Who to Blame? Privatization and Water Insecurity in Metro Manila

In 2017, Thames Water made headlines for being fined £20 million for mismanaging sewage water. The company’s opaque financial structure was then exposed (Plimmer & Espinosa 2017). While privatization initially allowed major investments, the service deteriorated rapidly and significantly damaged the environment. In March and June 2019, two water shortages hit Manila for several weeks, highlighting the insufficient quality of the infrastructure. The city is known to have achieved the world’s largest water privatization operation in 1997. It faced the need to largely expand its coverage as population grew exponentially (+300% in 40 years) (Porio, 2012). The alarming situation of water security in Manila is to be taken as a warning against postpoliticizing the provision of vital services.

Manileños queue to secure their water provision
Source: Vatican News, 19/03/2019

Initially, the Metropolitan Waterworks and Sewerage System (MWSS) Regulatory Office boasted of the success of the operation: from 67% in 1996, private companies reached almost universal coverage (98%) in 2013 (Cheng, 2013). Manila then appeared to be in a position to provide durably for safe and affordable drinking water for all. However, in just a few years, water security has steadily deteriorated.

Angat Dam reached a record low in 2019.
Source: The Philippine Star, 11/07/2019

According to the company in charge, the shortage was due to the limited capacity of the pipes. Indeed, few investments have been made with a long-term vision. The water supply of the metropolis of almost 30 million inhabitants relies for 97% on a single source, the Angat Dam, whose level reached a record low in 2019 (Cabico 2019), suggesting that it will not cover the needs of the Manileños for very long. The ongoing projects to diversify water sources are very limited. The desalination plant currently in construction should reach a maximum supply capacity of 100 MLD, representing 2.5% of Angat Dam’s provision (Padilla 2019).

In order to avoid the monopoly situation experienced by Thames Water in London, the service has been shared between two companies, Maynilad and Manila Water, which respectively supply the East and the West side of the city (Hawk 2005: 551). However, this system did not prevent irresponsible resource management and even slowed down the resolution of the crisis in 2019, as the opening of the canals to move water from one side of the city to the other took several days.

Unlike Thames Water, which is more than 80% foreign-owned, the financial structure of the companies in charge in Manila is more balanced between foreign and domestic capital, thanks to the shares of Ayala Corporation, the largest Filipino company (Wu and Malalun, 2008). However, the Ayala conglomerate owns a significant share of available land in Manila, and it is known to use its key role in the design of urban infrastructure projects – including water and transportation – to orientate public investment towards its own land (Lorrain & Mouton 2017).

Therefore, it seems that neither the avoidance of a monopoly, nor the presence of national investors in the financial structure of the companies in charge can guarantee a responsible management of water resources. Rather, the ultimate issue lies in governance structures framing the city’s planning.

Indeed, Manila and London are both examples of fragmented governance, leading them to behave as “growth machines” according to the principle of “entrepreneurial municipalism” (Harvey 1989; Lauermann 2016). In both cities, power is distributed between many government agencies and Public Private Partnerships (PPPs), and the mayors have to work with many (mostly private) partners (Gordon & Travers 2010). In Manila, this is a major limitation to effective urban governance (Boquet 2014). Manila seems to speak to other entrepreneurial cities about the risks of privatizing sensitive services like water provision. As long as there is no clear authority in charge of a strategy to diversify Manila’s water sources and to hold private investors accountable, insecurity around water resources will accentuate tensions in the city.

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Featured image: Vatican News (March 19, 2019). Cardinal Tagle urges prayers for Manila’s water crisis. Retrieved from: https://www.vaticannews.va/en/church/news/2019-03/tagle-manila-prayer-rain-water-crisis.html

Cabico, G. K. (July 11, 2019). Angat water level dips to critical anew. In: The Philippine Star. Retrieved from: https://www.philstar.com/headlines/2019/07/11/1933867/angat-water-level-dips-critical-anew

Gomes, R. (March 19, 2019). Cardinal Tagle urges prayers for Manila’s water crisis. In: Vatican News. Retrieved from: https://www.vaticannews.va/en/church/news/2019-03/tagle-manila-prayer-rain-water-crisis.html

Text:

Boquet, Y. (2014). Les défis de la gouvernance urbaine à Manille. Bulletin de l’association de géographes français, Géographies, 91(91–4), 461–478.

Cabico, G. K. (July 11, 2019). Angat water level dips to critical anew. In: The Philippine Star. Retrieved from: https://www.philstar.com/headlines/2019/07/11/1933867/angat-water-level-dips-critical-anew

Cheng, D. (2013), “(In)visible urban water networks: the politics of non-payment in Manila’s low-income communities”, Environment and Urbanisation, 25 (1), pp 246-260

Cheng, D. (2014). ‘Persistence of Informality: Small-scale water providers in Manila’s post-privatization era’, Water Alternatives, 7(1):54-71.

Gordon, I.R., & Travers, T. (2010). London: Planning the ungovernable city.

Harvey, D. (1989). From Managerialism to Entrepreneurialism: The Transformation in Urban Governance in Late Capitalism. Geografiska Annaler. Series B, Human Geography, 71(1), 3–17.

Lauermann, J. (2016). Municipal statecraft: Revisiting the geographies of the entrepreneurial city. Progress in Human Geography.

Lorrain, D., & Mouton, M. (2017). Portrait d’Entreprise. Les conglomérats familiaux (5): Ayala Corporation. Flux – Cahiers scientifiques internationaux Réseaux et territoires, 1(107), 91-103.

Padilla, A. (March 17, 2019). Privatization is creating an artificial water shortage. https://www.bulatlat.com/2019/03/17/privatization-is-creating-an-artificial-water-shortage/

Plimmer & Espinosa (May 4, 2017).  Thames Water: the murky structure of a utility company. In: Financial Times Online. Retrieved from: https://www.ft.com/content/5413ebf8-24f1-11e7-8691-d5f7e0cd0a16

Porio, E. (2012). Decentralisation, Power and Networked Governance Practices in Metro Manila. Space and Polity, 16(1), 7–27.

United Nations General Assembly (2010). Resolution adopted by the General Assembly on 28 July 2010, A/RES/64/292, Sixty-fourth session, Agenda item 48.

World Bank (May 15, 2012). Press Release: World Bank Approves US$275M Financing for Better Sanitation Services in Metro Manila. Retrieved from: https://www.worldbank.org/en/news/press-release/2012/05/15/world-bank-approves-275M-for-metro-manila-wastewater-management-project

Wu, X. and Malaluan, N., (2008). ‘A Tale of Two Concessionaires: A Natural Experiment of Water Privatization in Metro Manila’, Urban Studies, 45(1):207-229.

Zhang, Yan; Webster, Douglas; Gulbrandson, Andrew; Corpuz, Arturo G.; Prothi, Amit; Nebrija, Julia Catherine. 2014. The Metro Manila greenprint 2030 : building a vision (English). Washington, D.C: World Bank Group.

2 thoughts on “Who to Blame? Privatization and Water Insecurity in Metro Manila

  1. This is really interesting, I like how you have linked the water supply situation in Manila to what we were discussing in the seminar on Thames Water. It perhaps would have been nice to have slightly more of an introduction to Manila as a city — I personally don’t know anything about the city and have never visited so I would have found it very useful to give slightly more context to the discussion in the first post.

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    1. Hi Alex, thank you for your comment. Indeed, I conceived this blog more as a platform to make strong, insightful arguments, than as an essay. I chose to structure it directly around issues (one issue per post). Rather than presenting an introductory description of Metro Manila as a whole – which would have been extremely difficult -, I chose to let the reader look for general informations on his own (as can be done easily on the Internet). Fundamentally, each reader can derive his own vision of Manila from the successive insights given, as they are connected, yet also each revealing a different aspect. Each blogpost is self-sufficient. I have been cautious to contextualize my arguments in Manila’s multi-scalar governance system and plural development, in order to give the reader all elements needed to understand each post on its own.

      Like

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