Kudos to MWSS for Performing —Viable Public Alternative Needed for the West Zone

Bantay Tubig lauds the recent unanimous decision of the MWSS Board to fully draw on the US$120 million performance bond of the failed Maynilad Water Services Inc. The MWSS Board has clearly taken its cue from the recent Supreme Court decision, which found the Quezon City Regional Trial Court, Branch 90, to have acted in excess of its jurisdiction when it stopped the MWSS from drawing on the performance bond last November 2003.

At the same time, Bantay Tubig calls on Economic Planning Secretary Romulo L. Neri not to delay any further the NEDA Board decision explicitly rejecting the proposed Amendment No. 2. The latter, which involves drawing only $50 million of the performance bond of Maynilad and converting over $70 million in unpaid concession fees of Maynilad into MWSS equity in the failed Maynilad, is patently inferior to a full draw of $120 million.

No amount of elaborate calculations can prove that Amendment No. 2 is better than a full draw, and we are glad that the MWSS Board has finally acknowledged this. Bantay Tubig is confident that Secretary Neri, with his expert analysis and abiding faith in the principles of good governance, will reach the same logical conclusion. Cash of over P6 billion, especially for a government facing a chronic fiscal deficit and dwindling tax base, is superior to cash of less than P3 billion, equity of over P5 billion in a failed concessionaire, and an P8-billion bailout of its private, privileged owner. A NEDA rejection of Amendment No. 2 is a clear signal to the business community that government is not in the business of absorbing the losses of failed private business ventures even of the elite.

Now that the MWSS has opted to fully draw on the Maynilad performance bond—an amount which leaves the MWSS still with $60 million and counting in unpaid concession fees from Maynilad—it should focus its energies on exploring the best options for a viable west zone. Bantay Tubig believes that the Arroyo government should not limit its option to finding, in the words of Justice Undersecretary Manuel Teehankee, “how best to rehabilitate Maynilad for the water consumers’ sake.” (Philippine Daily Inquirer, 27 June 2004). Bantay Tubig cautions the Arroyo government into invoking consumer welfare to justify the lowering of performance standards simply because Maynilad cannot do any better.

The continued provision of water in the west zone is the ultimate responsibility of government, especially when its efforts to privatize water distribution have clearly failed. If Maynilad cannot efficiently provide safe, clean water to the west zone within acceptable standards of performance, then it is government’s responsibility to find someone else—including government-- who can. Given this scenario, MWSS should find better solutions that prioritize not only the government’s interests, but, more importantly, the consumers’ needs.