The Manila Water Company Concession Agreement: What You Need to Know

In the Philippines, the provision of water services is often a contentious issue. It is a basic need that is essential for the health and wellbeing of the population, yet the unequal distribution and accessibility of clean water is a pervasive problem. In 1997, the Philippine government signed a concession agreement with two private water companies, Manila Water Company and Maynilad Water Services, to improve water services in the country`s capital.

The Manila Water Company Concession Agreement was signed on August 1, 1997, between the Metropolitan Waterworks and Sewerage System (MWSS) and Manila Water Company, a subsidiary of Ayala Corporation, one of the largest conglomerates in the Philippines. The concession agreement aimed to improve water services in the East Zone of Metro Manila, which includes 23 cities and municipalities.

Under the concession agreement, Manila Water Company was granted a 25-year contract to operate, maintain, and expand the water supply and distribution system in the East Zone. The company was tasked with improving the quality, reliability, and accessibility of water services to the consumers. The MWSS retained ownership of the water assets, while Manila Water Company was responsible for their management and operation.

The Manila Water Company Concession Agreement introduced a performance-based system where the company`s revenue was tied to its performance. The company was required to meet certain targets, including increasing water coverage and reducing non-revenue water (NRW), which refers to water that is lost through leaks, theft, or inaccurate billing. Failure to meet these targets could result in penalties, while exceeding them could lead to incentives and bonuses.

Over the years, Manila Water Company has achieved significant improvements in the water services in the East Zone. Water coverage has increased from 67% in 1997 to 97% in 2021. The company has also reduced NRW from 63% in 1997 to 11% in 2021, surpassing the 2022 target of 16%. Moreover, Manila Water Company has implemented innovative solutions such as the C3 (Customer, Community, and Corporate) program, which focuses on community engagement and environmental sustainability.

The Manila Water Company Concession Agreement has not been without controversy. In 2019, the MWSS imposed a penalty of PHP 1.1 billion on Manila Water Company for failing to meet the required service standards during the 2018 water crisis, which saw widespread water interruptions in the East Zone. The penalty was later reduced to PHP 534 million after Manila Water Company appealed.

In conclusion, the Manila Water Company Concession Agreement was a pioneering effort to improve water services in the Philippines. It introduced a performance-based system that incentivized the private sector to invest in the water sector while ensuring accountability and transparency. Despite the challenges, Manila Water Company has made significant strides in improving water services in the East Zone. However, there is still much work to be done to achieve universal access to clean water in the Philippines.