Audit of water concessionaires urged

MANILA, Philippines — An official of the House of Representatives has proposed that the Securities and Exchange Commission (SEC) and the Metropolitan Waterworks and Sewerage System (MWSS) order an external audit of the two private water concessionaires operating in Metro Manila. 

Bagong Henerasyon party-list Rep. Bernadette Herrera-Dy, chair of the House committee on women and gender equality, said private independent firms could conduct the audit of concessionaires Maynilad and Manila Water. 

“By invoking their respective regulatory powers, either or both the MWSS Regulatory Office and the SEC can require external special audits, not by the Commission on Audit, but by any of the highly reputable private auditing firms operating in our country,” she said. 

Dy said the so-called “earthquake fund” of the concessionaires should be included in the external audit that could also be initiated by “independent directors” of the Ayala-run Manila Water and Metro Pacific-owned Maynilad.

“The taxes passed on to consumers as part of rate rebasing as allowed by MWSS Regulatory Office must be accounted for, most especially when the concessionaire is under five or six years income tax holiday as granted by the Board of Investments,” she said. 

“This kind of situation is hellish for both the water consumers and the Philippine government whose interests are both placed in a disadvantageous position,” the House deputy majority leader stressed. 

She wants the scope of the special audits to include the earthquake fund and other contingency funds which customers have been charged. The fund must be held in escrow, meaning it should be deposited in banks and used only for earthquake response, she said. 

“The earthquake fund should have been held in escrow because it is a contingency fund. However, Congress is not aware of any information that the funds have been placed in escrow, instead of being used as a source of operating funds,” Dy pointed out.

Quezon City Rep. Winston Castelo, chair of the House committee on Metro Manila development that investigated the recent water shortage in Metro Manila, had concluded that MWSS and east zone concessionaire Manila Water should be held liable for the water crisis. 

“The water supply problem cannot be attributed to the El Niño dry spell or climate change but to lack of foresight or mismanagement on the part of MWSS and the concessionaire Manila Water,” Castelo said. 

Castelo said both MWSS and Manila Water should have proactively implemented contingency plans in accordance with their demand growth forecast and supply profile. 

“The supply shortage had been earlier forecast, they should have addressed it immediately and prepared for the scenario, instead of reacting after the crisis had reached critical levels,” he said.   

The committee recommended that MWSS should study how Manila Water could compensate its customers as soon as possible for the inconvenience and losses. 

Both MWSS and Manila Water should be held accountable for the water shortage, as well as for the failure to properly implement contingency plans to stop the adverse effects of the water shortage to the public, he said. 

Castelo said compensation could be done through rebates based on Section 10.4 of Manila Water’s Concession Agreement and in accordance with applicable laws and regulations.

“Forward-looking, the committee recommended that the government needs to find and develop additional sources of water and new technology to recycle water and enhance its supply and distribution,” he emphasized. 

“The local government units, the national government, water regulator and water concessionaires must work together to develop and implement a water security master plan,” he said.