PRIVILEGE SPEECH OF SENATE PRESIDENT JUAN PONCE ENRILE
Tuesday, 21 September 2010

RECENT WATER CRISIS

A few months ago, most areas in Metro Manila suffered from a water crisis. Areas covered by Maynilad experienced water rationing or rotating supply interruptions. While other areas continued to get regular service, what was encountered was reduced pressure particularly in the elevated areas of Marikina, Pasig, and as far as Taguig City.

Even when the water level was expected to improve due to the amount of rainfall projected during the rainy season, still, government officials and even the private water concessionaires could not immediately and effectively arrest the panic and fear among the consuming public. After all, water is a survival issue which affects the health and hygiene of the individuals, sanitation within the communities, as well as the operations of industries, companies and businesses.

To experience a water crisis in a country like ours is a paradox. We are an archipelago rich in water resources. We have 421 principal river basins. Twenty (20) of these are considered major river basins, each of which is at least 990 km2 in basin area. There are also sixteen (16) major lakes and a vast coastal bay and water cover which hosts one of the world's most diverse marine ecosystem.

Moreover, every year, the country is frequently visited by typhoons. During the rainy season, the country also experiences an average annual rainfall of up to 2,400 mm, of which 1,000 mm to 2,000 mm is collected as run-off by natural topography of river basins, natural lakes and streams. Why then did our people and our industries have to suffer from a water crisis such as what took place in July this year?

CURRENT STRUCTURE OF THE WATER SECTOR

By virtue of Presidential Decree No. 424, the National Water Resources Board (NWRB) was designated in 1974 as the lead agency in charge of the comprehensive development, utilization, conservation and protection of water resources through the issuance of water permits for water abstraction. NWRB's mandate was eventually expanded to include economic regulation of waterworks operators except those falling under the jurisdiction of the Metropolitan Waterworks and Sewerage System (MWSS) and the Local Water Utilities Administration (LWUA).

On the other hand, the MWSS was created under Republic Act No. 6234 and was henceforth made responsible for supplying water and providing wastewater services in Metro Manila, the province of Rizal and selected municipalities in the neighboring provinces of Bulacan and Cavite.

As a result of the water crisis experienced in 1995, MWSS entered into a 25-year concession contract in 1997 with two private concessionaires, namely, the Manila Water Company Inc. (MWCI) and the Maynilad Water Services, Inc. (MWSI) for the east zone and the west zone, respectively, thereby transferring operational and capital development responsibilities thereto.

Over the years, however, the continued increase of population in Manila as well as the rapid rate of industrialization in the metropolis continue to drain our water resources. Because of this, past administrations have endeavored to identify and develop new water supply sources aside from the Angat Dam, which currently serves as the only water source for Metro Manila. A Water Supply and Sanitation Master Plan for Metro Manila indicated that there is a need to increase water supply by up to 1,600 million liters per day (mld), to augment the existing capacity of 4,000 mld, in order to meet the 5,600 mld expected demand by 2015.

WAWA WATER SYSTEM: ALTERNATIVE SOURCE OF WATER SUPPLY

At present, Angat Dam is already over-stretched and could no longer supply the requirements of Metro Manila and Bulacan farmers. Moreover, it sits on top of an earthquake fault. Cracks have appeared on its structure which needs immediate repair and rehabilitation.

There was a proposal to develop Laiban Dam, which lies adjacent to the Wawa Water System. However, the development of Laiban Dam as an alternative water supply source turned out to be not financially viable and feasible. Such project would entail a substantial amount of investment and would take a considerably long gestation period before it becomes fully operational. It was also found out that the project would adversely affect the environment and the surrounding indigenous communities. For these reasons, the proponents eventually abandoned the said proposal.

Cognizant of this compelling need to develop alternative water supply sources, the San Lorenzo Ruiz Builders (SLRBs) applied with NWRB for a permit to develop the Wawa Water System at no cost to the government in 1993. However, it was only after more than a decade that the NWRB approved SLRB's water application but only for a limited right covering only 3.48 cubic meter per second (cms), much lower than their original application for 40 cms.

ALLEGED ANOMALIES AND QUESTIONABLE ACTS OF WATER AGENCIES

At this juncture, it may interest many of us, Mr. President, to note that MWSS previously secured two Technical Assistance Loans from the Asian Development Bank, namely, the Manila North East Water Supply Project in 1992 and the Marikina River Water Supply Augmentation Project in 2004 supposedly for the study of the Wawa River Reactivation Project. The cost of these loans was paid for by the government using taxpayer's money. However, until now, no development has ever been undertaken on the Wawa River System.

In the meantime, it was reported that, in 2004, MWSS was also granted by NWRB water rights covering the same area as applied for by SLRB. Anent to these water rights, MWSS authorized one of its concessionaires, the Manila Water Company, Inc (MWCI) to make advance collection of P732 Million from its consumers supposedly to develop the Wawa Dam Project.

Based on documents made available to this representation, the advance collections for the project were already made and factored in the water tariff of consumers beginning January 2003 even before MWSS was granted the necessary water rights and even though the implementation of the Wawa Dam project has not even commenced.

Based on the Front Loading Capital Expenditure Report of MWCI in 2007, they were granted a tariff adjustment for the Wawa River System Reactivation Project as follows:

When questions were raised as to who has the legal water rights over Wawa Dam, the project was aborted. Of the P732 Million collected by MWCI, P715 million was instead used to finance the accelerated implementation of the following projects:

a) P127 Million for Curayao Well Field;
b) P169 Million for 600mm Pipe Extension;
c) P36 Million for San Rafael - 10MLD; and,
d) P383 Million for Accelerated Non-Revenue Water(NRW) Reduction.
Note, however, that the balance of P17 million still has to be accounted for.

URGENT NEED FOR A SENATE INQUIRY

Given that the consumers were made to pay for the advances collected by MWCI as allowed by MWSS, there is now an urgent need to review whether an abuse of discretion was committed by the MWSS in allowing such advance collections. Both the MWSS and the MWCI must disclose the timeframe within which these advances were collected from consumers, whether the new projects for which the advance collections were used actually resulted in the improvement in the delivery of water service or if, unfortuantely, it just became another undue burden being shouldered by the consumers.

There is also a need to investigate the circumstances surrounding the unreasonable delay in the grant of water rights to SLRB, on one hand, and, on the other, the haste with which MWSS' application was approved. Appropriate and equal standards and requirements should be formulated on which approving authorities should base the consideration, approval or disapproval of applications, requests and motions of interested parties.

Similar to the power sector, laws regulating water resources should be reviewed and restructured to separate the supply of water resources from distribution operations, to prevent monopoly in the water sector. In the case of the Wawa Project, it appears that MWSS has also allowed MWCI, a water distributor, to develop and engage in the supply of its own water needs.

Apparently, the regulatory responsibility in the water sector is highly fragmented such that the responsibility is devolved to several government agencies. There is therefore a lack of adequate or unifying legal provisions for regulation, resulting in differing and conflicting positions in the enforcement of water laws. Also, due to the number of government agencies in the water sector, there exists several water sector development plans leaving the government with no comprehensive plan for water resource development and utilization.

The excessive bonuses and emoluments being awarded by MWSS to its executives and employees, including the MWSS Regulatory Office, should also be taken into account as these come from concession fees paid by its concessionaires and are eventually passed on to the consumers. Perhaps, a creation of a new Regulatory Board independent of any terms and conditions of any concession agreement should likewise be contemplated.

Ultimately, it is the consuming public who will bear the consequences of the alleged anomalies and inefficiencies perpetuated by the concerned agencies who want to exact profits, whether legal or otherwise, at the expense of the consumers.

It has always been my position, Mr. President, that public utilities such as power and water should be rendered as a public service and end-users should be entitled to the least cost of service. This representation has always advocated for business environment that is efficient and one which will essentially provide utility costs that are least expensive and least burdensome to the consuming public.

Having laid down these premises, Mr. President, this representation urges the appropriate Senate committee or committees to immediately look into this matter. As legislators, we must see to it that government agencies and, more importantly, those private entities which were granted the privilege to engage in the operation of public utilities, shall exercise prudence and wise judgement in carrying out their mandate, duties and responsibilities.

Thank you.