BIZ BUZZ: HOT WATER

After Manila Water Co. Inc., it’s Maynilad Water Services Inc. that’s now in hot water for recent water supply disruptions. Unless it could persuade the Metropolitan Waterworks and Sewerage Services Regulatory Office ( MWSS-RO) otherwise, Maynilad is at risk of being penalized—maybe not in the same degree as the P1.13-billion fine slapped on Manila Water—but it was given a similar “notice of failure” on Tuesday. It has five days to reply to MWSS-RO.

Unlike the supply shortage that hounded the other water concessionaire, Maynilad’s predicament was due to the extraordinary algal bloom in Laguna de Bay that made the water treatment process more challenging at a time when it wasn’t easy to procure the chemicals needed.

But the situation was resolved quickly and rotational

supply and tanker rationing measures had been implemented, Maynilad chief operating officer Randy Estrellado said. Furthermore, the disruptions affected only a small segment of the customer base and did not last for more than a week.

Based on the concession agreement, MWSS may call out a concessionaire for failure to provide 24/7 water supply for 60 consecutive days. It can make a more urgent call in 15 days if it affects the health of the community.

Estrellado explained that that connections equivalent to no more than 12 percent out of 1.4 million customers were affected. Even then, he said most of them had water supply at certain hours of the day. About 8,000 to 10,000 clients totally ran out of water for multiple days and Maynilad had to supply them with tank water.

Apart from the unprecedented algae proliferation mostly attributed to extraordinary heat this summer, Estrellado said the chemical compound needed to address the situation was a controlled substance, the purchase of which required special clearance from the police, the Philippine Drug Enforcement Authority (PDEA) and even the Commission on Elections (Comelec). As such, it was not easy to get hold of it at the time it was needed.

What controlled substance is he talking about and why does it require so much paperwork? He was referring to potassium permanganate, an inorganic chemical compound that can be used for explosives and also for oxidizing coccaine paste. (Hence, the required approval from PDEA and the Police). And because all these coincided with the run-up to the midterm elections, Comelec clearance was likewise needed.

Maynilad is thus expected to argue that it is not in the same boat as Manila Water. —DORIS DUMLAO-ABADILLA

The great cement debate

What does the Tariff Commission (TC) know that we don’t? The agency is still keeping its cards close to its chest.

For a day and a half worth of public hearings, some of the country’s largest cement manufacturers tried to prove that they were seriously affected by a surge in imported cement.

Only a few details about the preliminary investigation report of the Department of Trade and Industry (DTI) on the issue are available. It was DTI, not cement producers, which pushed for the probe and then slapped a provisional safeguard duty on imported cement a surge in volume in recent years.

The injury, according to the Cement Manufacturers’ Association of the Philippines (Cemap), is so bad that it wants a higher definitive safeguard duty. This, the group says, is the only way to “cure” the industry.

The DTI report, however, only took into account the relevant figures of the Cemap member firms—namely, the Philippine units of multinational firms Taiheiyo, Republic Cement, Holcim and Cemex.

While these member firms account for around 80 percent of the local industry, there are still four other cement firms that were not part of the report.

The commission, however, has a report of its own called the “staff report”—a product of the commission’s own probe on the issue. It’s so secret, we hear, that not even the DTI or the Philippine Competition Commission were given copies.

Only importers and cement manufacturers got to see and comment on this staff report. But the hearings quoted some parts of it.

So if Cemap member companies blame the decline in their profitability to cheaper imports, how does the picture look like with the four other firms involved? Everyone else outside the case’s inner circle would just have to wait and see.

“Personally, I learned a lot. The decision, I think, has become clearer now,” TC Chair

Marilou Mendoza said. But the decision will also be influenced by TC Commissioner

Ernesto Albano. They might both have to agree on the issue given the lack of a third person to complete a panel.

Nevertheless, there is a lot of history here between the industry and the commission.

Back in 2002, cement manufacturers lost their case for a safeguard duty on imported cement after the commission failed to find any serious injury or even an imminent threat of serious injury from imports.

“Although there have been declines in the industry’s sales volume and market share and a downward trend in production and capacity utilization in 2000, they are not considered significant,” the 2002 report read.

An industry on decline. A surge in imported cement. All these things sound familiar now. So will the industry face a different verdict this time around? Or will this be a case of déjà vu? —ROY STEPHEN C. CANIVEL INQ

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