Introspective
Business World, 28 April 2019
In liability law, who causes the injury pays. This is the cornerstone of the rule of law. In the case of the 1.134 billion pesos penalty imposed on Manila Water (BusinessWorld, 25 April 2019), MWSS obligates the concessionaire to pay! But if the MWSS is itself the cause of the injury, we are standing the liability principle on its head.
The water crisis exploded because of the shortage of bulk water in Metro Manila. The Figure 1 below shows the trajectories of water of the La Mesa Dam and Angat Dams for September 2017 to March 2018 and September 2018-March 2019. Note how steeply the water level dropped in La Mesa Dam in the drought-hit period (red) compared to more normal same period last year (purple). Angat Dam water level held up better (blue and green). Drought had taken its toll on the main water source for Manila Water.
The customer base of Manila Water which stood at three million in 1996 now stands at seven million and with higher average per capita income. But the sources of bulk water are still the same. Why the water crisis?
It’s MWSS incompetence, stupid! No clearer evidence could be provided than the statements of MWSS Chief Regulator Patrick Ty, the government’s main man on water in Metro Manila: “It’s our fault. It’s the government because the Kaliwa Dam, Laiban Dam have been proposed since Marcos and due to a lot of opposition and accommodations for IPs, from the informal settlers, from leftist group, church group, these projects kept getting moved on….Are you saying it’s our fault? Yes, it’s our fault because we’ve been delaying all these projects…Manila Water has been raising this issue since I took over in 2017 so all this is our problem and we need to fix it.” (PhilStar quotation, 14 March, 2019).
Honest Mr. Ty may still get the sack. What are the obligations of Manila Water in respect to raw water provision? According to the July 1996 Privatization Strategy Report (not explicitly in the concession agreement but part of the preliminary spadework (Lazaro, 2019)), “The concessionaires…will be responsible for the supply of their respective future bulk requirements,” which seems to suggest that bulk water shortfall is the liability of Manila Water alone. But water distribution service in Metro Manila is a regulated activity―this means that any project proposed by Manila Water to improve water security must be approved by the regulator, MWSS. Without MWSS approval, the concessionaire cannot be reimbursed and the project is “drowned in the water”. A case in point―the Cardona Water Treatment plant – evidence many said of the negligence of Manila Water – would have produced additional bulk water from Laguna de Bay for the East Concession customer. This was proposed by Manila Water in 2008 but construction could not start until 2016 because squatter occupied the designated MWSS property. Informal settler clearing is not Manila Water’s mandate. But even had the Cardona Water Treatment Plant been fully operational at 100 mld in early 2019, the shortage would not have been avoided – the shortfall estimated at 160 mld meant that water rationing would still happen. Water treatment plants and groundwater sourcing are short-term remedies; they cannot substitute for new bulk water sources which task MWSS has claimed for its own and at which it has failed. But even the stop gap measures will fail if MWSS foot-drags. In 2013, MWSS delayed the capex applications by Manila Water for Tayabasan East Water Source which it deemed unnecessary; the Long Term East Source and the Kaliwa Low Intake projects were denied because MWSS would itself finance and build those projects. The regulator turning provider?
When the NEDA ICC met in October 2013, it changed the plan proposing instead that MWSS implement the project in stages: the Kaliwa Dam first and the Laiban Dam later The NEDA board approved the revised PPP plan in May 2014. Two bids were pre-qualified when Pres Aquino left office in 2016.
The incoming Duterte administration made noises about preferring the ODA modality to PPP and seemed to have entertained the offer of Japanese private firm to build a 7-meter weir on the Kaliwa River. This was to yield 500 mld at the cost of P20b. The administration took its time and finally in 2019 scrapped the Japanese proposal in favor of a Laiban (high) dam to be financed by Chinese ODA. This was to be 73-meters high with water yield of 600 mld and to cost P12b. Unfortunately, these continuing pivots effectively ensured that no work was done and no bulk water flows to Metro Manila from Kaliwa River.
The kindest, but not the only, interpretation of events is that the government was hankering for an ever more perfect plan and violated a common sense adage: “Don’t let the perfect be the enemy of the good.” The March 2019 water crisis is the harvest of unbridled zeal.
The MWSS decision constitutes a rape of the rule of law even if the concessionaires decided to hold their horses. If left to stand, it establishes a precedent that a guilty party can reap political pogi points by scapegoating a vulnerable party. The scapegoating of Manila Water certainly deflects the conversation from the threatened firing of the MWSS leadership for incompetence. Would that well-meaning lawyer groups will challenge it. Otherwise, it could be the twilight of the rule of law in the Philippines. And progress will, as the Intro to a Sinatra song goes, “…slowly fold its tent and silently slink away.”
