By Vanne Elaine Terrazola
The Metropolitan Waterworks and Sewerage System (MWSS) is now studying possible penalties against East Zone concessionaire Manila Water Company, Inc. over the water shortage that affected its customers in Metro Manila and nearby provinces.
Reynaldo Velasco and (MWSS) chief Patrick Ty (R) deliver his speech as President CEO of Manila Water Company Inc. Ferdinand Dela Cruz (L) and Metropolitan Waterworks and Sewerage System (MWSS) administration Reynaldo Velasco (C) listens during the investigate, in the aid of legislation, the water shortage affecting parts of Metro Manila and nearby provinces hearing at Senate building in Pasay city, March 19, 2019. (Czar Dancel)
MWSS Chief Regulator Patrick Ty revealed this Tuesday as the Senate Committee on Public Services opened its own hearing on the water shortage.
He said that the MWSS-Regulatory Office has been studying possible sanctions to the east zone water concessionaire in relation to the terms of agreement.
Ty stressed this after Senate President Vicente “Tito” Sotto III questioned his pronouncements at the House of Representatives hearing on the water issue last Monday.
In the House hearing, Ty said that they cannot hold Manila Water accountable due to supposed lack of provision allowing them to impose penalties for violating its 24/7 service obligation.
But Sotto cited Article 10, Section 10.4 of the concession agreement which laid out the penalties for water firms that fail to meet their service obligations.
Senators Grace Poe, committee chair, and Risa Hontiveros also raised eyebrows over Ty’s statements.
“A failure by the concessionaire to meet any service obligation which continues for more than 60 days (or 15 days in cases where the failure could adversely affect public health or welfare) after written notice thereof from the Regulatory Office to the concessionaire shall constitute a basis for the Regulatory Office to assess financial penalties against the concessionaire,” the concession agreement read in part.
Ty, in defense, said he only failed to articulate himself properly during the House inquiry.
“What happened was that I was trying to explained to Congress that I do not have the power to impose fines, I cannot impose fines and if you check the law, there's no penal provision for me to impose fines,” Ty told senators.
“The fines I was mentioning is the fines, the administrative fines that other regulatory offices are empowered to do,” he clarified.
The MWSS, Ty said, usually imposes financial penalties during the mandatory rate rebasing, or the determination of new water service rates, every five years.
Such a sanction would benefit the affected consumers in the form of rebates, as also stated in Section 10.4, to "temper (rate) adjustments," he said.
But the MWSS chief regulator assured that they will not wait for the five-year period since “there is no provision that prohibits the Regulatory Office to do it earlier.”
He added that they have already sent a written notice to the Manila Water about the move last March 8.
“We are now studying the amount of the penalty that will be imposed, which can be rebated,” Ty said.
Under the same section of the concession agreement, it is stipulated that the penalty “shall be equal to 25 percent of the costs that, in the reasonable opinion of the Regulatory Office, the concessionaire will incur in order to meet the service obligation in question.
But “if the Concessionaire does not meet such service obligation within 180 days, the penalty shall be equal to 50 percent of such cost.”
Ty, however, refused to categorically confirm if the MWSS will indeed penalize Manila Water, stressing that they have to “observe due process.”
Pre-empting this may be used against the government should Manila Water file arbitration charges, he explained.
He said they expect to come up with a decision by June or July as the agency also opted to work on addressing the water crisis first.
PCCI seeks accountability
But the Philippine Chamber of Commerce and Industry (PCCI), one of the country’s biggest business groups, called for more accountability on the part of Manila Water for its failure to prevent and subsequently manage a water shortage that has affected not just people’s lives but has also impacted businesses and the economy.
“This water shortage has caused more than just inconvenience and stress to Filipinos. Apart from disrupting our daily way of life, it has also affected productivity as many people could not go to work, school, or manage their business. Many businesses had to shut down or limit operations. Services were also disrupted. The economic impact of this shortage cannot be swept under the rug,” said the PCCI, which is led by Alegria Bing Limjoco.
“We sincerely hope that there will be some form of reckoning for this issue. It’s too important and critical to our people's well-being and our economy. Moving forward, government has to make sure that there will be policies in place to first, prevent this from happening again, and second, to identify penalties for those responsible,” said Limjoco in a statement.
“We believe that a true socially responsible company with high corporate governance standards will be sincere in their efforts to rectify the situation and will not skirt or avoid responsibility,” she added.
The PCCI lauded the Duterte administration for its quick directive to make water from the Angat Dam available to all affected areas. The group said the order was timely and once again showed that President Duterte has the welfare and well-being of ordinary Filipinos in mind every day.
Limjoco said that sales and productivity of businesses have been affected by the water rationing in the past few days.
“Fortunately, the President stepped in just in time,” she said.
“We are just lucky because our president resolves the issue before the damage it caused become irreversible,” said PCCI Chairman Emeritus Francis Chua.
Manila Water president and Chief Executive Officer Ferdinand Dela Cruz said the firm will comply with the MWSS' processes.
Asked by Hontiveros if Manila Water is willing to grant a refund to its customers, Dela Cruz said they are still exploring the matter.
“What I’ve instructed my team is to explore ways to provide some relief to those affected and the easiest there is an adjustment on the water bill.
We are looking into that considering what has happened and we will update this committee and we will discuss this with our regulator on what is reasonable.
This is something that is outside the penalty system that we have discussed,” he said.
During the Senate hearing, Dela Cruz admitted the concessionaire's failure to follow its 24/7 service obligation to the public.
Like in the House inquiry, he also apologized and owned up the crisis suffered by East Zone residents.
No price increase in bottled water
Amid the water supply shortage that affected thousands of households in the east zone concession, the Department of Trade and Industry (DTI) said there is no increase in prices of bottled water and supply is stable.
Bottled water is among the products listed by the DTI as basic necessities and prime commodities (BNPCs) which are subject to suggested retail prices (SRPs).
DTI Undersecretary for Consumer Protection Group (CPG) Ruth B. Castelo made the assessment of a stable price and supply situation for bottled water after holding a dialogue Monday with the Beverage Industry Association of the Philippines (BIAP) to discuss the prices and supply of bottled water amidst the ongoing water shortage situation in the country.
Castelo also reported receiving numerous reports that some retailers took advantage of the water shortage situation by overpricing on pail (timba) and dipper (tabo).
This prompted the agency to include these products in their regular prices and supply monitoring and enforcement activities to make sure that prices remain stable and that consumers are not unnecessarily disadvantaged. (With a report from Bernie Cahiles Magkilat)