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Regulator to renegotiate Metro Manila water deals

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THE ADMINISTRATOR of the Metropolitan Waterworks and Sewerage System (MWSS) said on Friday that it had given the country’s two largest water concessionaires a chance to renegotiate new terms of their contract with the government, ending speculation on their fate while clarifying issues that have arisen since Dec. 3.

In a statement, MWSS Administrator Emmanuel B. Salamat said his office had been directed to discuss with Manila Water Company, Inc. and Maynilad Water Services, Inc. to remove the supposed “illegal and onerous provisions” of their contract.

“MWSS has been expressly directed to renegotiate the Concession Agreements with Manila Water and Maynilad in order to remove the illegal and onerous provisions of the same as determined by the Department of Justice, as well as to include such other provisions that are beneficial to the consumers and the entire nation,” he said.

Mr. Salamat said events and developments in recent weeks on the actions of MWSS through its board of trustees, and the pronouncements made by President Rodrigo R. Duterte and other government agencies and officials “have resulted in numerous, and at times, inaccurate speculations.”

He said the 25-year concession agreements spanning 1997-2022 with Maynilad and Manila Water “are still valid and subsisting contracts.”

He said the MWSS board resolution dated Dec. 9, 2019 only revoked the previous resolution dated April 16, 2009 involving the extension period from 2022 to 2037 of Manila Water’s concession.

The Dec. 9 resolution also revoked another board resolution dated Sept. 10, 2009 on the extension of Maynilad’s concession for the same period.

“This action of the Board did not result in the rescission or outright cancellation of the said contracts, which requires a separate and distinct act to be legally effective. As such, the government through the MWSS is giving the two Concessionaires the opportunity to renegotiate and agree on the new terms of the Concession Agreement,” he said.

He said MWSS “acknowledges the cooperation showed by both concessionaires not only in expressly declaring that they would no longer collect or enforce the recent arbitral awards but also in their expressed willingness to renegotiate the inequitable provisions of the Concession Agreement.”

“In view thereof, MWSS and the Concessionaires will exert all necessary efforts to comply with the directive of the President to execute a new water concession agreement after 2022 which is currently being drafted by the Department of Justice.

He said MWSS is “fully engaged” in ensuring the performance of its mandates under Republic Act No. 6234, as well as “to achieve the purpose for, and the intention behind, the directives of the President.”

“It is committed to materially contribute to the satisfactory resolution of the various issues for all the stakeholders,” he said.

He said the continuity of the water sector public-private partnership “depends on strong communication channels and handholding engagement so that the basic access to water and wastewater services will not be jeopardized, which includes fully addressing and accomplishing the urgent call for new water and sewerage infrastructure projects.”

Despite the clarification, share prices of listed companies concerned continued to weaken: Manila Water by four percent to P7.44 apiece (60.4% down from P18.80 last Dec. 3); Metro Pacific Investments Corp. (which owns more than half of Maynilad) by 4.12% to P3.26% (25.7% down from P4.39 last Dec. 3); and DMCI Holdings, Inc. (which owns a fourth of Maynilad) by 1.39% to P6.38 each (1.8% down from P6.50 last Dec. 3).

Metro Pacific is one of three Philippine subsidiaries of Hong Kong’s First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains an interest in BusinessWorld through the Philippine Star Group. — Victor V. Saulon

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