• Arbitrary rules meet populism gone awry

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    Marlen V. Ronquillo

    Marlen V. Ronquillo

    After the pork barrel scam, the next big source of reportage and commentary on official indiscretion is, surprisingly, a water agency—the MWSS. The first reaction is to shrug it off and blame the two corporate entities that run the water concessions for its woes. The MWSS, the conventional thinking goes, is powerless against the two giant corporate interests.

    But after reviewing all the news files and the clips, the conventional thinking quickly evaporates. The embattled MWSS leadership, led by Administrator Gerardo Esquivel is not a puny, little agency that has been suffering at the hands of corporate interests. MWSS and Esquivel just happen to exist in an age of thorough scrutiny and what has been laid bare and exposed have been its own making, mostly by overpaying the MWSS Board and its cadre of consultants.

    MWSS just can’t hide much from a truth-seeking public, very much like Congress and the other questioned institutions. So when it announced a water rate cut, a noble and high-minded gesture, the feedback loop lobbed tough questions instead of hallelujah.

    Instead of just welcoming the rate cut, many have asked this question, What was behind the decision? The question is perfectly understandable given the current context. Rate cuts are outliers. Those generating water and supplying water face many and severe challenges. Just getting a pipe-laying permit requires Job-like patience. Diminishing water resources is now a global problem and the extreme formulation goes like this—someday oil would be cheaper than potable water.

    Are the supposed pass-on charges levied by the two concessionaries on their consumers the overriding motivation behind the rate cut?

    So, what is the real story behind the MWSS’s slash-your-rate-directive to the Maynilad Water Services and the Manila Water Company?

    The popular view is that Esquivel and the MWSS Board are right now trapped in a monstrous jam they have to get out of. The MWSS Labor Association (MLA), vigilant and resourceful, has charged Esquivel with graft. Rep. Jonathan de la Cruz is seeking a Congressional investigation of MWSS, based on his dossier of massive irregularities and fund misuse. The nightmarish thought of doing nothing but answer graft charges filed by your own employees and getting grilled by the Committee on Good Government and Public Accountability must have driven Esquivel to do something dramatic. A major, major one like a cut in water rates to favor millions of consumers.

    The populist measure, even one as major as a water rate cut, has sadly failed to get much traction and has not been given Esquivel the expected reprieve from his woes. The stench of the media reports on graft and fund misuse at MWSS is just a few notches shy of the stink from the pork barrel scam.

    Esquivel, for starters, has hired a total of 436 consultants since his take over of the MWSS in 2010, according to media reports, mostly drawn from Commission on Audit figures. The consultants most vocal in the vilification of Esquivel’s critics get the most pay, around P50,000 a month each. Not bad, given the fact that Esquivel has allegedly cut the meal allowances of MWSS employees from P150 a day to the princely sum of P3.

    In 2012 alone, MWSS spent P121 million more than its regular budget, according to reports. The P88 million of that P121 went to the usual suspects: the consultants. While MWSS employees have a meal allowance of P1 per meal instead of the usual P50, the consultants were given extra compensation in the form of representation and transportation allowance.

    The choicest cut of that generosity was allocated by the MWSS Board, your guess is right, unto itself. Under Esquivel, members of the Board get roughly P136,000 a month each, according to the MLA. The Board just padded the number of “board meetings” in clear violation of COA rules.

    The fund misuse and allegations of graft in the age of daang matuwid would look like benign boils once the bigger, broader picture is factored in, primarily the impact of the rate cut on the capital expenditures of the two firms, the money for modernization/expansion programs.

    Modernization and expansion plans have to be put on hold. The quality of water-related infrastructure, from water mains to sewers, would likewise suffer. Worse, the possibility of disrupted water services would become all too real. The grand plans of the two private firms were all based on the stability of water rates—and the predictability of the government’s policies toward investments on the critical water sector.

    Take note of two things. The privatization agreements with the two companies have their equivalent of heart and soul. First, is the tax recover mechanism. Second, is the rate-of-return provision. These were the two main issues jettisoned in the water rate cut directive.

    Investors are now raising anew an old specter: rules being changed midstream arbitrarily and recklessly by the government. Foreign investment groups have reacted negatively to the rate cuts. Overnight, the cumulative gains from the international roadshows that presented the Philippines as an investment have been eroded.

    The MWSS right now is a showcase of everything that is wrong with government. Reckless use of public money. Arbitrary rules. Rendering decision that would negatively impact on water generation and supply on one of the world’s densely populated metropolitan areas. Issuing directives that would place in great doubt the fidelity of government to its contracts with the private sector.

    And it gives populism a bad name. As they say, populist measures are not the calling of the noble but the refuge of scoundrels.

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    1 Comment

    1. Norman Quiambao on

      The actual quote from Samuel Johnson goes: ‘Patriotism is the last refuge of scoundrels’. Esquivel and the leftist NGOs demanding the water rate reduction are quick to claim they are doing it ‘for the people’. (Same leftists are also among the 436 consultants hired by Esquivel.) Now we see it for the self-serving diversionary tactic that it is.

      Will the fears expressed by the Japanese Chamber of Commerce finally get PNoy to follow his Daang Matuwid for a change and allow justice to be served to the man who donated P10M to his Presidential campaign?

      Will the consumer realize that Esquivel is just playing for time since once they learn that a rate decrease will not affect their bill in any way because of the guaranteed returns provided for in the contract?

      But now the dispute is entering international arbitration that will have people here and abroad shaking their heads and muttering “Only in the Philippines”.