The government will tap consultants from the Manila-based Asian Development Bank to help in the revision of the economic and financial terms of the new concession agreement to be offered to water concessionaires Manila Water and Maynilad, Justice Secretary Menardo Guevarra said on Wednesday.
Guevarra said he was informed by Finance Secretary Carlos Dominguez III about the plan to engage the ADB consultants.
The Justice Secretary noted that the Department of Finance was heavily involved even in the crafting of previous contracts with the water concessionaires.
“In fact, they’re going to have a meeting this afternoon in Malacañang with the Department of Finance in the Office of the President and I assume that one of the matters that we are going to take up later is the engagement of the ADB consultants for the purpose of guiding the government side in the matter of revision of the economic and financial terms of the water concession agreement,” Guevarra told the Kapihan sa Manila Bay news forum.
Guevarra also revealed that it might take six months to finish the draft concession agreements and present it to the water concessionaires for comments.
“The whole process may last six months. That is a conservative estimate on my part . . . We’ll be sitting down with the water concessionaires, I know that they are waiting,” Guevarra said.
Nonetheless, Guevarra admitted that the legal and constitutional issues pertaining to the concession contracts have already been resolved by the DOJ.
In fact, Guevarra said the legal team is only waiting for the input of the DOF on economic terms such as water rate-setting mechanism, factors to be considered such as inflation rate and exchange rate, expenditures that can validly be included in the concession agreement and what can be and cannot be taxed.
The Department of Justice secretary earlier said the government was still open to discuss with Maynilad and Manila Water the proposed amendments on the concession contracts.
Guevarra pointed out that the government’s takeover or nationalization of water distribution as authorized under Sections 17 and 18, Article XII of the Philippine Constitution, is the government’s last option.
Earlier, President Rodrigo Duterte lambasted Manila Water and Maynilad threatened to file a case of economic sabotage against the two water firms due to the “onerous” 1997 contracts with the government.
Duterte made the remark after Guevarra disclosed that the Justice department found the extension of these contracts to 2037 irregular, considering that the extension was granted 12-13 years before the original expiration of the 25-year concession agreements in 2022.
The DOJ said among the provisions in the old contracts that should be struck down for being onerous include the prohibition on the government’s interference in the rate-setting mechanism of the two water firms and the Metropolitan Waterworks and Sewerage System.
