‘Water crisis’: Magnates’ profit hunger, system’s failure

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THE so-called water crisis — the worsening of Metro Manila residents’ access to potable water — is yet another indication that there is something deeply wrong in our society and in our socioeconomic system.

To call it a “water crisis” is an understatement. The mark of civilization, even before the advent of electric power, is the capability of a society and its state to provide accessible, drinkable water to a population massing in cities — as demonstrated by the five great Mayan cities; by Istanbul with its Basilica Cistern, still an awe-inspiring tourist site; and of course, the Roman empire with its still existing, and usable, system of aqueducts.

My god, these were ancient cities, which provided potable water to their residents many centuries ago. Whatever excuses or rationalizations the water companies have been giving — and they are skilled in doing this with their hold on media — it is totally unacceptable that a water crisis has emerged in our prime metropolis where the two water services concessionaires, Manila Water Co. Inc. and Maynilad Water Services Inc., are mainly owned and controlled by the countries’ two biggest and richest oligarchs.

Manila Water is mainly owned and run by the Ayalas, the product of our Spanish and American colonization, with the brothers Augusto and Fernando among the country’s richest tycoons.

The two magnates ultimately calling the shots on water service in the metropolis. (Photos from First Pacific’s and Ayala Corp.’s 2018 annual reports.)

Maynilad is part of a relatively new foreign conglomerate which had its breakthrough during President Joseph “Erap” Estrada’s corrupt regime, when he allowed the foreign firm to take over PLDT, prohibited by the Constitution, to the extent of arm-twisting even an old elite, Alfonso Yuchengco. The former Securities and Exchange Commission chairman, Perfecto Yasay, alleged that Erap got P3 billion for it in a deal arranged by the late, notorious Mark Jimenez.

Perhaps even an insult to us is the fact that this new foreign firm wasn’t even a US or European conglomerate, but the Hong Kong-based company First Pacific, which is majority-owned by the Indonesian Anthoni Salim, the scion of strongman Suharto’s biggest crony, the late Liem Sioe Liong. (Salim’s face in the Philippines is his executive Manuel V. Pangilinan.)

The two companies have been extremely profitable for the Ayalas and Salim. “Based on our scrutiny of publicly available financial filings, we’ve gathered that Manila Water Co. Inc. and Maynilad Water Services Inc. raked in an aggregate of P138 billion in net profits from 2006 to June 2019,” Buhay party-list Rep. Lito Atienza disclosed in Congress.

Some P49 billions of these were released to their stockholders as dividends. A major part of such dividends were remitted abroad, in the case of Maynilad to its mother firm First Pacific and then to the firm’s main owner Anthoni Salim. In the case of Manila Water, part of it went to the Japanese-based Mitsubishi Corp., which is one of the major stockholders of its mother firm, Ayala Corp.

But not only that, both firms are listed in the stock market, which means that not just the country’s elite but the richest people in the world are profiting immensely from the two companies, even if they have been unable to provide the minimum required water services to residents of metro Manila.

Why wouldn’t the two companies be raking in so much money, when they are both monopolies, with their customers at the mercy of the sole water firm in their area. The Ayalas’ water firm covers the 23 cities and municipalities mostly in the eastern side of the metropolis, while the Salim firm, Maynilad, has the western side of the metropolis as well as parts of Cavite.

It was the second Yellow regime — the Fidel Ramos administration — that handed over the monopoly of water services in the metropolitan Manila and other public utilities to the oligarchs. The Lopezes who earlier owned the concession for Maynilad sold it for $248 million to the Salim group, which it needed to fend off the bankruptcy of its entire conglomerate.

While neoliberals have cheered Ramos’ “privatization” program as the victory of capitalism, its irrationality is uncontestable.

The services of public utilities are a right of every citizen. Why add a profit margin to the cost of such services, which are after all monopolies, which means they do not have the built-in competitive mechanism to improve their services? If the private sector is considered better than government bureaucrats, then why not simply hire private managers, tasked to make the state firms efficient at the least cost to consumers?

There is something deeply wrong in our economic system, which allows profit-hungry oligarchs to run public utilities. I was at a loss for words when my driver asked me as we were passing South Luzon Expressway, also operated by Salim: “Why do we taxpayers have to pay to use these roads, when we are giving money to government to build roads?”

The two oligarch-owned water companies have been blaming government for not undertaking fast enough projects that would add to the water supply, which they distribute.

But weren’t they in the best position to pressure government to complete such projects, especially as the oligarchs who owned them had much influence on ruling administrations, especially in the case of the Ayalas who were very close to President Benigno Aquino 3rd under whose term the water-supply projects should have been completed?

Have Ayala and Salim, or even just the latter’s executive Pangilinan, ever apologized for the misery of some 10 million metro residents unable to get the water they need?

While Duterte has led this nation further than any previous president, he has not scratched the surface to correct the fundamental flaws of our economic system. We hope in his remaining three years, he sees the colossal failures of this system, and at least takes the initial steps to correct them. Or else, we will never really take off from Third World to First World status.




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