In the Know: Privatization of MWSS

The Metropolitan Waterworks and Sewerage System (MWSS) faced problems like poor coverage, inefficient service and high nonrevenue water caused mainly by meter tampering, illegal connections, pipeline leaks and illegal use of fire hydrants.

These problems led to the privatization of the MWSS in 1997 through Republic Act No. 8041, or the Water Crisis Act. The law was aimed at transferring the financial burden of the MWSS to the private sector, improving service standards, increasing operational efficiency and minimizing tariff impact.

The government then entered into a concession agreement with two private groups, dividing the operation of Metro Manila’s water and sewerage system into two concession areas.

The east zone served by Manila Water Co. covers parts of the cities of Quezon and Makati, the southeastern parts of Manila, Taguig, Marikina, Pasig, San Juan, Mandaluyong, the municipality of Pateros and Rizal province.

The west zone served by Maynilad Water Services includes parts of Manila and Quezon City, west of South Super Highway in Makati, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon, as well as the municipalities of Bacoor, Imus, Kawit, Noveleta and Rosario in Cavite province.

According to “Good Practices in Urban Water Management: Decoding Good Practices for a Successful Future,” published by the Asian Development Bank in 2012, the average all-in tariff rate charged by the MWSS before the privatization was P8.78 per cubic meter.

All-in tariff is the sum of the base tariff, currency exchange rate adjustment, foreign currency differential adjustment, environmental charge and value-added tax.

After the privatization, Manila Water’s all-in tariff increased from 4.02 in 1997/1998 to P4.55 in 2000, to P18.55 in 2005 and to P24.64 in 2008. Maynilad’s all-in tariff rose from P7.21 in 1997/1998 to P8.63 in 2000, to P30.19 in 2005 and to P31.66 in 2008.—Ana Roa, Inquirer Research

Sources: “Good Practices in Urban Water Management: Decoding Good Practices for a Successful Future,” Inquirer Archives and the MWSS website