Regulatory Realities and Water Industry Mentorship: An Exchange with John Macabinta, Metro Cebu Water District (MCWD), Philippines

[00:00:00] Piers Clark: Welcome to the Exec Exchange 15-minute podcast, in which a leader from the water sector shares a story to inspire, inform, and educate other water sector leaders from around the globe. My name is Piers Clark and my guest today is John Macabinta, a manager at the Metro Cebu Water District, or MCWD in the Philippines.
[00:00:19] Piers Clark: John, wonderful to have you join me.
[00:00:22] John Macabinta: Thank you Piers for having me here.
[00:00:24] Piers Clark: Now, we start by jumping straight into learning a little bit about your background. So, take me back. What did you study at university? How did you get into the role that you are in today?
[00:00:34] John Macabinta: I started as an electrical engineer in this power corporation. We are a constructor of a power plant, and then I get into Metro Cebu Water District just a few years after that.
[00:00:46] John Macabinta: And I've been with the company for 23 years now. And so far, they have given me this role that allow me to be involved with different water utilities and different sectors in the water industry.
[00:00:59] Piers Clark: Maybe you'll be there for another 23 years, let's see. Now let's talk about what is MCWD? Where is it and what does it do? Who does it serve?
[00:01:08] John Macabinta: MCWD is a government owned and controlled corporation. We have been in this service for 50 years now, and we've been serving the metropolitan area of Cebu, it's down south of Metro Manila, and we are serving eight local government units. And four of these are cities and four municipalities. We are now serving roughly 210,000 service connection and we are producing 300,000 cubic meters of water per day. We're one of the biggest water district here in the Philippines as well.
[00:01:41] Piers Clark: 200,000 connections that's what half a million people served?
[00:01:45] John Macabinta: Yeah. We are serving roughly half a million people here in Metropolitan Cebu.
[00:01:50] Piers Clark: Wonderful. Now, there's a few things I want us to talk about today, but one of the key ones is that you have been a mentor in the Asian Development Banks program for mentors and mentees.
[00:02:02] Piers Clark: The twinning program, the thing that's called WOP4R, Water Operators Partners for Resilience You have been a mentor in that program working with a water district in Nepal. Can you just talk me through some of the detail of that? Who the mentee is and the sort of services that you've been providing to them?
[00:02:20] John Macabinta: We are the mentor for this WOP4R project and Kawasoti Water Utilities Committee or KWUC is our mentee and we were engaged with this since October last year. We signed a formal memorandum of understanding to pursue certain aspect of improvements in their water management, namely, NRW management and developing a GIS map for them, as well as providing them with a business plan for their operations.
[00:02:50] John Macabinta: So, we just recently came back from that exchange visit and we have been glad that they are so cooperative. In fact, they have hired two additional personal, just purposely for this project. It has been great thus far and we're looking forward for this project to be a success.
[00:03:07] Piers Clark: Okay. So, I get the impression that Cebu is a cosmopolitan sort of city that you're serving. In Katmandu, which is where your mentee is based, or it's near to Katmandu, it's a very different dynamic. What are the similarities? What are the differences between the two organizations?
[00:03:25] John Macabinta: We have been through increasing non-revenue water and they have been as well, one of the largest water utility in their municipality. There's really a big gap in terms of number of service connection. They have about 9,000 but considering that they have been there for about 26 years as well, we want to show them that there are still area that they can grow.
[00:03:47] Piers Clark: They're an order of magnitude smaller than you, you said they've got 9,000 connections compared to your 200,000 and it's all around non-revenue water. Okay so, you've been there for your first visit. This is relatively early stages in the twinning program and so you are still, I assume, scoping out exactly what value you are going to bring.
[00:04:04] Piers Clark: Has it become clear where you can contribute knowledge and expertise that will make a tangible difference?
[00:04:11] John Macabinta: Yes, we have already identified three focus areas. One of this is pressure management and as I mentioned earlier, developing their GIS and we are training the people that they have. We are making as well a business plan for them for the next five years of their operation. So, in a sense, we are already in the middle of the project right now, and they have been engaging with us making sure that this program is going as expected.
[00:04:38] Piers Clark: Wonderful. Do you think there'll be any learning that you will take back into MCWD? I get that you are really the mentor, feeding the mentee. Is there any flow back of learning that you think will come?
[00:04:50] John Macabinta: Yeah, if you are a mentee, it doesn't mean that you're the only one teaching these people. We gain so much as well from them, particularly in the way that they are crafting their policies in terms of servicing their people. There are some areas as well that we have learned, in terms of gaining some revenue outside of their water tariff. They have these ideas as well that we could use in our water district. So, again, this flow of information and knowledge is not a one way street, but we as well are taking some knowledge away from them.
[00:05:23] Piers Clark: That's very good to know. Actually, we will be doing a similar discussion with the folks from Nepal so we'll get that perspective as well.
[00:05:30] Piers Clark: Now, I want to move us on to a different topic. One of the things I know that you are particularly keen on is around the regulatory environment and what works and what doesn't work inside that and how that impacts the wider infrastructure that we have in the water space.
[00:05:44] Piers Clark: Let me start by asking you an open question. How do you feel the regulatory environment is working at the moment? If you were giving it a mark out of 10, what mark would you give it?
[00:05:54] John Macabinta: At this current state, I say it would be five since the regulatory policies, in a sense is outdated. We must amend some of the aspects of the law or the mandate that we have. It is very important that we integrate developments and certain changes in the environment and in the political climate as well. We should make the policy stronger for the water district to operate with autonomy, with the real autonomy.
[00:06:22] John Macabinta: So, my thinking is really to make an amendment on the certain areas of the law that govern a water utility here in the Philippines.
[00:06:32] Piers Clark: And just to be clear, we are talking specifically about the regulatory environment in the Philippines, but of course the reason I ask you the question is because actually around the world we've got challenges with the regulatory environment that utilities are working in. Now, what's that law that you would like specifically like to see changed in the Philippines?
[00:06:50] John Macabinta: You know what way back in 2023, I saw you in Singapore International Water Week. You were the facilitator of that round table. And one thing that I've learned from that engagement is that we, water utilities have very similar challenges and we have as well, very similar opportunities.
[00:07:08] John Macabinta: The way I understand this is that first world countries, they are supported by the national government in terms of financing for infrastructure development and improvement in their system.
[00:07:21] John Macabinta: We, here in the Philippines, we are left to our own selves. Our law tells us that you have to source your own funding. You generate your own revenue, and with that you have to flow it back to the investment for infrastructure. And the problem with that is that when we apply for water tariff adjustment, we are taking so long for us to be approved.
[00:07:45] John Macabinta: And if ever we are approved, it's not that much as we needed for our projects to be properly implemented. So I think, in terms of regulation, there must be a support from the national government, from the regulator to fund as well or provide grant or subsidy for our infrastructure projects so that we can sustainably operate our system.
[00:08:05] Piers Clark: I love it and at the risk of repeating what you've just said, let me paraphrase that for you. So, in the Philippines, you, the water district have the absolute full and complete responsibility for finding the funding that's necessary to put in place the infrastructure and the services to provide water and wastewater services to the communities you serve.
[00:08:25] Piers Clark: You are very happy doing that. The flip side to that of course, is when tariffs need to go up, you need there to be political will to actually push those tariffs up. And you've got politicians who keep the water tariffs at un economically sustainable low levels , which means that your business model, the very thing that you raise the money for to deliver those services is now not sustainable any longer, and that you are caught in this terrible dichotomy of raising money to deliver services, yet not having any politicians raise the tariff to enable the business model to work.
[00:08:58] Piers Clark: You can probably only say, "Yes Piers, you are roughly right on that", but what's your comment on that little summary of the position we're in? Have I got it right?
[00:09:06] John Macabinta: You hit the nail on the head, Piers, and it's the exact thing that is happening here in the Philippines. And that's the one thing that we want to be changed here.
[00:09:15] John Macabinta: If you want us to fund our own infrastructure projects, our operation, give us the real value for water. Now, that's the one thing I learned as well back here in Manila, in ADB, that we do not put the real value for water. We want to change the perspective of the politician, to see the real value for water that this is the real cost. It's not just we are increasing our tariff, we are providing a better service for everyone.
[00:09:41] John Macabinta: Hopefully, there are some amendments in our law that would create such an avenue for us to thrive.
[00:09:47] Piers Clark: John, your passion and your frustration and anger, if I might say so, is coming through I'm getting the sense of it. And whilst yes, obviously the regulatory issues are quite specific to the Philippine environment that we just talked about. That bigger question about how do we value water is a universal, global issue and we've got some other speakers who are going to talk specifically again on that topic of the value of water.
[00:10:10] Piers Clark: Now we're coming to the end of our time, and I do like to finish with a bit of a personal question. I like to know something that you wouldn't normally share. So John, my question to you slightly cheeky though it is, is tell me, when did you last cry?
[00:10:24] John Macabinta: So I was in Nepal as I've said, we've been there for 10 days and this last Sunday, our church here celebrated Father's day. And for the first time, my 14-year-old daughter sent me a message appreciating what I have done for the family, for her.
[00:10:40] John Macabinta: She appreciated how I drive her around every time. She appreciated that the jokes that I had, and she appreciated the help that I gave her when she studies her math. She told me that I'm her human calculator. So those kind of things, and it really touched me. For the first time, my daughter expressed this to me and it really touched my heart and I kind of had this teary eye experience, and it's kind of lonely out there in Nepal. You're out there working and doing these things and you have that message from your child. It's really touching.
[00:11:13] Piers Clark: I love that sharing that you've just given, it's so nice. And the bit I particularly took was that your daughter said she liked your jokes. So few daughters like their dad's jokes. That's gotta be a wonderful moment. Thank you for sharing.
[00:11:26] Piers Clark: You have been listening to the Exec Exchange with me, Piers Clark and my wonderful guest today has been John Macabinta from Metro Cebu Water District, or MCWD in the Philippines. I hope you can join us again next time.
[00:11:41] Piers Clark: Thank you.