consumers.

“In the first place, it is very wrong to pass on the burden of paying the CIT to consumers,” said the group.

The concessionaires are technically public utilities providing a very basic need such as water, said WPN. Aside from mandating the periodic alteration of basic charges through rate rebasing, the CA ensures the concessionaires’ steady flow of revenue and profit-making with other increases based on inflation, an environmental charge, and value added tax, noted the group.

WPN supports the MWSS-RO plan to suspend the impending rate hike this year should Maynilad insist on collecting indemnification from the government.

“The amount being demanded by Maynilad alone could reach Php40 billion, tantamount to an increase of about Php5.00/cu. m. on current average tariffs. Any rate hike today is also insensitive due to the soaring prices of goods and services,” said the group.

Inflation has risen to 6.7 percent in September from 6.4 percent in August.

Aside from pushing for the prohibition of the CIT and rate hike suspension, WPN stressed that strategically, government should review and repeal the CA altogether.

 

“It is the basis of the enrichment of private water firms at the expense of consumers. Government should instead ensure control over water resources to have these safe, accessible and affordable for the public,” WPN said. #

Groups protest water rate hike

Members of the Confederation for Unity, Recognition and Advancement of Government Employees (COURAGE) and Water System Employees Response (WATER) staged a picket protest outside the office of Metro-Manila Sewerage System (MWSS) in Balara, Quezon City to denounce the latest water rate hike by Maynilad and Manila Water Thursday, October 4.

According to Ferdinand Gaite, National President of COURAGE, Maynilad will increase its rates by approximately P5.73 per cubic meter while Manila Water will impose a P6.22-P6.55 per cubic meter hike in the next five years.

Customers of Manila Water (East zone concessionaire) will pay an additional P1.46 per cubic meter starting October 16 while Maynilad (West zone concessionaire) started a P0.90 per cubic meter increase last October 1.

Gaite also blames the rampant high prices of goods and services because of TRAIN Law (Tax Reform for Acceleration and Inclusion) that added burdens to the water customers.

Meanwhile Bayan Muna Rep. Carlos Zarate will file a resolution seeking the lower house to fast track the probe to stop water hike by legislating and forwarding measures to protect consumers.

He cited the anomalies happen in 2012 where giant water firms collected in advance for future projects.

This included the P45 billion Laiban project and P5.4 billion Angat Dam Irrigation project.

Both projects were cancelled in 2010 but P6 billion worth of collections were already made in 2012. # (Video by Dave Galman / Report by Joseph Cuevas)