CREATION UNDER R.A. 6234

On 19 June 1971, Republic Act 6234 was enacted. It dissolved the National Waterworks and Sewerage System (NAWASA) and created in its place the Metropolitan Waterworks and Sewerage System (MWSS). MWSS was thus given the mandate “to ensure an uninterrupted and adequate supply and distribution of potable water for domestic and other purposes at just and equitable rates.” The proper operation and maintenance of sewerage systems was likewise part of its mandate.

DECLARATION OF POLICY

The establishment, operation, and maintenance of waterworks systems, because they deliver essential services that are vital to public health and safety, must be supervised and controlled by the State.

PROBLEMS AND RATIONALE FOR MWSS PRIVATIZATION

Poor Coverage
MWSS was able to supply water to only 69% of its service area.

Inefficient Service
Water availability was intermittent – averaging only 16 hours per day – and water pressure was uncomfortably low.

Highest Non-Revenue Water (NRW) in Asia
NRW refers to the unbilled or lost portion of water produced or supplied. This is caused mainly by meter tampering, illegal connections, pipeline leaks, and the illegal use of fire hydrants. NRW of MWSS at the time was nearly twice that of developed countries.

Sewerage
Approximately only 8% of the total service population and less than 7% of households in the service area were covered. Sewerage facilities could be found only in some areas in Manila and Makati, with most establishments having to use either their own or communal septic tanks.

Procurement Procedures
Procurement procedures always tended to be very rigid and involved many sequential processes. This oftentimes resulted in inefficiency and delays, both in terms of acquisition of equipment and in the implementation of projects.

 

PRIVATIZATION

In 1997, the Legislature passed into law Republic Act 8041, also known as “The Water Crisis Act.” The Act, which paved the way for the privatization of MWSS, had as its primary objectives the following:

 

  • Transfer financial burden to the private sector
  • Improve service standards
  • Increase operational efficiency
  • Minimize tariff impact

In August that year, the Philippine government entered into a 25-year Concession Agreement with two private consortia comprised of local and international partners. This effectively transferred the operational responsibilities of MWSS to Manila Water Company, Inc. (for the East Zone) and Maynilad Water Services, Inc. (for the West Zone).

Amidst some uneasiness and skepticism, the transition was implemented with the vision of transforming an inefficient, debt-ridden, and overstaffed public corporation into a professional, well-performing, and financially viable service utility. The development of new water sources, improvement of water delivery, and expansion of coverage area, on the other hand, remained high in the list of the goals of privatization.

 

Despite privatization, MWSS continued to exercise several of its legally mandated functions including:

  • Facilitating the exercise by the concessionaires of its agency powers
  • Carrying out accounting and notification functions
  • Monitoring, reporting, and administering loans and performing related functions in connection with existing projects
  • Managing and disposing of retained assets
  • Managing and operating the Umiray-Angat Transbasin Project

These retained functions are presently the responsibility of the MWSS Corporate Office (CO). The CO’s functions are further delineated by the functions of the MWSS Regulatory Office (RO), which is primarily mandated to implement the provisions of the Concession Agreement.