WATER COMPANIES SHOULD BE NATIONALIZED

AFFIRMATIVE

As Alber Szent-Gyorgi said (Discoverer of Vitamin C), “Water is life’s matter and matrix,
mother and medium. There is no life without water.”

Your honors, ladies and gentlemen, good evening.

We, in the affirmative side, are asked to defend our National Economy as enshrined in
our Constitution. The first two speakers have already discussed the necessity and
beneficiality. And now I will forward to you our arguments regarding the practicability of
this motion.

As to the first argument, several provisions in the 1997 water concession agreements
between Metropolitan Waterworks Sewerage System (MWSS) with Maynilad Water
Services Inc. and Manila Water have been found to be onerous and disadvantageous to
the government and the consuming people.

In the said concession agreement, there is a provision against government interference in

rate-setting and indemnity for possible losses in the event of such government
interference.

It also contained provisions allowing concessionaires to pass onto consumers certain

charges such as business taxes and expenses for arbitration in appeals committee within
the MWSS. All these expenses are not related to the distribution of water are being
considered as expenditures that can be passed onto the consumers

In Article 14.02 of the concession agreement, it states that “MWSS shall indemnify and
hold the Concessionaire and its respective employees, servants and agents harmless from
and against any and all liabilities, claims, demands, actions, suits, losses, damages, costs
and expenses.”

Furthermore, in Article 7.1 of the concession agreement, it also states that Subject to the
requirements of the Charter, MWSS shall, upon request of the Concessionaire, cooperate
in all reasonable ways to facilitate the Concessionaire’s carrying out of its responsibilities
under the Concession. Pursuant to the authority given to MWSS by Section 3(h) of the
Charter, and subject to the restrictions contained in Section 12 of the Charter, this
cooperation shall include, but not be limited to, cooperation with actions undertaken by
the Concessionaire to implement changes to the Standard Rates for water and sewerage
services as instructed by the Regulatory Office or, as appropriate, by the Appeals Panel.

Secondly, the Department of Justice found irregular the extension of these contracts all
the way to 2037, considering that the extension was granted 12 to 13 years before the
original expiration of the 25-year concession agreements in 2022.

Thirdly, although there is a robust increase in profits of the concessionaires, being 6

billion pesos, water shortages and water crises still exists leading to public unrest.

In a working paper by Ronald Mendoza and Ayn Torres of Ateneo de Manila’s School of
Government entitled Anatomy of a Water Crisis, Manila Water already started charging
customers for a facility even it has not opened yet. This clearly complicated matters
further, fanning the flames of the public.

It is evident that such private concessionaires did not fully comply with the obligation to
provide continuing water supply leading to a water crisis which affected the public. And
in light of the said non-compliance of the obligation and circumstances, the State may
temporarily take over or direct their operations.

Under Article 12, Section 17 of the 1987 Constitution states that:

In times of national emergency, when the public interest so requires, the State may,
during the emergency and under reasonable terms prescribed by it, temporarily take over
or direct the operation of any privately-owned utility or business affected with public
interest.

Due to the private concessionaires’ failure in providing quality and continuing

water supply, it is practical to nationalize water companies to further obtain a more
credible, transparent and reliable way of providing and obtaining water security.

It is clear that the concession agreement is lopsided and largely benefits the
concessionaires. Thus, privatization can be discounted with in lieu of nationalized
water security.