Eligibility for perks latest wrinkle in water suppliers’ contract saga
THE water companies supplying Metro Manila will need to firm up their concession contract extensions before they are eligible for investment incentives, Trade Secretary and Board of Investments chairman Ramon M. Lopez said.
The two concession holders, Manila Water Co., Inc. and Maynilad Water Services, Inc., are currently involved in a contentious contract review process amid government claims that their privatization deals contain “onerous” provisions. The two firms also obtained extensions to their original concession agreements, which were due to expire in 2022, but the extensions are now subject to renegotiation also to remove onerous provisions.
Mr. Lopez told reporters at a media event Friday: “Of course ngayon, may consciousness na, may awareness na may issue ‘yung contract — I’m sure i–re-require ng government in general kailangan nasasaayos ‘yung contract. (Now that there is an awareness of the issues with the contracts, I’m sure government will require them to modify the contract),” he said.
He said the two water firms may be considered for incentives under the assumption that their contracts have been revised.
“We won’t give incentives the way it is right now.”
The President said earlier this month that the water providers enjoy “onerous” provisions in their deals, such as an undertaking that the government not interfere in the rate-setting process, and the ability to pass on the cost of income taxes to consumers.
The water industry’s regulator, the Metropolitan Waterworks and Sewerage System, said Friday said that it gave the two water companies a chance to renegotiate their contracts, and initiated discussion with the firms to remove the criticized provisions.
The Board of Investments had granted additional and extended income tax holidays (ITH) to Maynilad and Manila Water for new investment projects.
Mr. Lopez said it is not the BoI’s function to examine the companies’ contracts while assessing their eligibility for incentives granted in the past.
“Hindi kami involved sa contract. ‘Yung project ang tinitingnan namin. (We’re not involved in the contract. We look at the project),” he said.
Mr. Lopez added that the concerns surrounding the water companies are not likely to impact investor confidence, noting that not all government contracts have provisions similar to those flagged in the water companies’ contracts. — Jenina P. Ibañez
