Providing an alternative

With the Philippine government recently implementing a nationwide smoking ban, smokers of conventional cigarettes are now training their eyes on electronic cigarettes or e-cigarettes, which according to the health department, are not included in the ban as contained in Executive Order no. 26 signed by President Duterte.

In a commentary published recently in the Herald Sun, Australian Senator James Paterson described e-cigarettes as “a powerful tool to reduce smoking around the world.”

A member of his country’s Liberal Party, Paterson cited figures from the Australian Institute of Health and Welfare which showed no statistically significant reduction in smoking rates among people aged 14 and over between 2013 and 2016.

In contrast, smoking rates have declined considerably in the United Kingdom and United States where e-cigarettes are legal and are becoming increasingly popular.

Paterson said that of the 2.5 million people in the UK who attempted to quit smoking in 2015, more than one million used an e-cigarette, far more than the 700,000 people who used a licensed nicotine replacement product such as patches or gum.

He also quoted a US Center for Disease Control report which revealed that 35 percent of Americans who tried to quit smoking in 2014 to 2016 used e-cigarettes as a substitute for cigarettes, or more than any other smoking cessation aid.

Paterson likewise cited a recently released National Institute of Health study which said that the increased use of e-cigarettes was associated with a statistically significant increase in the smoking cessation rate.

But the senator pointed to a seeming unwillingness of some anti-tobacco activists and public health academics to accept anything less than an abstinence-only approach. There are those who have raised concerns that e-cigarettes could become a gateway to smoking, despite evidence showing e-cigarettes reduce smoking rates.

They have also argued that there is insufficient evidence that e-cigarettes are safe.

Paterson wrote that while no product is perfectly safe and no evidence exists to measure the health effects of long-term e-cigarette use since they haven’t been around long enough, evidence does exist showing that e-cigarettes are overwhelmingly safer than traditional smoking.

DOH Assistant Secretary Eric Tayag was quoted in a CNN report as saying that vapes and e-cigarettes are not included in the smoking ban, but local government units can implement an ordinance.

The order clearly aims to promote a smoke-free environment as well as smoking cessation for health reasons, as it referred to scientific evidence that tobacco consumption and exposure to tobacco smoke cause death, disease and disability.

If e-cigarettes promote smoking cessation, then shouldn’t our government (both national and local) promote it as a less harmful alternative to conventional cigarettes? After all, cigarette smokers are not going to stop smoking just because it isn’t allowed in public places.

Win-win decision

The International Chamber of Commerce (ICC) arbitral tribunal just last month unanimously upheld the validity of Maynilad Water Services Inc.’s claim for compensation from the Philippine government amounting to P3.42 billion covering losses incurred from March 11, 2015 to Aug. 31, 2016.

The losses resulted from regulator Metropolitan Waterworks and Sewerage System’s (MWSS) refusal to honor an earlier arbitral decision ordering water rate adjustments that should have started on Jan. 1, 2013.

Last Dec. 29, 2015, an appeals panel presided over by the ICC awarded to Maynilad an average increase of P3.06 per cubic meter for the five-year rebasing period. Both Maynilad and Manila Water are entitled under their contract with the MWSS to adjust their rates.

Some misguided elements are trying to paint a picture of Maynilad being the bad guy and unduly burdening consumers with a rate increase.

What these detractors do not know or pretend not to know is that Maynilad is entitled to a reasonable rate of return under its contract with government. It has invested tens of billions of pesos every year to provide much-improved water
services (much, much better than when MWSS was handling water distribution). When the government decided to privatize water distribution by entering into concession agreements with two private companies, it entered into a contract, which among others, allowed the rate rebasing.

No less than the current MWSS administrator Reynaldo Velasco has recently cited privatization as a major factor in the vastly improved water services in Metro Manila.

According to Maynilad president and CEO Ramoncito Fernandez, the arbitral ruling is an affirmation of the trust and confidence that the company has placed in its 1997 concession agreement with MWSS.

Fernandez said Maynilad would continue to honor its commitments under the CA and pursue capital expenditure projects that would improve further the quality of service to customers, as well as support the government’s initiative in ensuring the sustainability of the country’s water resources.

He also assured the public that Maynilad would coordinate and cooperate with the government in finding the most efficient way to implement the judgment of the ICC.

The ICC decision was silent on any tariff adjustment. It only upheld Maynilad’s claim against the government.

Maynilad has assured its customers that any tariff adjustment would take into consideration the public interest and would be done with the least burden on the affected consumers.

The ICC emphasized that its July 24 decision is without prejudice to any rights that Maynilad may have to seek recourse against MWSS for losses incurred from Jan. 1, 2013 to March 10, 2015. Further, the tribunal ruled that Maynilad is entitled to recover from the Republic its losses from Sept. 1, 2016 onwards. In case a disagreement on the amount of such losses arises, Maynilad may revert to the tribunal for further determination.

According to experts, the ICC decision not only affirmed the rate-rebasing mechanism under Maynilad’s original contrat with the MWSS, but also ensured the financial sustainability of maintenance and expansion programs for the benefit of half of Metro Manila’s water consumers.

Even the Supreme Court has said in one of its rulings that private companies are entitled to reasonable profits for them to recoup their investments. It said that “while the interests of the public are ideally to be accorded primacy in considering government contracts, the reality on the ground is that big-ticket projects cannot be realized without investments from the private sector, which naturally, would expect its usual share of profit.

Fortunately, the MWSS under the leadership of Velasco has been working on a new, stronger partnership with its concessionaires Maynilad and MWC, unlike the previous leaderships which refused to honor their contracts with the private sector.

For 2017 alone, Maynilad will be spending P13.2 billion for its water and wastewater infrastructure projects.

The ICC ruling, once implemented, is expected to further boost investor confidence which has waned due to the government’s flip-flopping in terms of its business rules. Both Maynilad and the consumers will benefit from it, in terms of a more stable investment climate for the former and an assured improved water supply and service for the latter.

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