Local water: the new battleground

By: Segundo Eclar Romero - @inquirerdotnet

Philippine Daily Inquirer / 04:06 AM November 25, 2019

One by one, the prime established water districts in the country are falling into the hands of—well,
who else—the PrimeWater Infrastructure Corp. headed by former senator Manny Villar. It’s an
entrepreneurial blitzkrieg the local water providers succumb to as the elements of surprise,
maneuver, concentrated force, and sweet promises overwhelm the puny defenses of local water
institutions and systems.

PrimeWater says it now provides 500,000 households with 300 million liters of treated water daily
from deep wells and surface water sources it operates. Actually, it has privatized or has forged joint
ventures with over 70 water districts,

While Metro Manilans are aghast at the recent fumbles of Maynilad and Manila Water in
supplying the water needs of the metropolis after the much-vaunted privatization of water services,
PrimeWater has been systematically taking over the operation of the water districts of many of the
country’s prime cities and municipalities.

As in a blitzkrieg, the strategy is multipronged. To start with, PrimeWater has a captive market. It
is the water provider of real estate projects identified with the Villars: Brittany, Crown Asia,
Camella Homes and Vista Land & Lifescapes.

Next, PrimeWater engages water districts in bulk water supply, capacitation and management.
What this means, in effect, is the takeover by PrimeWater of the control of water district
operations, including the wholesale replacement of its personnel. Water district officials suspect
the political influence of the Villars powers this invasive campaign. It may also be the result of a
long-standing ambiguity about the legal personality of a water district—is it a private corporation
(per Presidential Decree No. 198) or is it a nonstock, government-owned or government-controlled
corporation?

The blitzkrieg has reaped strong dissatisfaction and opposition among PrimeWater-engaged water
districts. The Zamboanga City Water District rationed water in January 2019 because PrimeWater
supplied only 28.8 million liters a day (MLD), far from the PrimeWater contractual commitment to
provide 50 MLD.
The Guagua Water District was cited by the Commission on Audit’s 2018 annual report as
producing water from eight of 13 pumping stations that had twice the allowable level of arsenic.

In San Pablo, the Water District Employees Association president reported that consumers now
pay almost P1,200 per month, up from P400 before privatization. He suggested the same goes for
similar water districts that have been privatized in the south—in Metro Quezon, Lemery in
Batangas, Los Baños in Laguna, Batangas City and Rosario in Batangas, and Daraga in Albay.

In Iloilo City, the Metro Iloilo Water District sued the city council for issuing a water supply
franchise to PrimeWater. The complaint alleged, among others, that the franchise undermines the
water district’s joint-venture agreement for the rehabilitation, upgrading, expansion, development,
operation and maintenance of the water system in Iloilo City and seven adjoining towns.

Certainly, there has been a need to improve the operation of water districts all over the country. An
Asian Development Bank report said many local government units (LGUs) show “little interest in
pursuing water supply projects due to local leadership uncertainties brought about by 3-year
electoral terms.” The World Bank in turn reports that “in general, water utilities under direct LGU
management are poorly operated because of the lack of technical, financial and management
capabilities at the local level.” This situation has goaded many LGUs to rush into the arms of
private enterprises like PrimeWater.

But there is need to check whether the solution fits the problem. There are about 1,000 LGU-run
water utilities. Are the water districts engaged by PrimeWater the utilities that need the greatest
help, or are they the ones simply with the greatest profit potential? This may not be an issue for a
private enterprise like PrimeWater, but it should be for the government and the people. This is
especially so since studies show that the poor masses pay much higher water prices than higher-
income households because of their lack of access to water service providers. So, let’s do due
diligence on the PrimeWater blitz. As Murphy cautions, perhaps “The light at the end of the tunnel
is the headlamp of an oncoming train.”

Union to gather 56K signatures vs Baciwa, Prime Water joint venture

TERESA D. ELLERA
June 23, 2019
THE Bacolod City Water District Employees Union (BEU-NAFLU) is gathering around 56,000
signatures to stop the joint venture between Baciwa and Prime Water Infrastructure Corp.

Leny Espina, President of BEU said that the joint venture is privatization and that Prime Water
will definitely take over Baciwa.

As of now, Espina said that they have already gathered 3,000 signatures against the joint venture
after they launched it last week and that they will circulate the position paper for signatures in
the barangays. Their time table for the signature campaign is until the month of July this year.

The union stated that water as a natural resource, should belong to the people through the
government, and not controlled and profited from vested interest that's why they oppose the joint
venture.

"The joint venture will be grossly disadvantageous to Baciwa, to its employees and most
importantly, to us residents of Bacolod City," the union further stated.

Espina also revealed that once the joint venture is approved, a 12 percent VAT will be applied to
the water delivered to the consumers and that projections show that over proposed 25- year
lifetime of the joint venture, water rates are likely to increase by as much as 75 percent.

"It is not true that the joint venture is the only way to ensure the adequate supply of safe and
potable water to Bacolod City. Prime Water will be exploiting the same water sources that
Baciwa is using," Espina further revealed.

She further exposed that Baciwa officials insist that the joint venture is not privatization.

"The truth is it is a form of privatization as it will effectively surrender the operation and
management of Baciwa to a private entity, leaving the water district with what, to all intents, is a
skeleton force relegated to mere monitoring. If Baciwa has failed to fulfil its mission of
supplying adequate water to Bacolod City, it's is because those tasked with laying down policies
and programs of the district have failed to fulfil their tasks," the union added.

Council asks water district to explain joint venture project

CARLA CAÑET
March 14, 2019
THE City Council of Bacolod, through Councilor Wilson “Jun” Gamboa Jr., passed a resolution
reiterating the request to the board of directors of the Bacolod City Water District (Baciwa), led
by Chairman Lorendo K. Dilag, to provide the council with the data and explanation in relation
to the approval of the unsolicited proposal of Prime Water for a joint venture (JV) project.

Based on the approved resolution, the Council wants to see the financial report of the water
district in the past five years and a comparative study among other water districts that have a JV.
The Council also asked for the content of the unsolicited proposal.

Gamboa cited Article II Section 16 of the 1987 Constitution, which provides, “the State shall
protect and advance the right of the people to a balanced and healthful ecology in accord with the
rhythm and harmony of nature.”

He said that Section 26 of the Local Government Code also provides that “It shall be the duty of
every national agency or government-owned or controlled corporation authorizing or involved in
the planning and implementation of any project or program that may cause pollution, climate
change, depletion of non-renewable resources, loss of cropland, rangeland or forest cover and
extinction of animal or plant species to consult with the local government units, non-government
organizations, and other sectors concerned and explain the goals and objectives of the project or
program, its impact upon the people and community in terms of environmental or ecological
balance and the measure that will be undertaken to prevent or minimize the adverse effects
thereof.”

He further cited Resolution No. 87 Series of 2019 passed during the January 23 session, asking
Dilag to explain the content of the water district’s Board Resolution No. 282 dated December 8,
2018, approving the unsolicited proposal of Prime Water for a JV.

In a separate resolution, also authored by Gamboa, the Council also enjoined Baciwa to institute
measures to ensure adequate clean water supply in Bacolod City establishments and households
during the El Niño phenomenon.

The El Niño will linger in Negros Occidental until November, as confirmed earlier by
Agriculture Secretary Emmanuel Piñol during his recent visit to Sagay City.

Gamboa reminded Baciwa of Section 15 of Article II of the Constitution of the Philippines,

which provides that the State shall protect and promote the right to health of the people and
instill health consciousness among them as well a censure the delivery of clean water to the
citizens.

The Baciwa was created by virtue of Presidential Decree No. 198, operating under the quasi-
public type corporation to provide clean water to Bacolod City establishments and households.

COA shows how Villar’s Prime Water screwed up Marilao

Water District in Year One: P50M losses, inadequate bond,
hole-ridden deal, zero insurance
The Commission on Audit has issued a scathing report against bilyonaryo Manny Villar and his
PrimeWater Infrastructure Corp. in its joint venture (JV) agreement with the state-owned
Marilao Water District in Bulacan.

In its latest annual audit report, COA noted how Villar’s Primewater incurred P50.55 million
water losses in its first year of operations in the district, created loopholes in its JV which would
lead to higher cost for customers and block government scrutiny, failed to remit collections and
pay franchise tax.

Mano-a-mano with MVP: Villar gets OK for Iloilo’s 2nd water franchise

Primewater signed a water supply and septage management system with Marilao Water District
in October 2017 and it started operations in January 2018.

In his first year of operations, Villar reported distribution losses or non-revenue water of 36.12
percent (3.9 million cubic meters of water was billed out of 6.215 cubic meters produced in
2018) which COA said was above the maximum acceptable level of 30 percent.

COA said Villar committed to maintain or reduce distribution losses at national levels when he
signed the JV agreement. COA said this has led to an “income opportunity lost by the district” of
P50.505 million.

“Management should be concerned on how to minimize these losses to ensure that whatever
resources taken from nature are put to good use or properly conserved and that the corresponding
income is collected and used to improve the district’s services and facilities,” said COA.

PCC clears BCDA-Villar group water supply deal

COA also flagged three provisions in Villar’s JV that “were not aligned with some laws and
lacked specific guidelines”:

1) Villar plans to charge value added tax (VAT) from Marilao residents. But COA said Marilao’s
water sales were already subject to a franchise tax and should not be burdened with additional
VAT.
2) Villar planned to submit financial reports and service obiligations on a yearly basis. But COA
said such reports should be done on “at best on a monthly basis and at worst, on a quarterly
basis” to provide reasonable assurance to the district that Villar would fulfill his end of the
bargain.

3) Villar did not put any provision that the JV would be subjected to audit examination. But
based on law and jurisprudence, COA is adamant that it has visitorial powers over private
companies especially if their business is imbued with public interest. It also cited Section 6.6 of
the 2013 Revised Guidelines and Procedures for entering into JV agreements provided that a JV
activity shall be subject to audit examination under existing laws, rules and regulation, and other
legal issuances.

Due to these gaping holes in the JV agreement, COA Marilao residents would pay more for their
consumption with the addition of VAT; the performance of the JV partner may not be timely
monitored and if there are underperformance, timely corrected; and COA would have difficulty
in imposing its visitorial powers to the JV partner.

Management agreed to address these concerns raised by COA and to “coordinate with and have
dialogues with various government bodies like Office of the President (OP), NEDA, LWUA
(Local Water Utiliies Administration), Bureau of Internal Revenue (BIR), Department of Justice
(DOJ), DBM (Department of Budget and Management), CSC (Civil Service Commission) and
COA for guidance to resolve these issues.”

COA said Villar should have also paid for the P6.852 million for a bolted tank ground reservoir
since under the JV agreement, it was responsible for the finance and operations of the Marilao
district. COA said Villar ignored management’s request to include the monthly payments for
these projects with the Land Bank of the Philippines which started on January 2019. “This
additional capital expenditures were not factored in the computation of the district’s contributed
capital in the JV and its revenue share but the JV partner (Villar) will enjoy the benefits thereon,”
COA said.

Other infractions cited by COA against Villar’s Primewater are:

1) Failure to remit collections in arrears worth P1.273 million. “Had these collections been
remitted to the district on time, interest income from bank would have been earned by the
district,” COA said.

2) Failure to pay P2.793 million in franchise tax from gross receipts of P139.6 million in 2018.
COA noted that before Villar’ s takeover, the district has regularly complied with the payment of
the two per cent franchise tax on the total water sales collection. Villar argued that his firm was
only liable to pay only the VAT. But COA said:”Since the operation and concession of the
District has been transferred to Primewater, the latter should shoulder the payment of franchise
taxes. The above circumstance deprived the government of additional revenues that will be used
to finance government programs, activities and projects.”

3) Failure to create and implement the Water Safety Plan (WSP). COA said without the WSP,
“the quality of the water produced/provided by its JV partner to concessionaires may not
promote public health, safety and welfare.”

4) Failure to insure with the Government Service Insurance System the district’s P36.471 million
worth of properties in violation of COA rules. Under the agreement, COA said Villar committed
to pay for the insurance.

A losing tug-of-war
posted December 05, 2019 at 12:40 am
by Charlie V. Manalo

"These complaints (against PrimeWater) have

become prominent enough to serve as cautionary
tales."
As President Rodrigo Duterte embarks on a war against water concessionaires servicing Metro
Manila’s water needs, it seems the struggle of Bacolod residents’ concerning their own water
service provider is apparently being overlooked.
To date, the residents of Bacolod have been embroiled in a year-long tug-of-war with its local
water utility, the Bacolod City Water District (BACIWA), in the latter’s pursuit of a joint venture
with private proponent PrimeWater Infrastructure Corporation.

Negotiations between the two began in February this year, with PrimeWater having officially
passed the negotiation stage later in July. Throughout the entire process, citizens have loudly
expressed their opposition to the joint venture, criticizing the water district for conducting the
evaluation without public consultation.

However, despite overwhelming criticism, the board remained adamant the NEDA joint venture
guidelines do not oblige them or PrimeWater to divulge the provisions.

In search for answers, citizens have formed groups to lobby against the joint venture. The water
district’s own employees formed the BACIWA Employees Union to elevate their concerns.
Representing the consumers is multi-sectoral organization Amlig Tubig, which has consistently
advocated for the consumers’ right to be informed of the developments, and campaigned for
transparency from BACIWA.

In fact, the organization was disturbed by the BACIWA board’s behavior following the Swiss
Challenge they hosted on Oct. 28, 2019 for the joint venture. The board had publicly opened the
submissions of one of the bidders to determine if it had passed the requirements for eligibility,
and reportedly promised to announce the result after a week. However, they have kept mum in
the month that has since passed.

“They have effectively left us in the dark,” said a representative from Amlig Tubig. “Their
habitual silence in all joint venture matters has left us feeling very suspicious about their
intentions as a utility created to serve the people.”

Interestingly enough, what happens in Bacolod doesn’t stay in Bacolod.

With PrimeWater’s extensive presence, operating in 127 towns and municipalities, its joint
ventures all over the country have gained notoriety for similar illicit or suspicious conduct.
Citizens in these water districts, such as Lingayen and Paniqui, have taken to social media to
lament on the subpar water quality and continued service interruptions that their water district’s
joint venture, also with PrimeWater, failed to resolve.

These complaints have become prominent enough to serve as cautionary tales: Amadeo Water
District terminated their negotiations with PrimeWater, also for a joint venture, following
successful rallies held by its residents.

Metro Iloilo Water District reportedly declined a similar proposal from the water company,
citing dissatisfaction with PrimeWater’s existing joint ventures.

Adding to reports of the company’s inappropriate practices are the accounts of other water
districts being strong-armed into accepting PrimeWater’s proposal for a joint venture. Sources
have attributed this to the significance of the company’s political ties.

Regulatory bodies seemed to have noticed PrimeWater’s poor performance, with the
Commission on Audit issuing reports on PrimeWater’s violations—both breaches in its own joint
venture agreements and in NEDA guidelines.

Given PrimeWater’s apparent convention of acquiring joint ventures in succession, negotiating

with the water districts behind closed doors, and yet consistently underperforming, it seems like
they are a company only masquerading as a water utility—with insidious intentions.

Even with a prestigious name behind the company, PrimeWater seems to have been employing
illicit business practices at the expense of its honest and paying consumers. It should not be
utilizing water, a basic necessity, to pursue anything other than the honest supply of water.

Anything less is a disservice to the Filipino people.