Stratbase ADR Institute’s Special Study: “Metro Manila’s Water Privatization: Making Sense of the So-Called ‘Onerous’ Provisions”

We are pleased to share with you free access to the Special Study, “Metro Manila’s Water Privatization: Making Sense of the So-Called ‘Onerous’ Provisions”, written by Dr. Philamer C. Torio of the School of Government of the Ateneo de Manila University. The paper examines the provisions of the concession agreements which the Philippine government has deemed onerous and disadvantageous to the urban domestic consumers. Viewed from an operating and financial lens, the paper looks into the logic and value of these provisions in the context of the concessionaires’ performance over the last 22 years.

Towards this end, the paper begins with a historical narrative of water provision in Metro Manila, from the Spanish colonial era to the present, followed by a comprehensive review of the privatization program. The next two sections then explain the concept of project finance, the type of financing used for privatization / Public – Private Partnership projects, and examine the major provisions of a project finance loan for Metro Manila’s water privatization. The last two sections discuss the importance of the so-called “onerous” provisions for a water privatization that has come to be considered one of the world’s largest and longest running programs for a water utility.


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