Water firms’ failure in supply, sewerage

THE TWO giant water firms serving Metro Manila have been raking in billions in profits, yet fail big-time in their basic responsibilities of ensuring a steady water supply and installing sewerage for their 14 million customers.

To top it all, Manila Water Co. and Maynilad Water Services Inc. have the temerity to scare their captive customers that water rates could skyrocket if they are forced to comply with their obligations under the Clean Water Act.

The Supreme Court upheld in August a 2009 Department of Environment and Natural Resources order penalizing the two suppliers and the Metropolitan Waterworks and Sewerage System with P1.84 billion in combined fines for violating Section 8 of the Clean Water Act.

Buhay Rep. Lito Atienza who issued the order in 2009 as DENR secretary, noted that while the two firms may be having problems delivering potable water and installing sewerage systems, “they are definitely not having difficulties producing profits for their stockholders.”

“Based on our scrutiny of publicly available financial filings,” Atienza said, “Manila Water Co. and Maynilad Water Services Inc. raked in an aggregate of P138 billion in net profits from 2006 to June 2019.”

He added: “Both firms also rewarded their shareholders a combined P49 billion in cash dividends over the same period. They have no excuse for failing to meet their obligations, including putting up adequate sewerage networks and wastewater treatment facilities.”

He assailed the firms’ threat to raise rates by 780 percent, or by as much P26.70 per cubic meter, if they are forced to connect all customers to a sewage collection, treatment and disposal system, as mandated by Section 8 of the Clean Water Act.

Some of their billions in profits, he said, came from the 20 percent environmental charge and 30 percent sewer charge that the water firms have been collecting from customers.

“We don’t know what they did with the money,” Atienza said. “They should have invested revenue from these charges to build sewerage networks and wastewater treatment facilities, but they chose to do something else.”

“Over the years, they have been invoking their obligation to provide sewerage networks and wastewater treatment facilities to borrow cheap funding from abroad for ‘green’ projects,” he added.

Until they fully comply with the Clean Water Act, the Supreme Court had said, Manila Water, Maynilad and the MWSS will have to continue to pay a P322,102 daily fine that escalates by 10 percent in two years, plus legal interest of six percent per annum.

The water firms asked the court to reconsider its order, warning that water rates could hit the roof should they be compelled to pay the fine until they complete the sewerage projects.

• Tapping alternative water sources

WHEN the two water providers took over, they were supremely confident that potable water supply would be sufficient, that they would make oodles of money, and could afford to spend for sewerage.

In fact, they also lobbied to compel consumers to shut down other sources of water and become their captive subscribers.

But civil engineer Willy Segovia, who is into construction and realty development, blamed what he said were the water firms’ miscalculations and neglect in the last two decades for the water and sewerage crisis in their concession areas. He pointed out:

1. Population and urban growth is well documented, thus water demand could have easily been forecast. Knowing by how much demand would grow, they should have developed new sources of water years in advance.

2. The cost to sewer Metro Manila will be horrendous at today’s inflated prices. But if they did their work 20 years ago, the construction cost and appurtenant issues such as traffic, would have been manageable. 

Segovia suggested some measures that consumers could take independently of the two water firms, which seem not up to the job anyway:

1. Commercial establishments may set up their own emergency water supply by digging wells. Some large hospitals already have done this. Water from the ground is not potable so it needs to undergo some treatment, depending on institutional water quality requirements.

2. Residential subdivisions connected to both providers can also set up their own wells for emergency. In small subdivisions with minimal traffic, water can be delivered at rates close to what providers charge. This had been done in older subdivisions. It is done in Iloilo and Cebu.

He recalled that before the two providers took over, the MWSS (formerly the NAWASA) was already deficient in supplying water. Many establishments and buildings survived by using their own water wells.

It was government itself, through the National Water Resources Board, that restricted the construction of wells. That improved the business of the two water firms as their consumer base grew rapidly.

But with the failure of Maynilad and Manila Water to provide potable running water 24/7, there is pressure for the system to allow water wells again for domestic use.

Just like some people are partly shifting to alternative sources of electricity from sun and wind, why not with water? Rain water eventually is stored in underground aquifers that can be tapped for selective use in areas not affected by creeping salinity.

The colossal failure of the giant profit-focused concessionaires feeds the argument that supplying water can also be devolved to smaller units, local governments, subdivisions, building establishments and to homeowners.

This decentralization scenario is what the two providers fear most, because their business would be drastically affected. So they have resorted to scaring consumers that rates would soar if the suppliers are forced to comply with their obligations under the law.

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NOTA BENE: All Postscripts can be accessed at manilamail.com. Follow author on Twitter as @FDPascual. Email feedback to [email protected]