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Maynilad may forego arbitration for clarity on tariffs

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PHILSTAR

MAYNILAD Water Services, Inc. said it is willing to drop its arbitration proceedings against the Philippine government in exchange for a tariff settlement that compensates it for lost revenue.

“I think we’re trying to settle that (because we also) don’t want to be in that situation with the government so I think that is being discussed with the MWSS (Metropolitan Waterworks and Sewerage System)… Assuming we come to terms on the tariff issue, then we’re more than willing to drop the arbitration case,” Manuel V. Pangilinan, Maynilad Chairman, told reporters in Muntinlupa on Monday.

The Singapore High Court ruled on Sept. 4, 2018, which was confirmed on Oct. 4, 2018, that the Philippine government should pay Maynilad P3.4 billion as an arbitral award, for the company’s foregone revenue due to the refusal of the MWSS to implement Maynilad’s tariff adjustment from 2013 to 2017, which includes the recovery of corporate income tax payments.

The Singapore High Court dismissed the Philippine government’s application to set aside the first partial award dated July 24, 2017 issued by a unanimous three-man arbitral tribunal in the arbitration between Maynilad and the Philippines. The Philippines filed an application to set aside the arbitral award on Feb. 13, 2018.

Aside from the dismissal of the application, the Singapore court ordered the Philippine government to pay Maynilad $40,000.

Under Maynilad’s concession agreement with the government, it may request tariff adjustments based on movements in the inflation rate, foreign exchange currency differentials, a rate rebasing process scheduled every five years and certain extraordinary events.




“Subject to agreement with the government on how we move forward on the tariff issue,” Mr. Pangilinan said, noting that the issue has been there for years, and that the company wants to settle on an agreed tariff structure.

“I think there’s been some arrangements with the government on that,” Mr. Pangilinan added.

Metro Pacific Investments Corp. (MPIC) owns 52.8% of Maynilad, while DMCI has a 25% indirect economic interest in the utility.

Meanwhile, Mr. Pangilinan said that his company is willing to comply with President Rodrigo R. Duterte’s call to the Office of the Solicitor General (OSG) and the Department of Justice (DoJ) for a review of government contracts with private firms.

“We welcome that review… we’ve indicated that to the President and we will cooperate in the review process,” Mr. Pangilinan said.

Justice Secretary Menardo I. Guevarra said in a text message that the department started reviewing Maynilad’s concession agreement, along with other priority government contracts such as the Chico River and Kaliwa Dam loan contracts, but “it may take time… We’ll make our recommendations upon completion of our study.”

“We have organized our teams in the DoJ to review certain priority government contracts. On top of the list is the Maynilad concession agreement, together with the Chico River and Kaliwa Dam loan contracts. We have started the review but this may take a little time. We’ll make our recommendations upon completion of our study.

MPIC, which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Reicelene Joy N. Ignacio, Vann Marlo M. Villegas