Maynilad agrees to terms similar to Manila Water deal

MAYNILAD WATER Services, Inc., the supplier for Metro Manila’s west zone, has agreed to renegotiated concession terms similar to those accepted by Manila Water Co., Inc., Justice Secretary Menardo I. Guevarra said.

“The government review panel and Maynilad had a smooth and easy meeting yesterday (Monday). Except for a few matters pertaining to Maynilad’s business plan, JICA (Japan International Cooperation Agency) loans, and the public listing of shares, the parties are in agreement on the rest of the proposed new concession agreement with Maynilad, which takes off from a similar concession agreement with Manila Water,” Mr. Guevarra said in a mobile message Tuesday.

Maynilad Spokesperson Jennifer C. Rufo said she would not comment on the details of the deal until it is finalized.

“Once our talks have been concluded, details of the final agreement will be revealed. We hope you understand,” she said in a mobile message Tuesday.

Ms. Rufo said earlier that Maynilad is “eager to conclude the talks at the soonest possible time.”

Mr. Guevarra has pointed out that certain parts of the new Manila Water contract were considered non-negotiable in the Maynilad talks.

They include “the removal of the non-interference clause, the non-chargeability of corporate income tax to consumers’ water bills, no government guarantees for future debts, CoA (Commission on Audit) audit, and a more transparent governance mechanism,” Mr. Guevarra told reporters on April 19.

Ms. Rufo has said that Maynilad does not expect its deal to be identical to Manila Water’s “because Maynilad is differently situated compared to Manila Water.”

Maynilad is the water provider for 17 cities and municipalities in the West Zone of the Metropolitan Manila area, while Manila Water services 23 cities and municipalities in the East Zone.

Manila Water’s revised concession agreement with Metropolitan Waterworks and Sewerage System (MWSS), the government agency in charge of water privatization in Metro Manila, was finalized and signed on March 31.

A copy of the revised agreement with Manila Water was sent to Maynilad on April 18 to review.

Some of the notable changes in the revised agreement with Manila Water are the removal of the company’s ability to pass on corporate income tax to customers, the cancellation of foreign currency differential adjustments, the lowering of the inflation factor to two-thirds of the consumer price index adjustment, and caps on increases in standard rates for water and wastewater.

The original rate-rebasing mechanism of Manila Water under the original agreement was also retained, which means that the rates for the concessionaire’s water and sewerage services will be set at a level at which Manila Water can recover its expenditures plus a reasonable return.

Manila Water also agreed to a tariff freeze until Dec. 31, 2022 to assist poor customers and aid the country’s economic recovery after the coronavirus disease 2019 (COVID-19) pandemic.

In November, President Rodrigo R. Duterte tasked the Department of Justice (DoJ) to review the water deals, which he claimed contain “onerous” provisions.

Mr. Duterte’s directive was a response to an international arbitration court’s ruling that the Philippine government must pay Maynilad P3.4 billion and Manila Water P7.4 billion for losses incurred when the MWSS rejected their request for an increase in water rates.

The concession holders opted not to demand payment, and said they were open to review the terms of their contracts. — Bianca Angelica D. Añago