Public interest and private agendas

In a week dominated by the continuing saga of Rep. Romeo Jalosjos, it was difficult not to take up his case once more, or to ignore the sudden appearance of a woman claiming to be his rape victim and of her 27-year-old son claiming to be the product of that crime.  My staff on Public Life, the weekly talkshow on GMA-7, agreed that we should tackle the water service privatization issue, but warned that no one might watch us.

As it turned out, viewers were as much interested in the kinship between Melchor Gabais and Romeo Jalosjos as they were in the affinity between a public utility and private profit.  For a whole hour, when most of Metro Manila was expected to be asleep, our phones in the studio kept ringing.  Callers were asking questions about a deal that almost everyone had previously assumed to be synonymous to a radical improvement of the city’s water service.

The winning bidders, the Ayala group for the east zone and the Lopez group for the west zone, offered a package of commitments which were simply too good to be true.  Ayala would charge a measly onethird of present water rates, while Lopez (Benpres) would cut rates by half.  In the next 25 years, beginning May 1997, they would pour in about P186 billion in investments towards the improvement and expansion of the water service.  On top of that, they would pay the government a regular concession fee equivalent to the debt service of existing MWSS loans.

Neither Ayala nor Benpres expects to lose money from this venture. So what is their trade secret?  They would not share this of course. Much of the discussion on my show revolved around 4 concerns: the prospect of dramatic increases in water rates in the near future, government being saddled with MWSS debts after privatization, employees’ welfare, and the danger posed by monopolies.

On the issue of water rates, the position is that the water tariff offered by the private operators is not low; current rates are just high.  They are high because of “systemic inefficiencies” like unchecked leaks, stolen water, deficiencies in collection, red tape, corruption, etc.  The government has assured the public that water rates would be adjusted mainly to take inflation into account.

Like Rep. Joker Arroyo, I too worry about a situation where the water facilities are to be privatized while the MWSS debts will remain public obligations.  We have seen this in the case of the PNB, the DBP, and the Central Bank – where debt-ridden agencies are stripped of their debts (which are absorbed by the national government) and then resurrected as new financially solid corporations.  But here again, the government offers the assurance that, under the MWSS privatization agreement, the private concessionaires will pay the debt service on existing MWSS obligations.

Likewise, the fate of the more than 5000 MWSS employees does not seem to bother the government and the incoming concessionaires. Current employees are to be offered early retirement and separation options in accordance with the law.  Government will pay these benefits, and the private operators have assured the employees that they expect to retain most of them.

On my program last week, Senator Francisco Tatad raised the specter of monopolies looming over our political and economic lives.  When the same conglomerates  become the principal patrons of  presidential aspirants, he warned, we could wake up one morning to find that the whole nation is being held hostage by private interests with no public accountability.

I frankly thought the senator was imagining a dreary scenario that could only happen in a banana republic.  But his fears may not be unfounded.  The morning after the show, an urban planner who has taught me everything I know about the sociology of the city woke me up to complain that he could not get through the busy phones the previous evening.  Tatad was correct, he said.

The water concession is nothing but loose change, my caller began. The larger picture is the real estate business.  That is where the real profits are going to be made.  It is no accident, he said, that all the interested bidders are, in one way or another, entities engaged in “land banking” and property development.  These are companies that have accumulated raw land; it is part of their long-term strategy to try to control the direction of future development.  Public utilities like electric service, telephone service, and water service are the main determinants of this direction.  Do you think the public interest is served when you lodge the power over these utilities in the hands of private monopolies? my caller asked rhetorically.

His thesis was compelling.  I hope Congress talks to people like him before Napocor is privatized next.  I wish I had talked to him before my show.  I realized that the worst thing about hosting a talkshow, apart from occasionally forgetting the names of your guests, is being offered neat perspectives like this on last week’s topic,  when all you are really concerned about is preparing for the issue next week.


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