FOLLOWING THE FLOW

1. FOLLOWING THE FLOW An Update on the Philippine Water Sector Scene Mary Ann Manahan Focus on the Global South, Philippines Programme September 5, 2006

2. Picture of Water Supply Delivery in the Philippines • Water service delivery is still public • URBAN: 70%- Water Districts, Local Gov’t Units (LGUs), community-based organizations • 30%- Private operators, Small Scale Independent Water Providers and household self-supply • RURAL: 65% (public) - 35% (private) • National: About 25-27.5% are serviced purely by the private sector (but GROWING) • BUTalmost half of the water utilities (especially the LGU-run) are no longer operating for many reasons (key constraint: financial sustainability, operational viability, legitimacy and accountability, regulation, etc.)

3. Picture of Philippine Water Supply… • Deteriorating access to safe drinking water: 80% even lower for poor segment of the country; 20% for sanitation (questionable whether Phil. can achieve MDG goal by 2015) • EVEN worse for access to sewerage (septic tanks, on-site treatment and disposal) • Regulation is a mess and with overlapping functions of different government agencies (better defined for public rather than for private concessions and operators) • Privatization: Increasing role of private concessions and operators (as pushed by both the National Government and the WB and ADB) esp. for megacities and “credit-worthy” water districts operating in major cities

4. Picture of Philippine Water Supply … • Where major European water TNCs are present (Suez in Manila, Veolia in a section of Metro Manila/Fort Bonifacio, and Clark Special Economic Zone, Biwater in Subic Freeport Area) in partnership with… • Domestic water companies (construction, land interests) • Problems with privatization (e.g. Metro Manila, Magdalena in Laguna) • Failure to fulfill contract obligations: High water tariff rates, NRW increase, Non-investment • Exacerbating unequal access to water • Taxpayers and consumers bearing the brunt • Non-transparency and unaccountability to water users and consumers • Threat to the existence of long-established and functioning community-water supply service providers • In this context, how do we define alternatives in the Philippines when water service delivery is still public but problematic and when you have failed privatization projects?

5. Alternatives in the Philippine Context • Ensuring that constituents (communities) have access to participate in the management and the dev’t of the water sector (question and frame of how WE want our water (services and resources) managed?) • Strengthening community-based water service providers rather than outright support for privatization • Community-based water service models (water cooperatives and water associations) in rural, urban and peri-urban areas- most successful compared to other models (as operating and providing water supply services in a community w/in a defined watershed)

6. Alternatives in the Philippine Context • Well-defined and clear rules for the players in the sector (agreeing on a democratic framework of management and development of the sector) • Building legitimacy, support (subsidies, political, policy environment) for community management models • strategies for water supply services become more effective when they are involved • Reforms within public water utilities are possible (e.g. Magdalena, Zamboanga) • Context-specific solutions (and not a blanket model of water supply and service delivery)

7. Alternatives in the Philippine Context • Developing alternative financing schemes that would nurture such community-led initiatives (vs. IFIs’ financing) • Important elements in the building of alternatives • Access to and control of water– who, what and how (community’s/consumers’ rights to water as basic human right) • Legitimacy and accountability • Financial sustainability • Resource sustainability • Socio-political sustainability • Operation viability (technical and organizational) • Legal identity • Conducive policy environment and legal framework • Independent functional regulatory system • Replicability • Challenging task of developing alternatives to privatization (within and post) in Metro Manila

8. Update on Metro Manila’s West Zone • Failed privatization: Lopez-family (former partner of Suez in Maynilad) was bailed out by National Government/MWSS through government buying 84% of the Maynilad at US$22 M (from US$57 M) via rehabilitation (approved last year despite opposition from public interest groups) • West Zone up for rebidding- attracted 9 companies/consortia now down to 4 Asian companies: Manila Water, Singapore’s Noonday Asset Management Asia Pte. Ltd., India’s Karunakaran Ramchand and DMConsunji, Inc. • Suez unclear if will stay on: “tag along provision” • Minimum bid of US$54 million, performance bond of $30 million • WB loan of US$ 220 M for Maynilad rehab • MWSS:whoever has the “most” money should operate in the West Zone (as if nothing happened)

9. Possible Scenarios • Ayala-led consortium wins(WB: “monopoly is ok”) • Dark horse wins • MWSS through Maynilad is forced to continue being the service provider in the West Zone • West Zone Operator, whether public or private fails and Local Governments decide to take-over the service area of MWSS • Derailing of rebid • (Our) Legal case case against Maynilad’s rehabilitation is upheld by the Philippines’ Supreme Court and rebidding will be derailed • Arroyo stops the bidding as part of a vendetta against the Ayalas

10. Initiatives and Campaigns • Development Roundtable Series on water resources and services process (coming up with alternatives for the West Zone through roundtables discussions, research/mapping and negotiations with different groups) • Dividing up the west zone: LGU-managed areas in the West Zone; Community-led initiatives (e.g. water cooperatives) supported by Local government • Reforming the MWSS (public sector enhancement capability program)

11. Initiatives and Campaigns • Bantay Tubig, a network of public interest groups and CSOs advocating for universal access and coverage to safe drinking water and sanitation, is gearing up for an intensive campaign on Maynilad rebidding • Strategy of multiple messages from different standpoints in common venues that will be organized: derail or universal coverage as conditionality for intervention in the rebidding • Multi-pronged approach: court cases, congressional hearings, public meetings, dialogues with MWSS and popular mobilizations, mobilizing support of mayors from Metro Manila towns and cities with significant number of waterless communities, international solidarity work (especially for pressure and info exchange on similar experiences and alternatives) • FDC’s Blue Drop Campaign

12. Some thoughts on “What we can/need to do”[ Asian-level and Europe-Asia cooperation] • Better ‘coordination’-collaboration and information exchange on the different initiatives and campaigns on water in the Asian region and Europe (e.g. popularizing the PUPs discourse in Asia/concrete links with anti-privatization work/issues) • More people-to-people exchanges of experiences/lessons learned (inter-regional and intra-regional/ country-level; N-S; S-S) • Watch out for the rise of Asian TNCs as big players in the water sector • Work towards an ‘agreed’ framework on how we want our water as part of the “regional commons” to be managed

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