A RESOLUTION DIRECTING THE HOUSE COMMITTEES ON OVERSIGHT AND

GOVERNMENT ENTERPRISES AND PRIVATIZATION TO INITIATE A

COMPREHENSIVE REVIEW AND INVESTIGATION INTO THE METROPOLITAN
WATERWORKS AND SEWERAGE SYSTEM (MWSS) CONTRACTS OF WATER
CONCESSIONAIRES MAYNILAD WATER SERVICES INC. AND MANILA WATERS INC.
AND MAKE IMMEDIATE RECOMMENDATIONS TO ADDRESS THE CURRENT WATER
SHORTAGE

WHEREAS, since July 2010, Maynilad Water Services Inc. (Maynilad) started to
implement rotating water supply schedule and rationing in the West zone. The water
shortage affected 150 villages in Manila, Caloocan, Quezon City, Parañaque, Malabon,
Navotas, Las Piñas, Valenzuela and some parts of Cavite. As a result, 18 percent, or 1.1
million of Maynilad’s 6.3 million customers are experiencing zero- to six-hour water
supply schedules;

WHEREAS, Maynilad said the severe drop in the water level of Angat Dam in Norgazaray,
Bulacan where the company sources nearly all of its water needs caused the water
shortage;

WHEREAS, Maynilad, operated by a joint venture between the Metro Pacific Investments
Corp. (MPIC) and DMCI Holdings Inc., takes 60 percent of the roughly 4,000 MLD water
allocation from Angat Dam. The remaining 40 percent goes to Manila Water;

WHEREAS, to immediately address the situation, Maynilad deployed water tankers,

installed stationary water tanks, reactivated deep wells and implemented intensified leak
repair program. The company has also started drawing water supply from Manila Water
Co. Inc., the piped-water provider in the east zone of Metro Manila;

WHEREAS, the two concessionaires projected a more severe water shortage in 2015
WHEREAS, aside from the deteriorating and inaccessible service, privatization also
caused excessive water rates as private water concessionaires pass on the costs of every
improvement project to customers through the Foreign Currency Differential Adjustment
(FCDA);

WHEREAS, despite the very favorable terms given to them by the government Maynilad
and Manila Water have failed to deliver efficient water services. Their own service
performance reports show that most of the targets in terms of water supply, sewerage,
and sanitation have been missed. More than half of the volume or 53 percent of water
allocated to Maynilad is lost due to leaks and pilferage while Manila Water is losing 13
percent of its supply;

WHEREAS, forty percent of Maynilad’s 1.3 million customers are without 24-hour service
and customers of both concessionaires continue to experience periodic water interruption
despite increasing basic water rates. Basic water rates have increased by 450% (Maynilad
- from P4.96 per cubic meter in 1997 to P27.24 by end 2009) and 845 % (Manila Water -
from P2.32 per cu. m. in 1997 to P21.91 by end 2009);

WHEREAS, the problem of water shortage highlights the short-term and long-term effects
and problems caused by the government’s privatization of water services;

WHEREAS, according to a study by the Water for the People Network (WP), although
climate change, pollution, exploitation and overpopulation contribute to and exacerbate
the global water crisis, the occurrence of ‘water shortages’ (i.e. shortage for the poor), in
fact, is primarily a direct result of the globalization policies of privatization and
commercialization of water;

WHEREAS, the concessionaire agreements between the Metropolitan Waterworks

Sewerage System (MWSS), Maynilad and Manila Water was supposed to expire on 2021
but MWSS recently extended Maynilad’s concession contract by another 15 years until
2037 supposedly to allow the utility to boost its investments by over 270%;

WHEREAS, the national government must rethink its position on water privatization as
the policy has been exposed to mean exorbitant water rates, poor services and
inaccessible water supply for customers. Privatization also caused retrenchment of water
district workers, economic and physical displacement of peasants, fisherfolk, indigenous
peoples and other marginalized sectors;

WHEREAS, it is imperative that Congress exercise its oversight functions and conduct an
extensive review of the MWSS Concession Agreements with Maynilad and Manila Waters.
Some sectors view this as a first possible step towards the establishment of a more pro-
people policy of water services;

WHEREAS, there is a need to ensure that the review of the Concession Agreement would
translate to actual benefits for customers and not amount to mere-lip service and token
action on the part of the government. Cause oriented groups and the Water for the People
Network have made the following suggestions for the review:

1. The review of the concession agreements must be made public to encourage broadest
possible participation of all stakeholders especially household customers;
 2. The objective of the review should not be limited to simply resolve the deficiencies in
the Concession Agreements. There should be enough flexibility to allow the
presentation and serious consideration of alternatives to privatization such as
complete government takeover;

3. The review must include pricing mechanisms like the Foreign Currency Differential
Adjustment (FCDA), Currency Exchange Rate Adjustment (CERA) that Maynilad and
Manila Waters have used to hike rates. While the review is ongoing, government
regulators can impose a moratorium on rates increases;

4. Water rates must be rolled back to pre-FCDA and CERA rates. The FCDA and CERA
resulted from the questionable amendments of the first Concession Agreement. These
mechanisms allow Maynilad and Manila Waters to recover foreign exchange losses
through rates adjustments and comprise around 40 to 70 percent of the total hike
that the two concessionaires have implemented;

WHEREAS, since privatization of water services started in 1997, there had been many
changes and modifications in the Concession Agreements between the MWSS, Maynilad
and Manila Waters;

WHEREAS, government regulators must come out with a detailed plan on how they will
ensure that ordinary households will not be further marginalized by well-off customers
and commercial establishments in terms of access to water supply;

NOW THEREFORE, BE IT RESOLVED AS IT IS HEREBY RESOLVED, that the House

Committees on Oversight and Government Enterprises and Privatization initiate a
comprehensive review and investigation into the Metropolitan Waterworks and Sewerage
System (MWSS) privatization contracts of water concessionaires Maynilad Water Services
Inc. and Manila Waters Inc. and make immediate recommendations to address the
current water shortage.

Adopted,