Asia Pulse | February 19, 2003 The success of the Ayala-led Manila Water Company in the Philippines in water distribution covering the East Zone half of Metropolitan Manila has shown that private participation can be a viable approach in water resources management in the light of scarce government funds for water projects.
The company's experience was presented during the East Asian Journalists Workshop on Water Policy Issues in East Asia held 15-18 February 2003 at the Hotel Cambodiana in Phnom Penh, Cambodia. The workshop was organized by the Water Media Network, the Asian Development Bank (ADB) and the World Bank Institute.
Wouter T. Licklaen Arriens, ADB lead water resources specialist, said the success of the Manila company can be a model for private participation in water resources management and a boost to ADB's "water for all program." Arriens said this is timely as some 1.1 billion people in the world lack access to safe water supply and 2.4 billion people lack adequate sanitation.
In Asia, home to 900 million of the world's poor, he said one in three people has no access to safe drinking water within 20 meters of the home and one in two people has no access to adequate sanitation.
Worse, water issues are often not included in the governments' poverty reduction strategies.
The Manila Water Company took over control of half of the water delivery service in Metro Manila formerly served by the Metropolitan Manila Water and Sewerage System (MWSS) in 1997 after a severe El Nino hit the country, sparking a water crisis in the Philippine capital. It was then billed as the "biggest water privatization in the world."
It was given concession over an area of 1,400 square kilometers with a population of five million.
Sherisa P. Nuesa, chief financial officer of the Manila Water Company, said in five years since the company took over, it has increased its water production by 70 per cent from 440 million liters per day (MLD) in 1997 to 750 MLD in 2002.
The company also expanded its service from only 325,000 households in 1997 to 470,000 households in 2002, she said.
According to Nuesa, 24-hour water availability in 1997 was only 26 per cent but her company was able to increase it to 83 per cent in 2002.
Drinking water quality standards also increased from 91 per cent in 1997 to 99.80 per cent in 2002 which she said was one of the highest in Asia.
More significant was the tariff structure implemented by the company. When the company took over, the MWSS was already charging P12 (US$0.22) per cubic meter of water. But the company was able to reduce it to P4 per cubic meter, she said.
While the company later increased water rates to P8 per cubic meter in 2002 for investment recovery, Nuesa said this still translates to some P10 billion savings for water consumers based on the projected increase under the MWSS tariff.
The company proved its viability when it posted a profit of P6 billion. This was however plowed back in terms of capital expenditures for expansion of its water distribution network by adding 200 kilometers of pipes to the 170 kilometers of pipes already laid in 1997, she said.
She said the company contributed to the Philippine economy by generating employment to some 20,000 workers who were paid some P2 billion in wages.
The company also paid some P1.44 billion in taxes to the government.
While the company retained 95 per cent of former MWSS employees in charge of day-to-day operations, it has increased efficiency and productivity by reducing the number of staff per 1,000 household connections ratio, Nuesa said.
From 6.6 employees per 1,000 household connections in 1997, the company reduced it to 3.2 employees per 1,000 household connections in 2002.
According to Nuesa, while residential consumers constitute 87 per cent of their total number of customers, they only paid 47 per cent of the total peso billing. On the other hand, commercial consumers which only constitute 11 per cent are paying 42 per cent of the total peso billing.
While admitting the company invested in water distribution for its viability, she said it was conscious of its social responsibility by reaching out to the informal settlers who otherwise would not have water connections.
As of 2002, the company's "Tubig Para sa Barangay" program has serviced some 64,000 households within their area which translates to some 400,000 individuals given access to safe drinking water.
Taking care of the informal settlers also proved beneficial to the company as this reduced the number of illegal water connections, she said.Asia Pulse:
