The rate hikes recently approved by the Metropolitan Waterworks and Sewerage System (MWSS) for its two private concessionaires were just the opening salvo of yet another round of increases in water charges for Metro Manila.

Based on its contract with Maynilad Water Services Inc. and Manila Water Company, the MWSS should approve at least five rounds of rate adjustments every year. These cover the automatic adjustment due to changes in the consumer price index (CPI) and the quarterly adjustments due to the foreign currency differential adjustment (FCDA).

Further, by February, the government is expected to raise the value added tax (VAT) from 10 to 12% and this will result in another round of rate hikes since the provision of water services is covered by the VAT.

Over and above these adjustments, Maynilad and Manila Water are also entitled under their contract with the MWSS to the extraordinary price adjustment (EPA), which can be implemented once a year due to reasons that may affect the commercial viability of the private operators other than the CPI and FCDA.

The recent increases (P1.86 per cubic meter [cu. m] for Maynilad starting next week; and P1.09 per cu. m for Manila Water beginning January 1) cover the adjustments due to the CPI and the FCDA.

An increase in the CPI means that the prices of basic goods and services have increased, and thus, a water rate hike due to an increase in the CPI is a double burden for the people. Meanwhile, the FCDA was a product of the 2001 amendment to the MWSS’s contract with the private concessionaires for them to recover foreign exchange (forex) losses from 2002 until 2021 when the agreement expires.

While the forex has shown improvement in the fourth quarter of 2005, resulting in a reduction in the FCDA, the general trend since the 1997 financial crunch is of a weakening peso against the US dollar. Further, much of the recent improvement in the forex was due to record-high remittances from overseas Filipino workers (OFWs) and not because of sustainable economic factors.

Preliminary estimates by the Water for the People Network (WPN) peg the total increase in the all-in tariff (basic rate plus other charges) from August 1997 when MWSS was privatized to the latest adjustments in January 2006 at 345% for Maynilad and 391% for Manila Water.

Such huge increases in water charges should be expected under a privatized water service system as any businessman would ensure that his or her investment would make more money. The rate adjustment mechanisms contained in the MWSS privatization contract were put in place to protect the profitability of Maynilad and Manila Water, at the expense of the poor families whose income could hardly afford the increasing cost of living.

Some supporters of water privatization may argue that the rate hikes are necessary if the private operators were to improve the infrastructure in their area and better the quality of service. But a look at the performance indicators of Maynilad and Manila Water disproves such argument. More than eight years since the takeover of Maynilad and Manila Water, more than 4 million people in Metro Manila are still without water supply and 11 million are without sewerage connection.

Metro Manila households as well as the consumers in other areas around the country that have privatized their water system or are in the process of corporatization and privatization should indeed prepare for another bout of frequent and unreasonable rate increases this year.

The people are in the middle of an escalating war against foreign corporations and their local partners over access to and control over water. We could not afford to lose this war. Through collective action, the poor and marginalized can counter the corporate greed of private companies and their supporters in government and institute a system of water for the people through effective people’s control.

No to water rate hikes!

Reverse the privatization of the MWSS!

Water for the people now!