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Maynilad, Manila waive P10-b award

Agree to review deals, defer rate increase

The two water concessionaires on Tuesday committed not to collect the P10.8 billion granted to them by the arbitral court in Singapore.

At a hearing conducted by the House of Representatives’ committee on government and public accounts, the Manila Water Company Inc. and Maynilad Water Services Inc. said they will comply with the wishes of the government and the President.

President Duterte earlier said he would not comply with the ruling of the Permanent Court of Arbitration in Singapore ordering the government to pay Manila Water P7.39 billion and Maynilad P3.4 billion for their respective losses after they were not allowed to raise water rates.

Manila Water president and CEO Jose Almendras said his company would no longer ask the government to pay the P7.39-billion arbitral award.

Almendras also declared that Manila Water has decided to work with the government “to look for solutions to the arbitral award,” adding that it is “more than willing” to discuss the onerous provisions in the concession agreement.

At the same time, Almendras said the Manila Water would defer its approved water rate increase in January 2020.

Maynilad president and CEO Ramoncito Fernandez said the water company made a similar position to comply with the President’s directive “not to pursue the historical arbitral award.”

He added the Maynilad will cooperate with the review of the concession agreement.

Similarly, Fernandez said the Maynilad is “open to delay” the water rate hike.

The Metropolitan Waterworks and Sewerage System approved Maynilad and Manila Water’s rate increase petition in 2018.

For Maynilad, the approved rate increase is P5.73 which will be applied on a staggered basis for five years or until 2022. Manila Water had been allowed a rate hike of P6.22 to P6.50.

Justice Secretary Menardo Guevarra said the decision of the two private concessionaires to no longer pursue the arbitral award was a welcome development, but said the review of their existing agreements would push through to remove their onerous provisions.

“This is a very positive development, although the President has said that the government will not pay these arbitral awards, at least during his term anyway, this gracious manifestation on the part of the water concessionaires nonetheless removes a potential liability from the books of account of the government,” Guevarra said.

However, the DOJ chief said what is most important to the government is removing the “burdensome” provisions in the water concession agreements.

On Monday, Guevarra said a composite team of lawyers from the DOJ, Office of the Solicitor General, Office of the Government Corporate Counsel and the Department of Finance are being formed to review the contracts.

Early this week, Guevarra said the DOJ has found a dozen provisions that were onerous and disadvantageous to the government and the consuming public in the 1997 water concession agreements of the Metropolitan Waterworks and Sewerage System with Maynilad and Manila Water.

“Most notable were the prohibition against government interference in rate-setting and the provision on indemnity for possible losses in the event of such government interference,” Guevarra said.

Guevarra said the DOJ also 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 concession agreement took effect in 1997 and covers a 25-year period, which ends in 2022.

A Memorandum of Agreement extended the concession agreement for another 15 years, to 2037.

On Tuesday, the President said he would expropriate water operations if he is not satisfied with the explanation of those behind the 1997 water concession agreement.

In a speech in Malacañang, the President reiterated that he would like to talk with government lawyers and executives of water concessionaires Maynilad and Manila Water over supposed “onerous provisions” in the contract.

“I would like to ask them: What the fuck did you do and screwed the country?” Duterte said.

“Now, if I am not satisfied, I will expropriate everything. I will take everything. File a case all you want. I only have two years in the office,” he added.

He also threatened to suspend the writ of habeas corpus to force the lawyers who are involved in the concession agreement to face him in the Palace.

Earlier in the day, Presidential Spokesman Salvador Panelo said the President will not spare anyone who is involved in the government agreement with Maynilad and Manila Water.

Even former Presidents Fidel Ramos and Gloria Macapagal-Arroyo might be sued by the Duterte administration if they are part of the “conspiracy” in the 1997 water deal, Panelo said.

“He said he will file economic sabotage [against] those involved...against all of them. Everybody that is involved in the drafting and approving of that concessionaire agreement,” Panelo said.

The 25-year water concession agreements were signed during the Ramos administration. Under the term of Arroyo, the deal was extended to 2037, long before its expiration in 2022.

President Duterte on Monday censured former Presidents Arroyo and Benigno Aquino III, saying they allowed the country’s Constitution to be bargained away over what he called “plunderous” agreements with the utility firms.

The Senate committee on public services chaired by Senator Grace Poe will conduct a hearing on proposed measures to establish a central water agency that would focus on water, sewerage and sanitation.

It will be jointly conducted by the committees on civil service, government reorganization and professional regulation, ways and means and finance.

“We need a lead agency whose ultimate responsibility would be the provision of adequate and safe water supply, not just for household and commercial needs, but for our farms,” Poe said.

“What we currently have is a fragmented regulatory framework for water that has limited powers, which has a significant impact on the delivery of water and sanitation services in the country,” she added. With Macon Ramos-Araneta

Topics: President Rodrigo Duterte , Permanent Court of Arbitration , Singapore , Manila Water Company Inc. , Maynilad Water Services Inc. , water concessionaires
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