METRO MANILA’S water service concessionaires on Tuesday said they have decided not to increase rates in January, as otherwise scheduled, and not to pursue awards they won at international arbitration courts, a week after President Rodrigo R. Duterte said their concession deals disadvantaged the government.
Mr. Duterte has since been threatening to charge all those responsible for the deals — including former presidents if warranted — with economic sabotage.
On Tuesday, ABS-CBN News Channel also reported that the board of the Metropolitan Waterworks and Sewerage System (MWSS) has revoked its decision to extend the concession deals of both utilities. Justice Sec. Menardo I. Guevarra said on Dec. 3 that his 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.”
NO RATE HIKE IN JANUARY
“Ipinarating namin sa MWSS ang aming sulat noong ikatlo ng Disyembre ang aming hangarin na makipag ugnayan na magkasundo kung paano maaayos, maipatutupad ang pagpaliban sa nasabing naaprubahang taas-singil ng tubig (We wrote the Metropolitan Waterworks and Sewerage System on Dec. 3 to signify our intention to come to an agreement on how to postpone our approved increase in water tariff),” Manila Water Company, Inc. President and Chief Executive Officer (CEO) Jose Rene Gregory D. Almendras told lawmakers in a hearing at the House of Representatives.
Maynilad Water Services, Inc. President and CEO Ramoncito S. Fernandez said in the same hearing that the concessionaire was willing to defer its rate increase, although the company would first want to talk with MWSS because a deferment could have an implication on its service obligation. “Kami po ay bukas mag-delay, pumapayag po kaming mag-delay. Kailangan lang pag-usapan ’yung timing at ano ’yung mga provisions (We are open to delaying the rate increase. We just have to talk about the timing and provisions of the eventual increase),” Mr. Fernandez said.
In January 2020, Maynilad was scheduled to increase water rates by P1.95 per cubic meter (/cu.m.) while Manila Water was to raise its base tariff by P2/cu.m. as part of phased adjustments for the fourth rate rebasing period.
ARBITRAL AWARD WAIVED
Manila Water also said it would no longer pursue the P7.39 billion it won in an arbitration case against the government.
Mr. Almendras said its board of directors had approved a resolution waiving its claim arising from the arbitral award in Singapore. “We will submit the board resolution of Manila Water to that effect,” he told lawmakers.
Mr. Almendras said the company would submit a written waiver as well as a written commitment that it would not collect the award at any time in the future.
In the same hearing, Maynilad said it was amenable to waiving the P3.4-billion award it won in a separate case against the government, which a Singapore court upheld in October last year.
The decision of the court issued on Sept. 4, 2018 had become final as of Oct. 4, 2018. This was after the court in July last year dismissed the application of the Republic of the Philippines to set aside the first partial award dated July 24, 2017.
“We are governed by the arbitral rules. We need to confer with the OSG (Office of the Solicitor General),” said Maynilad President and Chief Executive Officer Ramoncito S. Fernandez, explaining that the arbitral ruling requires the company and the government to be in agreement in their decision on the arbitral award.
The Justice department said last week that other onerous provisions of the water concession agreements included a “prohibition on government interference in rate-setting and the provision on indemnity for possible losses in the event of such government interference”.
Mr. Duterte has also railed against a provision that allows the water firms to include corporate income tax among charges they can pass on to their customers.
MWSS Vice-Chairman Emmanuel B. Salamat told lawmakers on Tuesday that the regulator has formed a technical working group to review the questioned provisions.
Prices of shares of listed companies involved have been falling daily since last week.
Manila Water’s share price fell 5.23% to P14.50 apiece from Monday, and was down more than a fifth from P18.80 each on Dec. 3.
That of DMCI Holdings, Inc., which owns a fourth of Maynilad, fell by 1.007% to P5.90 apiece and was down 9.23% from P6.50 each last Dec. 3.
Shares of Metro Pacific Investments Corp., which owns more than half of Maynilad, ended four straight session days of falls by gaining 3.67% to end P3.67 apiece, even as the price was still 16.4% down from P4.39 on Dec. 3. — Victor V. Saulon and Genshen L. Espedido with G. M. Cortez