MANILA SHORTAGES 18 April 2019 (Vol 20, Issue 4) Topics: Asia Pacific, Utilities Countries: Philippines Companies: Manila Water You can still unlock 1 article this quarter Shortages trigger Manila concessions review ‘A long-expected water shortage in Manila Water's Metro Manila service area has rapidly escalated into a political blame game, with concession contracts coming under fire and several new projects landing on the table, Filipino water and wastewater concessionaire Manila Water has found itself under scrutiny after approximately 1.2 million households in its, Metro Manila East Zone service area began to experience water supply interruptions in March, with the situation leading to a wider debate on the status of water privatisation in the capital region. President Rodrigo Duterte has now ordered a review of all government contracts with private companies to ensure that they do not contain any provisions detrimental to public interest. This will include the concession of Manila Water, a 25-year contract originally signed in 1997country. Separately, regulator Metropolitan Waterworks and Sewerage System (MWSS) was ordered by the president to submit a report outlining a roadmap for the future water supply of the city after he threatened to replace MWSS officials and end the contracts of the concessionaires. “It has gone to presidential level. He has to have the report on his desk by the 7th of April to illustrate how they're going to improve things,” a source told GWI. A decision by the president is now expected by 22 April. Aside from outright termination of the contracts, another possibility that has been mentioned is for the 2022 to 2037 extensions only to be terminated, Manila Water declined to comment to GWI ahead of the president's evaluation. ‘One main question which has been raised is why Manila Water has not done enough to develop additional water supply sources, despite predicting future shortages. The company’s water treatment plant in Cardona had faced a three month delay due to design issues when it began operating in the middle of the crisis, and will not be operating at its full 100,000m3/d capacity until the end of the year. ATIMELINE OF TROUBLES IN MANILA The water crisis in the Philippine capital soon turned into a business crisis for concessionaire Manila Water. Source: GWI To find short-term solutions, the company has relied on tube wells, and additional water shared from Maynilad, managing to cut the gap between supply and demand, which peaked at 150,000m3/d in March, by 50% one month after the shortage began. It also introduced a one- time bill waiver scheme for affected customers for March. On 16 April, Manila Water COO Geodino Carpio resigned, with no reason cited by the company. However, the company has also found itself scrambling for longer-term options. "I think their water shortage means that they'reImis coure Iyeluae Taseuacking or expanaing previously prannea projects, with the company signing an MoU with Prime Metroline Infrastructure Holdings in the middle of the crisis to develop the Wawa dam and water treatment project, which could add 500,000m3/d of supply to Manila Water. "[The Wawa Dam] is something that was happening before but it's becoming bigger because of the current shortage,” a source told GWI. "It was really just about how it would supply the local community; however now it has become a much bigger scheme.” Under the present allocation from the Angat Dam, Metro Manila’s main source of water, Manila Water is allocated 1,600,000m*/d, while Maynilad has an allocation of 2,400,000m3/d. However, Manila Water's customer demand has grown to 1,750,000m3/d, leaving the company with a deficit. Additionally, low water levels caused by drought conditions in the La Mesa Dam which the water passes through have meant that many existing water intake gates have been unable to retrieve water from the dam While the need to develop additional water resources for the city has been recognised, the national government's Kaliwa Dam project, which is supposed to provide 600,000m*/d to be shared between the two concessionaires once completed, has been slowed down by controversy over the displacement of indigenous people and the choice to use Chinese money to fund the project rather than developing it as a PPP. In a twist of fate, Prime Metroline was one of the pre-qualified companies for the Kaliwa Dam project during its days as a planned PPP. Conspiracy theories have circulated regarding the shortage being artificially constructed by the MWSS or Manila Water in order to get support for the Kaliwa Dam project, something which the regulator and the concessionaire have both denied. Separately, proposals for new projects have been put forward to the MWSS, including an alternative Kaliwa Dam project proposed by Japanese company Global Utility Development Corporation and an impounding basin project in Bulacan which would convey up to 800,000m?/d to the concessionaires.that the shortages were artificial and used to garner support for the Kaliwa Dam project. The regulator and the concessionaire both deny this claim. Source: Shutterstock