Palpak na, kumita pa! Ex-UP economist asks why MWSS fined Manila Water for shortage the regulator caused
Economist Raul Fabella is not happy with the Metropolitan Waterworks and Sewerage System (MWSS) decision to punish Manila Water Co. with a P1.134 billion penalty for the March 2019 water shortage in the East Zone concession area.
The retired University of the Philippines professor questioned why Manila Water should pay for the failure of MWSS to develop new water sources.
Worse, Fabella said MWSS earned “pogi points” while using Manila Water to escape President Rodrigo Duterte’s threat to fire its abogado-dominated board for sheer incompetence.
“In liability law, who causes the injury pays. But if the MWSS is itself the cause of the injury, we are standing the liability principle on its head,” said Fabella in a column in BusinessWorld.
“The MWSS decision constitutes a rape of the rule of law even if the concessionaires hold their horses. If left to stand, it establishes a precedent that a guilty party can reap political pogi points by scapegoating a vulnerable party. The scapegoating of Manila Water certainly deflects the conversation from the threatened firing of the MWSS leadership for incompetence,” he added.
Philippine Star’s Cito Beltran likened MWSS to a criminal profiting from their crime.
“Even if the Ayalas diplomatically declared “No Contest” and opted to pay the fine as well as waive a month’s worth of water bills for their customers amounting to an estimated P500 million, I see no reason why the MWSS should benefit or profit from a fault that they were party to,” said Beltran.
“Instead of getting or taking credit for slapping a fine on Manila Water, that might even be posted as ‘profit’ in their annual reports, the management and board of the MWSS should resign or be fired!” he added.
Raul V. Fabella is a retired professor of the UP School of Economics and a member of the National Academy of Science and Technology. He gets his dopamine fix from hitting tennis balls with wife Teena and bicycling.
The water crisis exploded because of the shortage of bulk water in Metro Manila. Figure 1 shows the trajectories of water of the La Mesa Dam and Angat Dams for September 2017 to March 2018 and September 2018-March 2019. Note how steeply the water level dropped in La Mesa Dam in the drought-hit period (red) compared to more normal same period last year (purple). Angat Dam water level held up better (blue and green). Drought had taken its toll on the main water source for Manila Water.
Water Levels of La Mesa and Angat Dams
The customer base of Manila Water which stood at three million in 1996 now stands at seven million and with higher average per capita income. But the sources of bulk water are still the same. Why the water crisis?
It’s MWSS incompetence, stupid! No clearer evidence could be provided than the statements of MWSS Chief Regulator Patrick Ty, the government’s main man on water in Metro Manila: “It’s our fault. It’s the government because the Kaliwa Dam, Laiban Dam have been proposed since Marcos and due to a lot of opposition and accommodations for IPs, from the informal settlers, from leftist group, church group, these projects kept getting moved on…. Are you saying it’s our fault? Yes, it’s our fault because we’ve been delaying all these projects…Manila Water has been raising this issue since I took over in 2017 so all this is our problem and we need to fix it.” (PhilStar quotation, 14 March, 2019).
Honest Mr. Ty may still get the sack. What are the obligations of Manila Water in respect to raw water provision? According to the July 1996 Privatization Strategy Report (not explicitly in the concession agreement but part of the preliminary spadework (Lazaro, 2019)), “The concessionaires…will be responsible for the supply of their respective future bulk requirements,” which seems to suggest that bulk water shortfall is the liability of Manila Water alone. But water distribution service in Metro Manila is a regulated activity — this means that any project proposed by Manila Water to improve water security must be approved by the regulator, MWSS. Without MWSS approval, the concessionaire cannot be reimbursed and the project is “drowned in the water.”
A case in point — the Cardona Water Treatment plant — evidence many said of the negligence of Manila Water — would have produced additional bulk water from Laguna de Bay for the East Concession customer. This was proposed by Manila Water in 2008 but construction could not start until 2016 because squatters occupied the designated MWSS property. Informal settler clearing is not Manila Water’s mandate. But even had the Cardona Water Treatment Plant been fully operational at 100 mld in early 2019, the shortage would not have been avoided — the shortfall estimated at 160 mld meant that water
rationing would still happen. Water treatment plants and groundwater sourcing are short-term remedies; they cannot substitute for new bulk water sources which task MWSS has claimed for its own and at which it has failed. But even the stop gap measures will fail if MWSS foot-drags. In 2013, MWSS delayed the capex applications by Manila Water for Tayabasan East Water Source which it deemed unnecessary; the Long Term East Source and the Kaliwa Low Intake projects were denied because MWSS would itself finance and build those projects. The regulator turning provider?
THE KALIWA DAM PROJECT
The story of Kaliwa Dam with water yield of around 600 mld and which would have completely sidestepped the 2019 water crisis is a cautionary tale. In February 2013, a PPP modality was proposed for the 2012-2016 MWSS road map for water security comprising of the Laiban (high) Dam and the Kaliwa (low) Dam on Kaliwa River, Tanay, Rizal. The proposal was for a 53-meter Kaliwa Dam with water yield of 926 mld at the cost of Php15 billion (Tabios III, 11 April 2019).
The NEDA ICC in October 2013 opted for implementation in stages: the Kaliwa Dam first and under a Japanese ODA financing scheme. The seven-meter Japanese proposed Kaliwa Dam to yield 500 mld and to cost Php20 billion was approved in May 2014. That the Japanese ODA modality meant the cost of the project will be charged to all taxpayers of the land rather than to Manila Water customers partly explains its attraction to MWSS. President Aquino vacated office in 2016.
The incoming Duterte administration took its time and in 2019 controversially scrapped the Japanese ODA scheme in a pivot to the China loan-financed Laiban Dam, 73-meters high with water yield of 600 mld and costing Php12 billion. The endless political dithering effectively ensured that Kaliwa River water does not flow to Metro Manila.