Into the lion’s den: Confronting the World Bank on privatized water : Page 2 of 3
Posted on 12 October 2013
WPN has long been calling on the Philippine government to cancel the Concession Agreement, which was designed to regularly adjust tariffs to ensure the two privatize firms’ financial viability.
Besides periodic rate rebasing, the basic charge is also adjusted annually for inflation and quarterly for foreign currency fluctuations. There is also a separate fixed PhP 1.00 currency-related charge. The private concessionaires are also allowed to collect additional fees resulting from so-called extraordinary price adjustment as well as collect an environmental charge. Recently, Philippine members of WPN exposed that even corporate taxes are passed on to consumers, which has prompted a senator last August to call for a Senate inquiry.
Audience with the EDs
Meanwhile, Philippine ED Roberto Tan, who also represents Brazil, Colombia, Dominican Republic, Ecuador, Haiti, Panama, Suriname, and Trinidad & Tobago, promised to relay concerns about Manila Water to the IFC, which has a 6-percent share in the company. He was particularly keen to ask the IFC on its stance regarding Manila Water’s intent to take the Philippine government to arbitration for refusing to raise consumer rates.
The MWSS Regulatory Office finally bowed to public outcry on affordability and decided to roll back rates this September. The regulator denied the petition to raise tariffs and instead approved a downward adjustment, which should be effective starting October but the concessionaires sought arbitration, freezing water rates until a final decision is reached by an international arbitration panel. Manila Water filed a dispute notice before the International Chamber of Commerce on September 24, while Maynilad did the same on October 4.
Naficy and Malonzo also met with an advisor to the United States ED—the most powerful ED at the Bank. The advisor appreciated the briefing on the WB’s water practices and Manila Water, and expressed concerned about the impact these practices have on the lowest income households, stating that she may take the issue up with the IFC. Another advisor who shares many of the advocates’ apprehensions informed them that several other EDs have internally expressed concern.
Before a crowd of over 100 people, Malonzo asked a panel of more than 10 EDs what will it take for the WB to divest from private water. The session was part of the events on the sidelines of the 2013 IMF-WB Annual Meetings. Germany, Switzerland, the U.S., France, and Saudi Arabia were among the Directors that listened attentively as Malonzo asked, “What would it take for Executive Directors to support the call for the World Bank to stop promoting the privatization of water utilities, given that it’s not working from the development perspective nor in terms of promoting the human right to water?”
The French ED, who responded to the question, defended water privatization as appropriate in some cases, depending on the context. This is not surprising as France is home to one of the world’s largest water transnational corporations, Suez.
Nevertheless, Naficy said this kind of intervention helps get the message across broader audience within the WB and increase pressure for change. Since 2012, CAI