page_title: Water privatization in Metro Manila
section_title: Reaching the poor
hierarchical_section_title: Water privatization in Metro Manila / Impact / Reaching the poor
caption_attribution_description: English: A shanty town in Manila, beside the Manila City Jail. This picture was taken from Recto LRT Station.
context_page_description: Water privatization in Metro Manila began when the then President of the Philippines, Fidel Ramos, instructed the government in 1994 to solve what he called the water crisis in Manila by engaging with the private sector. In 1997, two concession contracts for the Eastern and Western halves of Metro Manila were awarded after an open competition. The concessions represent the largest population served by private operators in the developing world. Both winning companies, Maynilad Water Services in West Manila and especially Manila Water in East Manila, submitted bids with extremely low water tariffs. The tariffs proved to be too low to finance the investments needed to improve performance, especially after the East Asian financial crisis and the devaluation of the Filipino Peso.
  Maynilad expanded access, but unable to reduce water losses it stopped paying concession fees to the government and went bankrupt in 2003. It was temporarily taken over by the government, sold to new investors in 2007 and performance has improved since.
context_section_description: Many poor in Manila do not have access to piped water supply because the land where they live is occupied illegally and the private utilities are thus not allowed to connect them to the network. However, innovative solutions have been found to overcome this problem.
  In East Manila, Manila Water's approach to connect poor communities usually involved no pipes inside the communities, but included a single bulk meter for up to 100 households. It was the responsibility of the community to connect its members and any losses beyond the bulk meter were not incurred by the utility.
  In West Manila, Maynilad initiated early attempts to connect the poor in slums through the construction of piped networks by a small local company called IWADCO (Inpart Waterworks and Development Company) using its own funds and buying water in bulk from the utilities. Local banks initially refused to lend to the company even when it already had 25,000 paying customers. A NGO called Streams of Knowledge, which is associated with the Philippine Center for Water and Sanitation and was supported by UNDP, helped to set up the arrangement together with the local government and Maynilad which provides water at a discounted bulk rate. Users pay their water bills to water coordinators from the respective communities, which in turn pay Streams, which in turn pays a salary to the coordinator, pays the bulk water bill and returns part of the funds to the community. Maynilad built the piped network only to supply points at the entry of narrow alleys, from where residents distributed it among themselves with rubber hoses. A connection fee of 5000 Pesos (about US$90) was paid in instalments, resulting in monthly payments of about 200 Pesos (US$3.70) per household. This was about four times less than what the poor had paid to water vendors before. Maynilad pursued an approach to connect poor communities that included laying pipes in slums, which made it difficult to control theft. Indeed, non-revenue water even increased in West Manila.
  Tariffs charged to many of the poor remained higher than for residential customers who lived in single-family houses. Homeowners' associations and community groups, including those living in slums, are charged the highest residential block rate for bulk water provision, which is about three times the lowest block rate.
caption: Slum in Manila near Manila City Jail in the western half of the metropolitan area. Utilities are not allowed to provide services directly to residents in illegally built areas. Nevertheless, ways have been found to overcome this challenge.
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