Maynilad Water Services Concession Agreement

In 1986-1992, the government of Corazon Aquino launched an extensive privatization program that resulted in the sale of 122 companies for $2 billion. Succeeding him, Fidel Ramos extended the privatization program to infrastructure and caused an electricity crisis in 1992-1994 through rapid private investment in power plants. Based on this perceived success, Ramos asked his Secretary of Public Works and Transportation Gregorio Vigilar to apply the same approach to solving Manila`s water problems. [13]:3-5 Between 1997 and 2002, access improvements were limited and water losses even increased in Western Manila. Subsequently, however, performance improved in both halves of the city. Until 2009, access had increased significantly and the efficiency and quality of service had improved considerably. Improvements have been faster and more significant in the eastern zone than in the western zone. Both companies have worked to reach the poor in the slums. However, tariffs have also increased significantly and improvements have remained well below contractual obligations.

As far as sanitary facilities are concerned, almost no improvements have been made. The concessions were granted to the following joint venture, which came into effect in August 1997: prior to privatization, the Metropolitan Waterworks and Sewerage System (MWSS) provided an average of 16 hours of water per day to Metro Manila. [16] It was also inefficient, overcrowded and suffered from very significant water losses. According to the Asian Development Bank, the amount of non-returned water (NRW) (water delivered but not decreasing, for example.B. due to leaks and illicit compounds), more than 60 per cent; This was much higher than in Seoul (35%), Kuala Lumpur (36%) and Bangkok (38%), and only comparable to Jakarta. [17] Tariffs were low and MET depended on subsidies that the government desperately wanted to remove. The distribution company was burdened with an $800 million debt to the Asian Development Bank, the World Bank and the Japan Bank for International Cooperation. [18] People in Manila had become accustomed to the poor distribution of water in Manila and did not feel a strong desire to change the situation, not least because water prices were very low. In 2001, a dispute broke out between different members of the regulatory office of the MET regulatory system. The head of the bureau, Rex Tantiongco, resigned in July 2001 after failing to obtain the support of other bureau members for the approval of a further tariff increase after that granted by the arbitration panel. His successor, Herman Cimafranca, called the Office a « toothless paper tiger. » It stated that it had no role to play in authorizing tariffs to increase tariffs, as shown by the old transfer to increase the rate of return to an arbitration panel and not to the regulatory office. [21] In October 2001, MWSS` Board of Directors approved the first amendment to the concession contracts.

It allowed for rapid changes in tariffs due to exchange rate fluctuations, rather than offsetting losses resulting from exchange rate fluctuations through incremental adjustments. The result was a further immediate increase in tariffs. [18]:1-4 Most manilas residents deduct their wastewater from about 2.2 million septic tanks. Dealers are required to empty these septic tanks. [42] Manila Water operates 60 mud trucks that empty septic tanks free of charge. The sludge is transported to two wastewater treatment plants. [43] Maynilad also operates mud vehicles, but does not yet have a sewage treatment plant. [42] As previously noted, both concessionaires submitted offers with much lower tariffs than previous tariffs: 26 per cent of the previous tariffs in East Manila and 57 per cent in West Manila. .

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