CONTINUING STRUGGLE AGAINST PRIVATIZATION

Brief Background on the Government Policy of Privatization

The policy of privatization was part of the Structural Adjustment Program (SAP) introduced by the IMF and World Bank to underdeveloped countries in the 1980s. The Philippines was among the first countries imposed by the IMF-World Bank to push for privatization.

It is a policy intended to realize schemes that will reduce public spending to cover up budget deficits caused by automatic allocation for foreign debt servicing. Reorganizing the bureaucracy with emphasis on staff reduction has become a major component of the government's austerity measures.

President Marcos introduced privatization as a government policy in the Philippines under Presidential Decree Nos. 2029 and 2030, but it was only under the Aquino government that this was implemented.

Under President Aquino, the privatization program was focused on the sale of assets and/or corporations owned by former Marcos cronies whose foreign indebtedness was guaranteed and assumed by government banks. Later, this was widened to include private sector participation in infrastructure and energy projects including water and irrigation.

The Build-Operate-Transfer (BOT) Law was enacted to legitimize the entry of private business in vital government development undertakings and operations.

Privatization under the Ramos government was further intensified. In a Letter of Intent (LOI) to the IMF-World Bank, Ramos committed further reduction in government subsidy and the entry of multinationals in more public utilities, social services, and development projects.

Immediately, the sale of banks (Philippine National Bank), hotels (Manila Hotel), revenue-generating assets like Petron, real estate properties (Fort Bonifacio) and the Metropolitan Waterworks & Sewerage System (MWSS) were effected. These Government Financing Institutions (GFIs) and Government-Owned and Controlled Corporations (GOCCs) are being sold after additional heavy foreign debts were incurred by the Aquino administration for their development and recovery. President Ramos also expanded the scope of t he BOT Law to include other schemes and to widen private sector choices of participation.

After the MWSS privatization which is said to be the largest deal so far ever made in the world, the privatization of the National Power Corporation (NPC) is being re adied. Plans to privatize state colleges and universities, social security institutions and hospitals are also underway.

Likewise, the Ramos government has been receiving praises from the IMF-World Bank for the successful mass lay-off of 323,466 public sector workers and is hellbent to dismiss the same number in the completion of its Re-engineering plan.

Indeed, to say that the government is in a privatization frenzy, which is seemingly privatizing the Philippine government on the whole, is only saying the obvious. What is not being said is the harsh and anti-people effects of this policy.

THE MWSS EXPERIENCE

In 1995, the Ramos government passed the Water Crisis Act (WCA citing the inefficiency of MWSS to service 100% of the Metro Manila residents as basis. It would seem that the WCA missed the core problem of insufficient water source thus gave the wrong prescription of privatizing the distribution system or that the WCA was a mere means to open the floodgates in privatizing the water systems nationwide.

It then prescribed as solution the privatization of water utilities including the MWSS. Immediately, the International Finance Corporation (IFC), the IMF-World Bank arm for private financing, was commissioned to design and oversee the bidding of MWSS at $ 7M and a bonus of US$3.5M upon completion of the bid.

After 120 years of existence, the MWSS, considered in 1960 as a super agency by the Supreme Court because of the very nature of its service is transferred to the control of Manila Water Company (Ayala-Bechtel-United Utilities/Northwest Water) and Maynilad Water Services, Inc. (Lopez-Benpres-Lyonnaise). These two corporations which are partnerships of two of the biggest monopolies in the Philippines and two foreign monopolies in water services are given 25 years of concession worth US$7 Billions.

Although promises for better services including an initial lower rates were stipulated in the concessionaires' agreement, the government downplayed the fact that the concessionaires were given eight reasons for r ate hikes. All of which are easy ways to attain the core aim of big businesses for higher super profits.

Moreover, the privatization of MWSS has periled the jobs and security of tenure of its 5,400 employees. There is no assurance that any employee will be retained by the MWSS Regulatory Office while the Concessionaires' Agreement stipulated that they will work with the privatized agency for a 6-month probationary period. After six months, the concessionaires will decide whether they will be re-hired or dismissed.

As of August 1997, some 200 employees of the old MWSS were already rejected by the Lopez and Ayala-owned consortia which took over half of Metro Manilas's water service only in August 1. It is expected that all the 5,000 employees will be terminate d unless they accept another "offer sheet" as contractual personnel which will mean recieving lower salaries, giving up their benefits and without the rights to unionism.

These 200 workers were dismissed for protesting against the privatization of MWSS, h and in hand with their demand to uphold their security of tenure as they have served MWSS for at least ten years, and higher separation benefits. The concession agreeement stated that terminations will only start after the 6-month probationary period.

Clearly, this termination is a violation of the concession agreement even as the concession agreement itself violates the worker's right to their security of tenure.

What about the general Filipino public who depends on MWSS for their water needs? Water has been said to be life itself. Water, is a very basic need not only of every person, but of every animal and plant life on this earth.

How can privatization ensure that water is served to all who need it at prices the poor majority can afford ? Experience and studies on other developing countries who have privatized their water services show that privatization has only benefitted a few.

In Argentina, privatization has retrenched more than half of its workers, prices has become more expensive, supply and distr ibution has not improved. The French firm who won the contract gave bribe money to the city Mayor who was later on found guilty. Privatization has only concentrated wealth and power to very few local rich families and multinational corporations.

How can th e government give up on its responsibility to ensure that services as basic as water service be given to its people? The privatization of Petron has paved for the enactment of the deregulation policy of the government. Now, the three oil companies have th e control of the prices of oil and other oil products. Why did government give up a state-run petroleum company when it is an earning company and one that provides another important commodity for everyone?

Public utilities were established precisely to gua r d the people from the scarcity of products that are important and basic. Privatization it seems, even without trying hard to explain in technical jargons, was not intended to benefit the Filipino people. Privatization has only strengthened the grip of big business, the elite and transnational companies on our lives. It has doomed the poor forever.

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