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Republic of the Philippines HOUSE OF REPRESENTATIVES Twelfth Congress Third Regular Session

HOUSE RESOLUTION NO. 1474 __________________________________________________________________________________

Introduced by Reps. SATUR C. OCAMPO, JOEL G. VIRADOR, SIEGFRED D. DEDURO, ABRAHAM B. MITRA __________________________________________________________________________________ RESOLUTION URGING PRESIDENT GLORIA MACAPAGAL ARROYO TO SUSPEND THE ISSUANCE OF A PENDI NG EXECUT IVE ORDER BASED ON A WORLD BANK- SPONSORED STUDY’S PROPOSED “REFORMS” IN THE FINANCI NG POLICI ES FOR THE WATER DISTRICTS AND OTHER WATER SERVICE PROVIDERS THAT WILL PAVE THE WAY FOR THE PRIVATIZAT IO N OF WATER DISTRICTS NATIONWI DE AND VIRTUALLY ABOLISH THE 30YEAR OLD LOCAL WATER UTIL I T I ES ADMIN ISTRAT IO N (LWUA) WHICH WAS CREATED UNDER PRESIDENT IAL DECREE 198, AS SUCH EXECUTI VE ORDER WOULD NOT ONLY BE CONSTITU T I O NALLY AND LEGALLY QUESTIONABLE BUT COULD RESULT IN COSTLY CONSEQUENCES FOR THE WATER- CONSUMI NG PUBLIC, ESPECIALLY THOSE IN THE COUNTRYSIDE, AS WELL AS THE MASS LAY-OFFS OF EMPLOYEES IN LWUA AND THE WATER DISTRICTS, AND ORDER THE HOLDI NG OF IMME D I ATE AND CONTIN U I NG PUBLIC CONSULTATIO NS WITH LWUA EMPLOYEES AND CONCERNED SECTORS W HEREAS employees of the Local Water Utilities Administration (LWUA) have engaged for a year now in peaceful concerted mass actions to demonstrate their opposition to a World-Bank sponsored study funded under the so-called Miyazawa Initiative and conducted by the US-based Stone and Webster consultancy group which has endorsed “water reforms” in the country’s provincial water supply sector for the immediate implementation by President Gloria Macapagal-Arroyo through an Executive Order; W HEREAS the LWUA was established by Presidential Decree No. 198, as amended by PDs 768 and 1479, to serve as a “specialized lending institution” for the promotion, development and financing of provincial water supply systems, particularly those run by locally-controlled government-owned and controlled utilities known as the water districts The LWUA is currently attached to the Department of Public Works and Highways; W HEREAS the World Bank-sponsored study singled out LWUA, the lead national government agency in the provincial water supply system, as the “key to the reforms” needed in making the sector work more efficiently and equitably. The study recommended that LWUA become a mere Water Finance Development Group or sort of “graduation school” that will provide technical assistance to water districts and prepare them to become profitable enough for the private sector to take over; W HEREAS the LWUA Employees Association for Progress (LEAP), which counts on the membership of a large majority of the agency’s rank and file, including some supervisors and division managers, while recognizing the necessity for reforms has however raised the following major issues questioning the inherent soundness and viability of the recommendations proposed by the World-Bank study: p

the study virtually calls for the emasculation and dismemberment of LWUA’s duly instituted functions as a specialized development agency for provincial water supply ministering to the financial, institutional and technical development needs of the water districts, although the present system is still working effectively. What is needed is a more empowered LWUA, particularly in development financing, to make the system more responsive and efficient; ¨

the so-called credit-worthy water districts which are usually the big, more financially and technically capable water districts are essential in the present socialized financial setup as carried out by LWUA,


wherein earnings derived from the loan accounts of the big water districts are used to finance the projects of the small districts. Graduating these big districts will have an adverse effect on this financial cycle, to the detriment of the small districts; d

LWUA’s regulatory function is inherent in its financial, technical and institutional development functions for the water districts as provided for under PD 198, as amended. Devolving this function to a separate entity will have far-reaching adverse implications not only to LWUA and the water districts but also to the water-consuming public by way of delays in loan approval, project implementation and water tariff determination, among others, on account of the added bureaucratic layers which will also mean more government spending for personnel services;

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LWUA is the recognized expert in the provision of proper technical assistance and services to the water districts owing to 30 years of continuing training, studies and understudies with experts and technicians and actual application of acquired expertise in varying local conditions. Private sector participation should be tapped more for financing and other expertise not available in-house;

d

it is highly doubtful that LGUs will be able to manage the water utilities better than the water districts. LWUA and the water districts were created precisely because of past findings about the LGUs’ neglect, mismanagement and misuse of water supply systems for political ends rather than public service; the proposed privatization of LWUA and more than 500 water districts nationwide will not only result in mass lay-offs of employees in these affected agencies but the possible deterioration of water services as in the problematic experience with the privatization of the country’s premier water institution in 1997 – the MWSS;

f

proposed reforms on better corporate governance, financial transparency and accountability and more efficient operations can be instituted without virtually abolishing the LWUA and paving the way for the privatization of water districts nationwide;

W HEREAS it is the water-consuming public, especially those in the countryside, who will ultimately bear the costly consequences of any misinformed judgments and ill-conceived decisions of government. Government’s basic social responsibility and providing for the basic needs of the people, including adequate, safe and affordable water supply, must always be way paramount over the objectives of the World Bank study of giving a greater role to the private sector and ensuring profits or cost recovery for new industry players; W HEREAS serious concerns have been expressed by the LWUA employees’ association that one of the principal members of the foreign consultant’s team has been identified as an agent of the USAID-financed project called Accelerating Growth, Investment and Liberalization with Equity, or AGILE, that has lately been exposed as a lobby group reportedly influencing or directly intervening in the formulation of key economic policy reforms in favor of US interests; W HEREAS it should moreover be underscored that the present role of LWUA as a development agency with corollary regulatory functions was provided for under a Presidential Decree which has the force and effect of a law; hence, any executive order made by the President would be constitutionally and legally infirm as only appropriate legislative action by the Philippine Congress can amend or abrogate a law; NOW , THEREFORE, BE IT RESOLVED THAT THE HOUSE OF REPRESENTATIVES urge President Gloria Macapagal Arroyo to suspend the issuance of a pending executive order based on a World Bank-sponsored study’s proposed “reforms” in the financing policies for the water districts and other water service providers that will pave the way for the privatization of water districts nationwide and virtually abolish the 30-year old Local Water Utilities Administration (LWUA) which was created under Presidential Decree 198, as such issuance would not only be constitutionally and legally questionable but could result in costly consequences for the water-consuming public, especially those in the countryside, as well as mass lay-offs in LWUA and the water districts; FURTHER RESOLVED that the House urge the President to order the concerned national agencies to immediately conduct continuing pubic consultations and dialogues with employees of LWUA and other concerned sectors regarding the implications and consequences of the World Bank-sponsored study on water reforms.


Adopted,

SATUR C. OCAMPO Bayan Muna–Party-List Palawan, 2D

JOEL G. VIRADOR

SIEGFRED D. DEDURO

Bayan Muna–Party-List

ABRAHAM B. MITRA Bayan Muna–Party-List


HR 1474 - LWUA