ENGINEERS OF Metro Manila’s water concessionaires say that investigating water pilferage is a long drawn-out, tedious and dangerous undertaking often hounded by political pressure.

There is also no guarantee of success: in fact few of the water thieves are nailed in the end. Although the law states that the mere existence of illegal connections constitutes prima facie evidence, the courts usually demand stronger proof.

“Kailangang makitang sila ang nagkabit,(We have to prove that it is they who installed it)” says Manila Water staff lawyer Jovencio Fulgeras. And because the water concessionaires are unable to prove beyond reasonable doubt that the suspected water customer installed the illegal connection, anti-pilferage cases are usually dismissed.

The impossibility of finding the actual culprits also affects the settlement of cases. Where water concessionaires manage to dig up illegal connections, water users would normally reason out that the connection happened before their time, or that the management of erring establishments was not aware of the offense.

This makes it even more difficult for water concessionaires to settle arrears resulting from pilferage. Still, says Florencio Cayco, executive assistant to Maynilad president Rafael Alunan, the company’s priority remains making the pilferers pay for the water they consumed and avoiding lengthy legal disputes.

Among those who have shown a willingness to settle is Unilever Philippines, a top producer of soap and shampoo, whose assessed arrears from an illegal connection amounts to P19 million.

Unilever’s general manager for corporate development Chito Macapagal admits an illegal connection was unearthed inside the company premises. It was likely, he said, that the connection was installed long ago before the present management took over what used to be the Philippine Refining Company. Investigations showed that the connection led to a water line that had been plugged and remained unused for years.

Macapagal maintains that it would be unfair to penalize the present management of Unilever for an offense it did not commit. “We are a responsible company and it was we who immediately sought out Maynilad to resolve this issue,” Macapagal says. Still, he concedes that Maynilad is only trying to enforce the law, and Unilever is willing to settle, but for much less than it is being billed.

Down the road from the Unilever factory in Pandacan, Manila is Coca-Cola Bottling Company, another establishment where Maynilad has unearthed an illegal connection. The firm was initially billed P 27 million for drawing water illegally since 1984. The basis for the assumption is that the road over the underground connection was paved that year, although the connection may have been there earlier.

Coca-Cola Bottling Company external relations manager Arnie Dy admits an illegal connection was found, but doubts whether it was used at all. “I can’t say categorically that it was not used at all but all I can say is that management will never tolerate an illegal practice like that just to earn a little more profit,” Dy says. The company's Manila production plant was closed down last year.

Coca-Cola settled for P 2 million under an agreement which made no mention of illegal connections, and classified the payment as “unpaid water consumption.” The agreement also called for Maynilad to assist Coca-Cola in checking wastage and correcting systems faults.

Not all suspected water pilferers though would take to settling the dispute amicably. Manisla Water’s Engr Nestor Gabot narrates the case of an establishment where a bypass connection was discovered. A bypass is a water service connection to a main pipe bypassing the water meter.

When a team of Manila Water engineers raided the firm, the owner offered them a bribe of P100,000 rather than settle his arrears, which were estimated to have reached P3 million. The Manila Water team rejected the offer, Gabot says, and asked him to settle his obligations. Despite several notices and demand letters, the owner refused to pay and instead filed a temporary restraining order in court to stop Manila Water’s closure of his water supply.

Influential protectors can sometimes shield big water pilferers. Former Manila Waterworks and Sewerage System (MWSS) Administrator Angel Lazaro III says he would get calls from powerful people interceding when big water thieves were caught. “I would just say yes, but then go ahead with the investigations,” says Lazaro. “Meron talaga. Yes na lang ako ng yes. Pero pagka alam nilang may nag-aalaga, natatakot rin ang mga tao ko. (There are really people who intercede. I just say yes. But once they know a suspected water pilferer has a protector, my people get scared.) ”

The practice continues to this day. Cayco says calls from protectors of big water thieves are passed on to Maynilad president Alunan. Sometimes the requests come from people whose power and influence are no match even for Alunan. These cases are passed on to Maynilad’s owners, the Lopez family.

Big water thieves are not only rich and influential, they are often armed and dangerous. Former MWSS employees and executives interviewed for this article, including Lazaro, say it is not uncommon for water utility personnel investigating pilferage by big firms to be threatened by the companies’ armed guards.

Both concessionaires admit that water theft would not take place without the connivance of corrupt contractors and MWSS insiders. But the best-kept illegal connections are those made by MWSS personnel themselves.

Common knowledge within both Maynilad and Manila Water is the practice by former MWSS employees of accepting bribes to install illegal connections. Common knowledge too is the so-called “alaga system” where water thieves give corrupt officials and employees regular bribe money to ignore their offenses. Under the “alaga system,” it is the bribe-taker who is usually directly involved in installing the illegal connection.

Lazaro believes only a small fraction of MWSS employees was involved in water theft during his time. Still, the corruption may have reached management levels. A former MWSS engineer now connected with Manila Water says several cases of water theft ended up nowhere after being turned over to the legal department of MWSS.

Another former MWSS employee recalls that several years ago, an anti-pilferage team pounced on an apartment building with illegal connections, only to be told after they made their report to back off from the case. The row of apartment buildings, he said, belonged to the then MWSS administrator.

The practice goes all the way down. A former MWSS employee says personnel laying pipes that pass through depressed communities would offer to install illegal connections, charging anywhere from P10 to 12,000 for a cluster of four to five homes.

When MWSS was privatized in August 1997, the concession agreement called for the two concessionaires to absorb the water utility’s employees who numbered some 5,000 that time. Most went to Maynilad, which covers a bigger concession area.

Because the company continues to suffer huge losses from water pilferage and leaks, these former MWSS employees have been under suspicion and have complained of a virtual witchhunt.

Maynilad’s problem is that it has not been able to bring down its rate of non-revenue water or NRW—the amount of water produced and unbilled—which now stands at a high 67 percent. Manila Water’s NRW, on the other hand, is almost half of Maynilad’s at 39 percent. Under the concession agreement, the water concessionaires are supposed to bring NRW down to 25 percent in 10 years.

At 67 percent, this means Maynilad loses two-third of its revenue and earns only 33 percent. A high NRW is an indication of inefficiency in water distribution, one of the reasons the MWSS was privatized in the first place. The Philippines’ NRW remains one of the highest in Asia. Among the lowest is Singapore, with an NRW rate of 20 percent.

At the height of the El Niño problem in the summer of 1998, both concessionaire’s NRW dropped considerably but it was an artificial reduction caused by the low water supply. When the water supply is low, there is little water to steal or lose to leaks, hence the low NRW.

NRW is water lost to both theft and leakage. But it is difficult to say exactly how much of the NRW is lost to theft and how much to leaks. There are those who say theft predominates, otherwise all the water gushing out from leaks would have flooded Metro Manila. The contrary view is that more water is lost to leaks since most of the MWSS pipelines are old, brittle and prone to punctures.

This debate has been raging within Maynilad. On the one hand are engineers and other employees who say that most of the non-revenue water is lost to leaks. Management, on the other hand, has maintained that the greater volume is lost to theft.

Bienvenido Gaurino, former chief of the anti-NRW Task Force of the Maynilad Water Service, Inc, says it has never been established which of the two is the bigger determinant of NRW. “That remains one of the biggest debates within Maynilad,” says Gaurino, who admits he espoused the view that leaks, more than theft, comprise the bigger percentage of NRW.

Sadly, he says, management has come to suspect those like Gaurino, with opposing views, of involvement in illegal activities. A number of middle-level employees have been removed from previously sensitive assignments, demoted or were otherwise forced to retire, himself included, Gaurino laments. Talk has it that more of them will be retired or fired.

Lazaro takes this view:“Kung alam mo kung gaano karami ang ninanakaw ibig sabihin puwede mong pigilin. Kaya di mo mapigil kasi do mo alam kung saan. (If you know how much water is being stolen that means you can prevent it. But you can’t because you don’t know where it is). So by definition, pilferage, you don’t know.”

But Yves Bories, vice-chairman of Maynilad's management committee, says it would not matter which of the two—leaks or theft—is the more rampant problem. “Whatever the figures, the action plan is still the same. You translate one kind of loss to another. You repair leaks, then there is more water to steal. All causes are linked together,” he insists.

Michel Versmerch, NRW specialist at Maynilad, points out that impunity, the absence of punishment, is what makes water thieves commit the crimes. “When there is impunity, it could spread out all over.” Maynilad officials promise to prosecute at least one big fish among water thieves to show the rest they mean business.

A parallel move is being undertaken against corrupt Maynilad employees. At least five employees have been dismissed from the service, although not all cases were related to complicity in water theft.

Both Maynilad and Manila Water are also upgrading their systems to detect water theft without having to go through the process of securing excavation permits from concerned government agencies. One of these measures is the replacement of water meters.

Both concessionaires are also strengthening the territorial units which directly oversee water distribution. The concessionaires have divided their zones into business areas to closely monitor the inflow and distribution of water. Technical measures have been instituted to allow concessionaires to compare actual consumption with the users’ requirements, especially those using huge volumes of water.