Water Security and Legacy Projects under the Duterte Administration

SPEECH OF REYNALDO V.VELASCO (ret.)
MWSS Administrator
FINEX RESEARCH AND DEVELOPMENT FOUNDATION, INC. (MAY 24, 2017 @ NEW WORLD HOTEL)

Good day ladies and gentlemen.

This is my first appearance before you, members of the Financial Executives Institute of the Philippines, since I assumed the post of Administrator at the Metropolitan Water Works and Sewerage System three months ago. 

At this point, I wish to thank FINEX Foundation through its Chairman, Mr. George Chua, as well as the Chairman of FINEX’s Environment Committee Mr. Rodrigo E. Franco, and the committee’s Liaison Trustee Mr. Romeo L. Bernardo for inviting me here today and allowing me to share MWSS’s programs for water sustainability.

This is also to acknowledge the presence of the panel – our two concessionaires and partners in service, Manila Water President Ferdinand M. de la Cruz and Maynilad President Ramoncito S. Fernandez.

Indeed, we are in good company among CEOs and CFOs of the country’s top corporations and please bear in mind that WATER, being an essential human need and service, is also a lucrative business venture given the successful legal framework for Public Private Partnership (PPP) put in place in August 1997 during the Ramos Administration.

The income figures would not lie and you can just ask Mr. Ferdz de la Cruz and Mr. Mon Fernandez on their secrets of success in managing Manila Water and Maynilad in the last 20 years since the MWSS was put into a PPP.

You can also include the multi-billion peso bottled water industry where top corporations have joined the lucrative business to include malls all over the Philippines that sell their own bottled water.

Add another mushrooming water business – billions in pesos capacity if added altogether – which are the water refilling stations.

WATER SUSTAINABILITY

When one speaks of water sustainability, it means there is enough and available water not only for the present generation but also for future generations.

In fact, one of the 17 Sustainable Development Goals of the UN is to “ensure availability and sustainable management of water and sanitation for all.”

According to the 2016 Asian Water Development Outlook (AWDO) of the ADB by 2050, more than 60% of the Asia and Pacific region’s population will be living in cities. 

The overall urban water security score takes into consideration the fundamental requirements of a livable city—water supply, wastewater collection, flood management (drainage), and river health.

The Philippines has a National Water Security Score of 40.4 out of 100, which means to say that much needs to be done for the country to become water secure.

FVR: SOLVING THE WATER CRISIS IN THE ‘90S

About a month ago, on April 21, MWSS hosted the formal book launch of FVR’s Ramos Peace and Development Foundation (RPDEV) 15^th year commemorative book, of which the MWSS Privatization in 1997 was among the salient features in the book’s chapter on environment and sustainable development.

Since our discussion for today is about sustainable water development, perhaps it’s just but proper that we take a quick trip back down to memory lane specifically on Metro Manila's overall water supply situation during the early years of the Ramos presidency.

SOME QUICK FACTS:

1. There was generally poor service coverage all over the metropolis which was only 53% of the service area;
2. Unaccounted for water was more than 63 percent;
3. There was inefficient service with low water pressure and limited water availability;
4. High non-water revenue; and,
5. Minimal sewerage coverage.

These problems, aside from rigid procurement procedures,have resulted in delays in project implementation and inefficiency in the water agency.

In 1995, President Ramos signed into law Republic Act 8041, also known as “The National Water Crisis Act” to address the nationwide water crisis, which adversely affects the health and well being of the population, food production and industrialization. 

Relative to this, President Ramos also signed Executive Order No. 311 on 20 March 1996, which encouraged private sector participation in the operations and facilities of the MWSS. 

He also called for the reorganization of the MWSS to address issues connected with the supply distribution, strengthening the government anti-water pilferage efforts and the finance privatization.

These two important initiatives paved way to the MWSS privatization.

In August 1997, the Ramos administration entered into a 25-year Concession Agreement with two private consortia comprised of international and local partners. 

This efficiently shifted the operational responsibilities of MWSS to Maynilad Water Services, Inc. (for the West Zone) and Manila Water Company, Inc. (for the East Zone).

The MWSS privatization or successful PPP of the water agency yielded positive results.

MWSS PPP, FVR’S MASTER STROKE OF A GENIUS

I guess all of you will agree with me that the eventual privatization of MWSS in 1997 is "FVR’s master stroke of a genius,” for without which, we cannot have achieved a total serviced area, now at 96 percent, as well as reduced unaccounted for water at 13 percent by Manila Water and 32 percent by Maynilad.

One important aspectand enduring effect of the successful legal framework of the PPP between MWSS and the concessionaires, is the fact that these two water partners have shared their best practices to other parts of the country and also our ASEAN neighbors like Vietnam, Myanmar, Indonesia and Cambodia.

It is for this reason why I have always chided our two concessionaires that we redraft the agreements with the provisions that MWSS must have at least a royalty on the PPP Legal Framework, much like franchise.

PLANS AND MWSS LEGACY PROJECTS

Before I discuss further about sustainable water source projects and to address the issue whether there is an impending water crisis, please allow me to touch on the general directions of MWSS under my baton.

I have always been imbued with the same PASSION, COMMITMENT and LEADERSHIP having been blessed to serve in government and public service for more than three decades in the military and police and as a one-term mayor of my hometown, Sta. Barbara, Pangasinan.

When I assumed as MWSS Administrator last February 26, I made a policy pronouncement that for me to fulfill the mandate of MWSS of serving the common good, I must be FAIR and JUST to all.

Allow me to share with you some of the plans, projects and vision for MWSS in the next five years.

AFFORDABLE AND SAFE WATER FOR ALL

First, MWSS will serve its mandate in providing Affordable and Clean Water to our 20 million consumers in Metro Manila and nearby provinces like Rizal, Cavite and Bulacan provinces.

Our mission at MWSS is to work for the well being of our consumers notably on water supply for each person that must always be sufficient, safe, and continuous for personal and domestic uses.

Thus, MWSS will push for what is Fair and Just to our Consumers.

RESPECT FORCONCESSION AGREEMENTS

Second, let me assure everyone that the new MWSS administration will continue respecting our concessionaire agreements with Manila Water and Maynilad, and, of late the Bulacan Bulk Water.

The past three months have also afforded me the chance to interface with our concessionaires and among the great realizations I have is to treat them as “PARTNERS IN SERVICE” and not as “UNFRIENDLY FORCES” in providing and distributing water to our consumers.

While there may be disagreements with the past management over tariff rates and rebasing to protect their business interests, the new MWSS administration and its trustees are confident to find ways and solutions and reach a common ground that is fair, just and equitable to all

While we do business, more so with water, it behooves upon everyone to have our respective SOCIAL AND ECONOMIC CONSCIENCE because at the end of the day, we serve the common good in the name of public service.

A balance between the protection of consumers and business sustainability is likewise important in future-proofing MWSS.

While we make this assurance of mutual respect for our agreements, it also behooves upon these first two concessionaires to fast tract the implementation of the Sewerage Treatment Plants (STPs), which I learned, has only more than 20 percent implementation rate, way beyond their promise and commitment.

For Bulacan Bulk Water, we will ask them to fast track their project so that they can now start serving the people of Bulacan and eventually earn additional revenuesfor MWSS.

Again, the basic principle of what is Fair and Just to MWSS and the Filipino people is being invoked here.

SALARY STANDARDIZATION AND EARLY RETIREMENT

Third, I plan to implement the salary standardization as approved by the Government-owned and Controlled Corporation (GOCC) and the Department of Budget and Management.

While I am after the overall welfare and for the fair and just compensation of each and every MWSS personnel, gone are the days of abuse in allowances and bonuses that have become synonymous to the agency.

We shall pursue the Early Retirement Program to give MWSS a fresh start and hire professionals in our overall effort to enhance the corporate image and capacity of MWSS in these millennial times.

The collective goal is that after five years; the public would have changed their bias and perception of MWSS and even its employees that every job applicant will desire to be employed in a prestigious government corporation like MWSS.

NEW AVENUES FOR GROWTH, REVENUES  & MWSS COMPOUND MASTER PLANNING

Fourth, MWSS is endowed with many land assets, some of which can be transformed into income-generating ventures to support development projects to further improve our overall services.

We are now in the process of constructing a new parking building to service the 3,200 daily average of vehicles visiting the MWSS compound and to put sanity to our dysfunctional parking system at MWSS.

We will seek other revenue generation projects from whatever income we can earn through proper disposal of old assets and review of the existing rental arrangements with our customers.

Another noble planthat we will pursueis to commission the master planning ofthe 79 hectares of the MWSS Compound.

Owing to our utmost concern for the environment, we will make sure that our buildings and other facilities will be designed environment-friendly and sustainable for future generations.

The grand plan with the Palafox project is to pursue the noble dream of converting the MWSS Compound into a WATER ECO TOURISM PARK and transforming it into a CENTER FOR LEARNING ON WATER RESEARCH, TRAINING AND DEVELOPMENT.

Overall, the MWSS fiscal position is SOLID BLACK that we are in a position to implement such noble projects for institutional purposes and in the name of national development.

IN PURSUIT OF PROTECTING THEENVIRONMENT

Under my watch, MWSS will take an active role in the advocacy on water conservation and protecting the environment.

We shall vigorously partner with the Department of Environment and Natural Resources as well as the LGUs, media networks and other business and civic organizations like the Bantay Kalikasan, the Rotary, Jaycees, Lions and Kiwanis in helping us in this noble mission to conserve and use water as well as protecting our environment.

There are six major watersheds namely, Umiray, Angat, Ipo, La Mesa, Marikina and Laguna Lake watersheds, that need protection and are at present managed by different government agencies. 

Long-term, there must be an integrated watershed management plan that should sustain the care and protection of these watersheds including the rivers and arterial channels. 

The protection of these watersheds is important as their environmental conditions directly impinge on the quality and amount of potable water supply to our constituents.

On June 25, we shall officially launch the Annual MWSS Million Tree Challenge aimed at planting one million trees a year over the next five years in the watershed areas.

I challenge FINEX Foundation to be part of this noble project to protect our watersheds and our environment.

AVERTING A CRISIS: PURSUING THE NEW CENTENNIAL WATER SOURCE PROJECT

At this point, let me now discuss the overall water situation in Metro Manila and its environs including the on-going projects and future water source projects of MWSS under the Duterte Administration.

At present, MWSS sources 95.6% of its total water supply from the Angat and Umiray Rivers and 4% from the Laguna Lake.  The remaining supply, 0.4%, comes from groundwater sources.

THE BULACAN BULK WATER SUPPLY PROJECT (BBWSP)

In 2016, MWSS entered into a Concession Agreement with San Miguel Corporation’s Luzon Clean Water Development Corporation and K-Water for the supply of treated bulk water to the entire Province of Bulacan through its water districts. The people of Bulacan that hosts the Angat Dam will now have access to steady potable water supply.

This new development will also impact the overall water supply needs of Metro Manila in the future.

While the Angat Reservoir seems to be sufficient with its capacity to cover the water requirement of the current population including the near future, nonetheless, droughts brought by perennial El Nino and decreasing effective reservoir capacity due to the heavy siltation have sometimes given limits for water supply requirements of Metro Manila due to the irrigation requirements in Bulacan and Pampanga provinces.

Thus, the water supply for Metro Manila must be secured thorough additional water sources. 

MWSS needs to reduce its dependency on the Angat Dam especially when the BIG ONE or a 7.2 earthquake strikes or when major disasters occur including potential threats from terrorists.

WATER SECURITY& DISASTER PREPAREDNESS

So how secure are our major water installations and facilities notably those managed and operated by Maynilad, Manila Water, Bulacan Bulk Water as well as the Angat Dam?

Because we all can’t take risks, we should always be prepared and ready when and where disaster strikes.

In the briefing that I had last week, I am elated to find out that both Manila Water and Maynilad have their respective existing Disaster Preparedness and Contingency Management Plans in the event a major disaster strikes like a 7.2 earthquake.

(Allow me to show you some of the slides on Disaster Preparedness courtesy of Maynilad and Manila Water).

I am also calling for enhanced anti-terrorism program to beef up our overall security measures to protect our water facilities and sanitation, which is among the high risk targets along with power, transportation, communication and ports. 

Thus, additional security measures are needed to prevent degradation of assets by the enemies of state, terrorist attacks or saboteurs.

This goes with the territory and there is a constant need for Threat Assessment and Intelligence Build Up to negate the enemy plans.

SECURITY MEASURES FOR ANGAT DAM AND ITS ASSETS

Having stated that Angat Dam is the major source of water for Metro Manila and its environs, it is thus incumbent to secure and maximize Angat Dam and all its appurtenant structures and assets.

Foremost of this is the Angat Dam and Dyke Strengthening Project (ADDSP)to ensure its stability and safety to withstand the potential risk posed by possible seismic activity associated with the West Valley Fault, the structural roadmap for securing and optimizing the Angat Dam has been defined and it is projected for completion in the next two years.

You could seeon the power point the table list of other on-going projects in relation to Angat Dam and other future projects of MWSS.

U.P.-NEC STUDY

In the development of the roadmap for redundant and additional water sources to the Angat Dam, MWSS used the 2011 water demand study of the University of the Philippines National Engineering Center (UP-NEC) for both the East and the West zones. 

This study delved into an assessment of municipal level usage to establish average per capita water usage for each of the East and West zones, capturing their operational and economic differences.

Results showed that unlike past studies — which utilized an LPCD (liters per capita-day) of 160-180 following international averages — both the East and West zones had much lower LPCD’s at 150 and 126 respectively (and later in the period, 132 liters for Maynilad). 

The new assumptions drastically drove down overall billed volume (demand) given the 2007 population figures in the first 10 years of the planning horizon, but demand catches up again, though still only up to 89% of the level of the extension term forecast, in the last 5 years to 2037. 

The catch-up occurs due to the assumptions tracking projected spatial demand when undeveloped areas today approach their full future development potential. 

This is an assumption worth further study since the shift tends to push volumes in hockey stick fashion in the last 5 years.  Hence, from a requirement of only 500 MLD in the first 12 years, another 1,800 MLD is suddenly required over the last 5 years.

The MWSS Board of Trustees approved (MWSS Board Resolution No. 2013-098-CO) using the water demand study and a water source infrastructure roadmap and a combination of MWSS and concessionaire led projects.

Together with the new MWSS Board of Trustees under the administration of President Duterte, we will deliver the needed dam projects long started and stalled during the Ramos presidency to ensure adequate, safe, potable, affordable and sustainable water supply for Metro Manila and the adjoining provinces serviced by MWSS.

Water Security Infrastructure Roadmap 2016 –2037

Basis:  UP-NEC Study in 2011

MOVING AHEAD: FORWARD TO LEGACY PROJECTS

Over the last three weeks before this forum, I have actively pursued the approval and implementation of new water source projects like the Kaliwa and Laiban dams with NEDA through Secretary Ernesto Pernia and the Department of Finance through Secretary Sonny Dominguez.

We have the opportune time under this administration to push for the Laiban and Kaliwa flagship dam projects that will include the possible rehabilitation of the Wawa Dam.

Putting these all together in place will result in additional combined 2,400 MLD to complement the 4,000 MLD from Angat Dam.

With these new water sources, MWSS will ensure adequate, steady and sustainable water supply for our consumers in Metro Manila and adjoining provinces in the next 25 to 50 years.

THE KALIWA DAM PROJECT

Funding for the first phase of the project, the New Centennial Water Source-Kaliwa Dam Project, was submitted to the National Economic and Development Authority on Jan. 17 already.

By March 21, the Investment Coordination Committee-Cabinet Committee confirmed the financing shift of the project from PPP to Official Development Assistance.

China and the Philippine governments have signed an agreement to fund the Kaliwa Dam at USD$364-million.

In the last three months being at the helm at MWSS, at least six interested parties from China, Japan, Korea and the Philippines expressed interest to undertake and fund the $1-billion twin flagship dam projects (Kaliwa and Laiban) either through ODA or PPP.

SUMAG DIVERSION & RELOCATION PROJECT

Next week, I will be personally visiting the relocation area that will house and resettle about 40 families to be affected in General Nakar, Quezon province, to be affected by the Kaliwa Dam Project and the revival of the Sumag Dam Project.

The Sumag River Diversion Project will generate an additional 2 cms inflow to Angat Reservoir, as approved in NWRB and funded by the two concessionaires.

This is enough to cushion the possible effect of El Nino or dry spell.

Our primordial goal is to make General Nakar Relocation as a Model Resettlement Area that will ensure adequate housing, land area to enable them to plant fruit bearing trees on top of a sustainable livelihood project to sustain them and make them economically dependent for 10 years and beyond.

This undertaking is actually in preparation for the future resettlement of families to be affected in the planned Laiban Dam project.

AWTIP AND ITS RELEVANCE TO WATER SECURITY

Another important project being implemented by MWSS is the Angat Water Transmission Improvement Project (AWTIP, the “Project”) aims to improve the reliability and security of the raw water through partial rehabilitation of the transmission system from Ipo to La Mesa and the introduction of water safety, risk and asset management plans.

Originally, the project only included the system downstream of Bigte but it was found necessary to include the tunnels between Ipo and Bigte in the assessment as they form an integral system with the aqueducts downstream of Bigte.

WATER SOURCES AND RESERVE MUST BE UNLIMITED

In the business of water and water security, there must be no limit given the growing population, and, God forbid the occurrence of the Big One in our lifetime.

I wish to officially announce that henceforth we will be forming a new TECHNICAL WORKING GROUP comprising of MWSS, our three concessionaires – Manila Water, Maynilad and Luzon Water Development  – to map out a new 10-year roadmap or development plan on new water sources that will zero in on: Laguna Lake (50 MLD);Putatan (150 MLD); Umiray and Sumag (350 MLD);Kaliwa (600 MLD), Laiban (1,800 MLD) and the possible reinstatement of Wawa Dam (350 MLD) into an active state after 24 years of dormancy.  The arching goal is to match Angat’s dam 4,000 MLD productions from 2022 to 2025.  

Having these additional flagship projects approved and started in the next five years would be enough WATER SECURITY AND LEGACY OF THE DUTERTE ADMINISTRATION for the next generations of Filipinos and consumers in Metro Manila, Rizal, Cavite, and Bulacan.

I ENJOIN YOU ALL TO HELP the MWSS make these FLAGSHIP projects happen as overall stakeholders on WATER SECURITY.

140 YEARS OF MWSS

Finally, we will also be celebrating 140 years of MWSS in FEBRUARY next year, truly a remarkable feat that will usher in the rebirth of MWSS as a water agency.

Gearing up to our 140 years, MWSS is committed:

1. To pursue new water source projects to insure water security;
2. To produce a new master plan to transform MWSS into a Water Eco Tourism Park and a Center for Learning for Water Research, Training and Development;
3. To create a professional and energized workforce to serve the people;
4. To promote and enhance the value of SHARED RESPONSIBILITY and COMMITMENT with our CONCESSIONAIRES/PARTNERS IN SERVICE  – MANILA WATER, MAYNILAD AND LUZON WATER DEVELOPMENT CORPORATION – to provide safe, potable and affordable water to our millions of consumers.

Together, we will venture into such programs and policies, guided by what is FAIR andJUSTto all so that we can all provide AFFORDABLE and SAFEWATER to everyone.

Once again, thank you to FINEX FOUNDATION for inviting me here today and good day to all.