Philippine E-Journals

The Privatization of Water Utility: A Policy Analysis

Miguel D. Soledad

Discipline: Research, Social

 

Abstract:

The administrator who ascends into office shoulders the burden of looking after the welfare of the citizenry. This is why a primordial task of a government administrator is ensuring that his constituency is provided with the basic necessities, such as utilities. However, given the inefficiencies associated with a giant bureaucracy such as the government machinery, the management of these utilities commonly succumbs to sub-optimal performance. To correct this malady, privatization is resorted to in order to “depoliticize” public enterprises, improve efficiencies and end subsidization. The Philippines’ move towards privatization is most felt in the capital-intensive industries such as oil distribution, telecommunications and utilities. The privatization of the utility industry started with electric power generation and later with water. While the business results of privatization of water utilities based on the corporate performance of the concessionaires of Metropolitan Waterworks and Sewerage System after it was privatized have been largely positive, grassroots support for it hasn’t snowballed in its favor especially in areas outside of Metro Manila. The lack of support for the idea of privatization among employees of the Davao City Water District and that of other water districts illustrates quite graphically this resistance to this policy direction. Clearly, there is a need to review this policy. Among the alternatives that are being considered are private-public partnerships, conversion into a broad-based, publicly-traded stock corporation, and conversion into closed private corporations owned by employees and customers, a set-up similar to the “corporative” type of arrangement. This researcher feels that, after assessing the relative merits of these options, organizing a “corporative” type of arrangement would be the most workable due to its ability to better attain utilitarian ends.