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Gov’t hints of changes to water service deals

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Field staff of Maynilad Water Services, Inc. check pipes in this 2015 official photo release. -- BW FILE PHOTO

CHANGES could be in the offing for contracts between Metro Manila’s water service concessionaires and the Metropolitan Waterworks and Sewerage System (MWSS), Justice Secretary Menardo I. Guevarra signaled on Tuesday.

Mr. Guevarra told reporters via Viber message that the contracts contained some provisions “onerous” for the government.

The review followed President Rodrigo R. Duterte’s order in April for the Department of Justice (DoJ) and the Office of the Solicitor General (OSG) to look into all government contracts with companies and other countries.

Mr. Guevarra had said then that “priority contracts for review include concession agreements on public utilities and foreign loan contracts,” adding that “target provisions are those perceived to be onerous, one-sided, disadvantageous to the government, and/or contrary to public order or public policy.”

“Upon instructions of the President, the DoJ reviewed the 1997 water concession agreements of the MWSS with Maynilad (Water Services, Inc.) and Manila Water Company (Inc.) and found a dozen provisions that were deemed onerous or disadvantageous to the government and the consuming public,” Mr. Guevarra said on Tuesday.

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




Last Friday, a Manila Water disclosure announed the ruling of the Permanent of Court of Arbitration in Singapore for the government to indemnify the company some P7.39 billion “for actual losses suffered by it” from June 1, 2015 to Nov. 22, 2019 “on account of the Republic’s breach of its obligations” in not implementing tariff increases.

The government was also ordered to pay 100% of the amount paid by Manila Water to the court and 85% of the company’s other claimed costs.

The OSG in a statement last Friday said the award to Manila Water “is not yet final and executory.”

“The OSG is studying all the remedies available to the Republic in assailing the Award,” it said.

In October last year, the Singapore High Court upheld the arbitral award of at least P3.4 billion to Maynilad for losses from March 11, 2015 to Aug. 31, 2016 due to the refusal of MWSS to implement Maynilad’s tariff adjustment for 2013 to 2017 which included recovery of corporate income tax payments.

“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,” Mr. Guevarra said on Tueday.

He said certain recommendations to the President were adopted by the Cabinet in its meeting last Monday and that “the president will make his public statement on this matter very soon.”

MWSS in October 2009 and April 2010 has approved the 15-year extension of the Concession Agreement of Manila Water and Maynilad, respectively, or until 2037, years before their 25-year contracts expire in 2022.

Presidential Spokesperson Salvador S. Panelo on Tuesday confirmed in a statement that Mr. Guevarra gave an update on his review of government contracts in Monday’s Cabinet meeting.

Manila Water declined to comment while Maynilad officials did not respond to requests for comment. — Vann Marlo M. Villegas

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