Turn On The Tap, Get A Bill From
The World Bank
The information for this blog is from Case Study: The Human Toll of Water
Privatization in Manila
from www.stopcorporateabuse.com Please read the document for more detail and references.
from www.stopcorporateabuse.com Please read the document for more detail and references.
Bechtel once owned the rain in
Bolivia. In Manila the World Bank
will bill you for your water use.
It started in 1977 when, burdened by a heavy load of international debt, the Filipino government
turned over the management of Manila’s water supply to two private corporations. More than 3
million residents had no access to water. The system desperately needed improvement. To deliver the
city’s water, two new corporations were created, as joint ventures of local Filipinos and
internationals.
It started in 1977 when, burdened by a heavy load of international debt, the Filipino government
turned over the management of Manila’s water supply to two private corporations. More than 3
million residents had no access to water. The system desperately needed improvement. To deliver the
city’s water, two new corporations were created, as joint ventures of local Filipinos and
internationals.
Maynilad and Manila Water took over different
areas of the city. The International Finance
Corporation (IFC), the World Bank’s private-sector arm, designed the privatization plan and worked
closely with the government throughout the bidding and implementation of the contracts. The IFC
also invested directly in Manila Water, loaning $110 million to the new company and acquiring a $15
million equity – ownership – share in the new venture. Which is a perfect description of the phrase,
“conflict of interest.”
Corporation (IFC), the World Bank’s private-sector arm, designed the privatization plan and worked
closely with the government throughout the bidding and implementation of the contracts. The IFC
also invested directly in Manila Water, loaning $110 million to the new company and acquiring a $15
million equity – ownership – share in the new venture. Which is a perfect description of the phrase,
“conflict of interest.”
What is the primary interest of Manila Water?
Well, since its inception water prices have soared, with
increases between 450% - 850%. Quality has decreased. Public Health is more of an issue. What
the organization has done is to rigorously investigate and diminish the amount of unbilled water.
increases between 450% - 850%. Quality has decreased. Public Health is more of an issue. What
the organization has done is to rigorously investigate and diminish the amount of unbilled water.
The World Bank continues to portray the
result as a success. In January, 2010 with no competitive
bidding, Manila Water was awarded a 15-year contract extension. As the Freedom from Debt
Coalition summarized in extending the current arrangement through 2037, “accounts of pervasive
corruption practices within the water system put to doubt whether these project funds were fully and
strictly applied to necessary infrastructure projects.”
bidding, Manila Water was awarded a 15-year contract extension. As the Freedom from Debt
Coalition summarized in extending the current arrangement through 2037, “accounts of pervasive
corruption practices within the water system put to doubt whether these project funds were fully and
strictly applied to necessary infrastructure projects.”
When the companies were created,
Maynilad took on 90% of the existing debt, leaving Manila Water
with just 10% of the obligation. An Asian financial caused devaluation of the Peso by half relative to
the United State Dollar. Legally the debt is defined in dollars. In 2004, the government spent over 8
billion pesos to bail them out, in order to “preserve the integrity of the country’s water privatization
program.”
with just 10% of the obligation. An Asian financial caused devaluation of the Peso by half relative to
the United State Dollar. Legally the debt is defined in dollars. In 2004, the government spent over 8
billion pesos to bail them out, in order to “preserve the integrity of the country’s water privatization
program.”
In the language of the contract Manila
Water is exempt from the regulations enacted for utilities and
also exempt from the limit of 12% on profit margin utilities can accrue. Maynilad was taken over by
DMCI Holdings and Metro Pacific Investments in 2006, with promises to restructure the
underperforming utility. Manila Water has been churning out cash since its inception.
also exempt from the limit of 12% on profit margin utilities can accrue. Maynilad was taken over by
DMCI Holdings and Metro Pacific Investments in 2006, with promises to restructure the
underperforming utility. Manila Water has been churning out cash since its inception.
Residents
from those who fish for a living to church officials have protested the actions
of ManilaWater and questioned the wisdom of privatizing utilities. Individual citizens are very rarely
able to start an independent water utility, generate needed electricity, or
safely deal with sewage while protecting the environment. Also the contract was designed to give
every advantage to Manila Water and every disadvantage to its sister
organization. Those who helped
write the contract shortly thereafter became partial owners of Manila Water.
The
situation reminds me of the time of U.S. robber barons (before Theodore
Roosevelt became president) who funded presidential candidates sympathetic to
their goals, built monopolies, and operated in a business environment unrestricted
by regulations. The robber barons could count on US Marshals and even the
national army to violently break up strikes by workers. The only competition these unbridled
Capitalists faced was from other Capitalists.
The
actions taken in Manila would be illegal, even unthinkable, in the United
States today. It may well
take another “Water War” or citizen’s revolt to force changes. Is making a higher profit the only
value an international corporation needs to adhere to? Do individuals share a
similar philosophy? If you were
searching for a cardiac surgeon because you needed a triple heart bypass
operation would you chose one based only on who could perform the operation at
the cheapest price?
http://writerswhokill.blogspot.com/2015/01/when-bechtel-owned-rain.html
Providing clean water (and other things people need to live reasonably) is a difficult and expensive proposition.
ReplyDeleteWe often don't want to pay the cost involved, expecting things to be cheap or free (now that many places are trying to charge a reasonable amount to cover the costs of treating & delivering water, not to mention dealing with sewage, some folks don't want to pay the amount it takes.)
And where ever a large amount of money is involved, some people will try to take advantage of it for their own benefit. Certainly that's the history of the US's economic history, swinging back and forth between profits for the unscrupulous few and public welfare.
ReplyDeleteSomewhere in north central California, I heard that the land owners control the water deep in the ground and sell it for outrageous amounts to those nearby. I don't know if that's still going on or not, but I think it probably is.
There are some situations in which the private sector seems to do a better job than the public sector. I'm glad we have alternatives to the USPS. But in providing basic services, like water, it doesn't make sense.
ReplyDeleteThere are only one set of pipes to everyone's abode. The quality of water must be regulated and monitored. The cost to people must also be regulated. It is a basic need.
I have no idea what the government was thinking in this situation. There are other ways of attracting capital into a country and then redirecting the new found resources to public sectors where it is needed. The whole concept of what they did fails my logic.
Thanks for reporting on this situation, Warren. I don't keep current on world events as much as I should.