MANILA - In light of the issues that surfaced due to the Laiban Dam controversy, the subcommittee on water resources of the infrastructure committee is undertaking a review of all water utilities-related bills and laws that could improve water-utilities regulation in the country.

National Economic and Development Authority (Neda) Assistant Director General for Infrastructure, Regulation and Contract Review Services Ruben Reinoso said one of the laws that will be reviewed is the proposed bill to create a water-resources commission to act as financial and economic regulator of water utilities.

Reinoso, who is also the executive director of the Infracom’s Management Group, said the bill was proposed during the time of former President Fidel V. Ramos. However, there has not yet been any progress on the bill.

“The subcommittee on water resources of the Infracom will make the recommendation to the Neda Board once we have concluded our review,” Reinoso said.

One possible change that could happen to the bill is to give the new water regulatory body economic and financial powers, such as setting water tariffs and setting safety standards which are currently part of the functions of the National Water Resources Board (NWRB).

Reinoso said the functions of the NWRB are very broad to include even water resource regulator which gives it the power to decide which and how much water is alloted for various uses, imposing safety standards and setting tariffs.

However, the Neda official said the NWRB has no devoted staff and no funds, and could not give attractive compensation to its secretariat. With lacking resources, an interagency committee that has so much power and responsibility in government, could not be expected to fulfill its role properly.

By putting in place a new water-resource regulator, Reinoso said, there is a good chance that the more important functions of the NWRB, like tariff setting and safety standards, can be carried out efficiently by the new regulator. 

This, Reinoso said, will also be a good way to encourage private-sector companies to go into water utilities. He said even if water utilities is a very viable investment area, few private companies go into it because of the lack of stability in water-resource rules.

“Water supply is very viable. But the rules are not clear so nobody in the private sector is interested. When you go into water utilities, you need clear rules because long-term recovery or more than 10 years are needed before you make a profit. If they change the rules right after you finish the project, what happens to the investor?” Reinoso explained.

Apart from attracting the private sector, a Neda source said an independent regulatory body can also remove doubts on possible joint-venture agreements of the government that could turn sour like the Laiban Dam controversy.

The source said the Laiban Dam project also shows that there is a conflict-of-interest angle seen on the part of the Metropolitan Waterworks and Sewerage System (MWSS), which will act as both regulator and concession owner of the Laiban Dam.

This means that as concession owner, the MWSS may be forced to ensure that the concessionaire for the Laiban Dam Bulk Water Supply will not fail. This may be done through its approval of tariff rates that will benefit the concessionaire, whether this will be San Miguel Bulk Water Co. Inc. (SMBWCI) or not.

Last week the MWSS confirmed that to date, there are no companies that expressed willingness to challenge SMBWCI in its proposal for the Laiban Dam project.

In an ambush interview, officials of the MWSS disclosed that as the July 9, deadline for the letter of intent closed, no company has expressed willingness to participate in the Swiss Challenge for the Laiban Dam project. The MWSS is waiting for another 30 days for evaluation before it formally opens the Swiss Challenge.

Both MWSS Administration and Support Services Deputy Administrator Isaias Bongar Jr., who is also the chairman of the joint venture selection committee (JV-SC) and Office of the Government Corporate Counsel (OGCC) Alberto Agra, who is vice chairman of the JV-SC, said SMBWCI is the only proponent they are talking to right now.

However, MWSS officials, including MWSS Administrator Diosdado Jose Allado, said private entities like the two water concessionaires, Manila Water Co. and Maynilad Water Services Inc., are no longer eligible to bid for the project, even if the OGCC gives its nod to republish the invitation to bid.

Bongar explained that there are rules against cross ownership to avoid monopoly. This means that if you are a water retailer you cannot be a water wholesaler.

This also means that even if the parties interested in the project have experience in operating a bulk-water facility, they cannot bid for the project if they are retailing water to consumers where the bulk-water supply will be used.