Iloilo – Ang Banwa Ko nga Wala Tubig

The Old Calle Real (JM Basa Street) in downtow...

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Iloilo City, Philippines – This past week has seen a deluge of press on the current and persistent problem of access to potable water in the city of Iloilo.  We have seen and heard accusations of corruption, calls for resignations and/or firings and the two cents worth of every Tom, Dick and Harry who wants to be heard.

When I was growing up, we had our water drawn from a ground well which was pumped up to a water tank.  The growl of the motor driving the pump irritated me no end as well as the chore of having to step out to turn off the pump when the water overflowed from the tank.  Now, I know how lucky I was.  At least, we had water.

It is painful to hear that 20 or so years later, the problem of lack of access to water for Ilonggos remains and has appeared to actually have gotten worse.  It is a sad and for some an ultimately life-threatening state of affairs.

It is also sad to see that despite everyone agreeing that there is a crisis, a lot of what we see and hear boils down to a heated war of words by the various stakeholders in various media outlets.  Is something substantive actually being done behind the scenes to address this crisis?

A lot of the current brouhaha centers around the adoption by the MIWD Board of Directors of recommendations made by Castalia, the consulting firm engaged by the World Bank to undertake a study of Iloilo’s water situation.  The recommendations include public-private sector partnerships to address the current crisis.  This Public-Private sector partnership is what is being alluded to as privatization.

MIWD management while raising other issues concerning the competence of its Board to make decisions, also admits that they fear the loss of jobs should privatization happen.  Another concern raised by some in the media and the Freedom from Debt Coalition (FDC) – Iloilo are other potential negative effects of privatization like a rise in prices.  They often cite the sale of the Panay Diesel Power Plant in Dingle, Iloilo.

Given this conflict which are clouded by side issues, it is unfortunate that it is the tax-paying Ilonggo who will continue to suffer from the delay in resolving this crisis.

Having laid the situation as it currently stands, I will say right off the bat that the stakeholders need to have an honest to goodness discussion of the options that are available.  The exchange of charges of corruption and incompetence will not solve this problem.  The parties should take the appropriate action in the appropriate jurisdictions for these issues and not cloud the bigger issue at hand which is the water crisis.

The options at hand
As I see it, two of the options (there are probably more) are (1) retain the current system as management wants it; or (2) look at some other structure, including Public-Private sector partnerships, as the Board espouses.

The current system option
It seems, at this point, that management is the only one really wanting this option.  The media and NGO organizations, while criticizing the “privatization” option, don’t really put forth any suggested course of action.

As the proponents of this alternative, it is management’s obligation to present to the Ilonggo public why this is the best option including a detailed plan for how they intend to resolve this water crisis.  It would be nice if they also set for themselves certain benchmarks so their performance over time can be judged relative to what their plan promises.

Some key questions that need to be addressed in such a management plan include:

– what is the current state of the water supply and distribution in Iloilo City?

– what are the specific steps that you will take to (1) increase supply; (2) reduce waste as measured by Non Revenue Water (NRW); and, (3) increase the number of connections in Iloilo City?

– how are you going to fund your plan?

– how long will your plan take and what are the internal interim benchmarks that you will set for yourselves?

– what happens if you are unable to achieve the benchmarks and goals of your plan?

The public-private sector option
As the main proponent of this option, the board of directors should also be subject to the same questions as the ones raised above for management to address.  They owe this to the Ilonggo people who they claim to serve.

A word on privatization and MIWD
My own leanings are that other options other than the status quo should be explored.  This does not necessarily mean that privatization will be the answer.  At this point, however, the burden is on management to present to us why the status quo should be preserved.  They got us into this mess, they should tell us how they are going to get us out of it and let us be the judge if their plan is feasible or not.

Addressing issues
I’d also like to put in my two cents’ worth on side issues that I alluded to earlier.

We don’t have to go far to look for possible answers to the fears addressed over a potential privatization of a water distribution utility.  In February, 1997 the MWSS awarded concessions to Manila Water Company and Maynilad Water Services, Inc. to service the water distribution needs of Metro Manila.  We can learn a lot from what has happened since then to provide us with a framework for what can be done with MIWD.

On the issue of jobs, recent data show that 95% of the employees of Manila Water now were former employees of MWSS.  If you talk to them now, they are a lot happier now than they were then.

On the issue of price increases, the all-in tariff immediately prior to privatization was P8.78 per cm.  One year after privatization, it was P4.96 per cm in the East Zone and P7.21 in West Zone, a reduction of 44% and 18%, respectively.  More tellling, it was not until 4 years after the privatization when rates actually exceed the rates prior to privatization.

While the Philippines’ “relevant” water distribution utility privatization experience has generally been positive, it is important to remain vigilant should it be decided by the powers that be that this is the way to go.  One key consideration is the mode by which any public private sector partnership is going to be structured.  In the MWSS scenario, the concessionaires essentially are providing the services as private entities but the assets remain owned by the government.  It is also important to note that the MWSS remains the regulatory body with the power to approve or disapprove rate hikes.

If such were to happen to MIWD, it is important to insist that the members appointed to what would be the regulatory body are competent and free of any conflicts of interest.