BENEFICIALITY OF NATIONALIZATION

1. Technical efficiency and lower cost of production/service

a. Price Stability

i. would then allow the regional water utilities to operate more in the public
interest with lower water bills for households which then increases their economic
welfare. Instead of aiming to maximize profits and returns for shareholders public
sector utility might switch from profit maximization to pricing closer to an
allocatively efficient price equal to marginal cost.

ii. Government can easily track and control the prices of water since it is working
under one system

b. The managers, freed from their tutelage to the industrial overlords, would devote
themselves entirely to improving technical efficiency and lowering the cost of
production.

2. Industry is essentially a natural monopoly (Natural monopolies are allowed when a

single company can supply a product or service at a lower cost than any potential
competitor, but are often heavily regulated to protect consumers.) and as such is not
suitable for the usual types of competition between rival suppliers.

a. water is a basic commodity, therefore, a basic human right.

i. The United Nations Development Programme (UNDP) suggests that water costs
should not exceed 3% of household income. Yet WPN, in its studies in 2013,
found poor families in Metro Manila paying as much as 7-22% of their household
income for water which is so basic to survive. Since the start of water
privatization, water rates have increased seven-fold in the West Zone under
Maynilad (573% increase) and ten-fold in the East Zone under Manila Water
(871%). These rate increases far outpace inflation over that same period.

b. Nationalization is the real alternative to water privatization. It is the best way to ensure
that water is provided as a service instead of operated as a business.

3. Supposed profit earned to be built infrastructures and water facilities

a. Revenue from water sources would be utilized by government, not for profit, but for
building water facilities and infrastructures. Manila Water’s net income grew from 2.4
billion pesos in 2007 to 5.7 billion in 2017. Maynilad’s grew from 1.3 billion to 6.8 billion
pesos in the same period. For the first half of 2019 alone, Manila Water generated a total
revenue of 2.9 billion pesos which is 18% lower than 2018. As a private corporation this is
distributed to its shareholders.
 b. With a government-owned water firm, we make use the billions of pesos that we
collect to build a better water system, and not to distribute to shareholders. Furthermore,
concessionaires pass the burden to consumers through water hikes by shifting their
corporate income tax, which is a direct tax, to its consumers. This is not the case with
government, which is public-service oriented and not profit driven.

4. There would be accountability on the part of the government that is not present with
concessionaires.

a. Article 12, Section 1 of the 1987 Constitution mandates the sustained increase in the
amount of services, like water distribution, for the benefit of the people, especially the
underprivileged.

b. At present, we face unacceptable delays in the construction of water treatments

facilities, exorbitant water rates, among others, all contributing to the worsening water
crisis and compromising the quality of water service.

c. As a matter of fact, the Office of High Commissioner for Human Rights (OHCHR)
revealed that water rates drastically increased by more than 357.6% for Maynilad and by
414.4% for Manila Water after its privatization

CONCLUSION

All told, the right to water and consumer access through equitable distribution of water supply,
affordability, improved service quality and infrastructure can only be assured if water services are
publicly owned, managed, and controlled.

Thank you and good evening.

NOTES:

Data #1

Currently, Maynilad has a service area of 540 square kilometres with a population of 9.5 million,
89.2% of whom are customers of Maynilad or a total of 937,578 water service connections. Of
these customers, 82% have access to 24-hour piped water services and 92% receive water at a
pressure of 7 pounds per square inch (psi). The company produces 2,149 million litres of water
per day (MLD) through its three treatment plants, 17 pumping stations and 35 distribution lines.
The company also has 12 Business Areas, 35 Hydraulic Areas and 761 District Metered Areas.
The company is currently manned with 2,123 full time employees.

Data #2

The La Mesa Water Treatment Plant, with very minimal electromechanical equipment, relies
mostly on water’s hydraulic properties to backwash its filter and gravity to convey raw water
from the source into the plant and out into the distribution system.

It can only process 2,400 MLD (million liters per day) of raw water, while the Balara Treatment
Plant, which has a full production capacity of 1,600 MLD, can supply more than 6 million people
throughout the metropolis.

When both Balara and La Mesa Treatment Plants are operation, the total processing capacity will
be 4,000 mld. The La Mesa Water Treatment Plant serves the western half of Metro Manila, while
the existing Balara Water Treatment Plant supplies the eastern half.
(http://mwss.gov.ph/learn/metro-manila-water-supply-system/)

Data #3

In 2007, the NRW of Maynilad reached 66% - a very high rate. This means that 1,500 million
litres of water per day were wasted. To illustrate the enormity of this water loss; NRW at a
volume of 1,500 MLD could flood a 16.95 KM road with 2.0 meters of water or could supply Ho
Chi Minh City, Vietnam with water 1 ½ times. Furthermore, water of this quantity, if not lost,
could supply an additional 1,250,000 households with potable water. When lost, this volume of
treated water remains unaccounted for and does not translate to revenue for the company and
adversely impacts water supply.(UN Water)

Data #4

The National Water Resources Board (NWRB) estimates total available groundwater supply to be
20,200 million m3 /year. Based on an 80% probability for surface water, the total dependable
surface water supply is 206,230 million m3 /year, implying a total mean supply of 226,430
million m3 /year. Agricultural use accounts for 83% to 85% of this amount, the remainder being
shared by the industrial, commercial, and domestic sectors. Growing population especially in the
urban areas together with water pollution, wasteful and inefficient use, continued denudation of
forest cover (particularly in watersheds), and saltwater intrusion caused by excessive withdrawal
of groundwater (particularly in the metropolitan area of Cebu, Davao City, and certain areas of
Metro Manila), are the major challenges facing the country’s water resources. (ADB)

Data #5

The National Water Resources Board (NWRB) has identified seven critical major
metropolitan areas in the Philippines where the projected demand for water is expected
to dramatically increase over the next 10 years. By the year 2025, water demand is
expected to reach 2.883 billion cubic meters in Metro Manila, 342 million cubic meters
in Metro Cebu, 203 million cubic meters in Zamboanga City, 153 million cubic meters in
Davao City, 111 million cubic meters in Bacolod City, 98 million cubic meters in Cagayan
de Oro City, and 87 million cubic meters in Baguio City. These Metropolitan areas are
expected to have one of the most rapid increases in population growth because of rural
to urban migration and increased birth rates. They are expected to attract the largest
amount of investments in manufacturing, construction, electricity gas and water, as well
as in commercial and residential establishments. However, the amount of exploitable
groundwater in these nine major metropolitan areas fall short of the projected demand
for 2025. (DLSU Research: Challenges to Water Resource Management)

Data #6

The regions with the largest water resource potential are: 1) Northern Mindanao at
31.116 billion cubic meters; 2) Southern Mindanao at 20.548 billion cubic meters; 3)
Western Visayas at 15.344 billion cubic meters; 4) Southeastern Mindanao at 13.675
billion cubic meters; 5) Southwestern Mindanao at 13.182 billion cubic meters; 6) Eastern
Visayas at 11.907 billion cubic meters and; 7) Cagayan Valley at 11.335 billion cubic
meters. The remaining five regions which have water resource potentials below 10.0
billon cubic meters are: 8) Central Luzon at 9.611 billion cubic meters; 9) Southern
Tagalog at 7.780 billion cubic meters; 10) Ilocos at 4.498 billion cubic meters; 11) Bicol at
4.145 billion cubic meters and; 12) Central Visayas at 2.939 billion cubic meters. The
identification of these 12 water resource regions are based on the hydrological
boundaries set by the DENR, EMB and NWRB. (DLSU Research: Challenges to Water
Resource Management)

Data #7

Water quality Inadequate sewerage treatment systems has increased the amount of
domestic household waste water, industrial effluence and agricultural run-offs that have
contributed largely to the pollution of ground water and surface water sources severely
compromising water quality. The Joint Monitoring Program for Water Supply and
Sanitation of the World Health Organization and UNICEF (2004), reports that only 7
percent in the urban areas and 2 percent in the rural areas in the Philippines are
connected to a sewerage system. A majority of households use flush toilets that drain
into a septic tank or into sewers that lead to canals and river systems without being
treated, contaminating both surface and groundwater.