Water Woes: MIWD in Dire Straits, Clamor for Privatization Gains Steam

Metropolitan Iloilo is one of the fastest growing urban areas in the entire country. As such, its demand for water has risen tremendously and consistently through the years, buoyed by the ever-growing population and commercial activity in Iloilo City and its adjoining municipalities.

Iloilo City Representative Jerry Treñas emphasizes the importance of water, calling it “the most basic and essential commodity” and “the prime factor that will determine if we could sustain the rapid commercial growth in Metro Iloilo.”

Unfortunately, the delivery of water has been the most agonizing problem that has plagued the people of Metro Iloilo for so many years. The delivery of water within the Metro Iloilo service area is exclusively handled by the Metro Iloilo Water District (MIWD). The MIWD was created by virtue of P.D.  No. 198, which authorized the creation of water districts throughout the country. It was tasked to handle the provision of water in Iloilo City, Oton, Maasin, San Miguel, Pavia, Sta. Barbara, Leganes and Cabatuan. Sadly, the MIWD miserably failed to comply with its mandate, as a mere 20% of the total service area is being serviced by the water district. Worse, the 20% “serviced” by the MIWD have vocalized their very serious complaints against the beleaguered water district.

With the growing demand for water and its inability to supply the vast majority of its service area, the MIWD decided to tap two water specialist companies to help it obtain sufficient supply of water to be delivered to the people within the MIWD’s service area. These two companies are Flo Water Resources, Inc. (Flo Water) and Iloilo Primewater Ventures Corporation (IPVC). Both companies complied with their respective contractual obligations and proceeded to supply MIWD with bulk water pursuant to their contracts. However, MIWD failed to honor its end of the contract, refusing to pay the two companies for its accumulated bulk water bills.

This is the tipping point that launched Congressional investigations, casting doubts over the continued ability of the MIWD to faithfully execute not only its social contract with the people, through its legal mandate to provide water to its service area, but also on its proprietary obligations due to its payment disputes with its bulk water suppliers.

Acting on the complaints of IPVC and Flo Water, Congressman Treñas filed House Resolution 569 in the House of Representatives, calling for the investigation on the refusal of the MIWD to comply with its contractual obligations. Treñas said that the refusal of the MIWD to pay its outstanding bills was in violation of its contractual obligations, and has compromised the steady and reliable supply of water to the MIWD service area.

The Committee on Good Government and Public Accountability took cognizance of the Treñas Resolution, as the MIWD is a Government Owned and Controlled Corporation (GOCC) and since malfeasance, misfeasance and non-feasance may have been attendant in the non-fulfilment of the MIWD of its contractual obligations. During the Committee’s initial hearing, Treñas said that the bulk water supply contracts of the MIWD are imbued with public interest and that the primary functions of the MIWD involve social functions upon which the State, in the interest of its people, is duty bound to intervene when the common good so demands. Committee Chairman Representative Oscar Rodriguez echoed the sentiments of Treñas, citing the need to further investigate the MIWD considering that water supply contracts are vital for all LGUs.

On March 6, 2014, the Good Government Committee held a special hearing in Iloilo City in order to investigate the MIWD. Aside from the member Representatives of the Committee, Iloilo Governor Arthur Defensor and representatives from MIWD, Flo Water and IPVC attended the Congressional inquiry. Former MIWD General Manager Le Jayme Jalbuena ignored the Committee’s invitation to attend. During the hearing, it was revealed that the MIWD is in severe financial crisis, as the water district has accumulated millions of unpaid bills which are due to the two bulk water supply companies. The cash flow problem of the water district is further compounded by the messy turn-over from the previous interim board to the new board, chaired by Dr. Danilo Encarnacion. The gross mismanagement of the water district’s finances by the previous interim board was revealed, and Dr. Encarnacion said that numerous documents of the MIWD went missing when the new board took over at the start of the year.

Congressman Treñas, Governor Defensor and Committee Chairman Rodriguez strongly urged the MIWD and the two bulk water companies, especially Flo Water, whose Chairman Rogelio Florete, Sr. was very vocal over his discontent on MIWD’s refusal to pay its outstanding obligations, to immediately find a solution to their dispute. Treñas called for the concerned parties to act with haste in settling their dispute, as the continued development of Metro Iloilo is contingent upon the ability of the water district to consistently supply water to the entire service area.

However, the MIWD’s struggles continued even after the earnest efforts of local leaders to broker an amicable solution between MIWD and its bulk water suppliers. Meanwhile, the growing dissatisfaction of residents and commercial establishments over the poor service of the MIWD continues to snowball. Countless of people from Iloilo City have derided the failed efforts of the MIWD to provide consistent water in their taps. Businesses have also complained about the ill-effects of the MIWD’s intermittent water supply to their operations.

With the 2015 APEC Summit on the horizon and Metro Iloilo’s rapid economic growth in jeopardy due to a possible water crisis, Treñas filed House Resolution 1363 calling for the privatization of the water distribution functions of the MIWD. The Iloilo City Solon mentioned that “the water distribution problem in Iloilo City and the rest of the MIWD service area is seen as the only stumbling block to the rapid development of Metro Iloilo, as it compromises business operations and causes severe anxiety and hardships to the residents of Iloilo City and its adjoining municipalities.”

Treñas cited reports from the World Bank and USAID which found that engaging the private sector is a prudent option to address the problems of the MIWD, as many countries around the world, including the Philippines based on the successful privatization of the Metropolitan Water Works and Sewerage System (MWSS) in Metro Manila, have turned to various forms of public-private partnerships to improve the delivery of water. In his Resolution, Treñas also mentioned that the Asian Development Bank (ADB) recognizes the importance of private sector initiatives in improving the performance of water service delivery.

Senate President Franklin Drilon supported the call of Treñas for the privatization of the water distribution operations of the MIWD. Governor Arthur Defensor of the Province of Iloilo and Iloilo City Mayor Jed Patrick Mabilog also expressed their support for the privatization move. Representatives Arcadio H. Gorriceta (Iloilo 2nd District), JC Rahman A. Nava (Lone District of Guimaras) and Pablo Roces Nava III (Party List-APPEND) have co-sponsored the Treñas Resolution.

Business groups, the academe and local leaders in Iloilo City have also manifested their support for the move to privatize the water district’s water delivery operations. Among the organizations which have stated their support for privatization are the Iloilo Economic Development Foundation, Inc, (ILED), Iloilo Hotels, Restaurant & Resorts Association (IHRRA) and the Iloilo City Urban Poor Federation, Inc.

ILED issued a Resolution expressing its support for the privatization of the water district’s water distribution operations, as the MIWD “has become unreliable and ineffective to address the growing needs of Metro Iloilo and the contiguous municipalities in the Province of Iloilo.” The IHRRA, headed by its President Alberto Ong, stated that it believes that the privatization of the water district will result to a robust water supply and distribution infrastructure for Iloilo. A Resolution supporting the move to privatize was also issued by the Iloilo City Urban Poor Federation, observing that there is an inverse-proportion between the fast-paced growth of Iloilo City and the public utility performance of the water district, which has been sliding back while demand for water progressively increases.

The University of the Philippines – Visayas, University of Iloilo and the Western Visayas College of Science and Technology have also voiced their support for the privatization of the water distribution operations of the MIWD. The Liga ng mga Barangays of Iloilo City had likewise issued a Resolution supporting the call for privatization. The Liga’s Resolution stated that the “privatization of the water distribution operations of the MIWD will allow private sector entities with the necessary expertise and competence to handle the city’s water distribution.”

All seven Associations of Punong Barangays representing the seven districts of Iloilo City have also backed the privatization move. Barangays under the umbrella of the Liga ng mga Barangay and the Association of Punong Barangays have similarly issued endorsements supporting the call for privatization.