ADB to help in drafting new water contracts, says Justice secretary

THE Asian Development Bank (ADB) will help as consultants in the drafting of the new contracts of Metro Manila’s water concessionaires, Justice Secretary Menardo I. Guevarra said.

He said Finance Secretary Carlos G. Dominguez III had informed him that his team would engage consultants from the ADB to revise the contracts, which President Rodrigo R. Duterte previously said contain “onerous provisions.”

He said the Finance department would probably discuss in the meeting in Malacañang on Wednesday the involvement of the Manila-based regional bank.

“I presume that one of the matters that we are going to take up mamaya (later, Jan. 15) is the engagement of the ADB consultants for the purpose of guiding the government side in the matter of revision economic and financial terms of the water concession agreement,” he said in a news forum.

Mr. Duterte said last week that the government would offer new contracts to Manila Water Co., Inc. and Maynilad Water Services, Inc. If rejected by the concessionaires, he said he would push for the takeover by the state of water distribution services. He also threatened to file criminal charges against them.

Late last year, Mr. Guevarra said his department had found onerous provisions in the contracts forged by the water concessionaires with state-led Metropolitan Waterworks and Sewerage System. He cited a provision that calls for non-interference of the government in rate-setting and indemnity if it interfered.

While legal and constitutional issues are being ironed out, the Justice secretary said he would wait for the input of the Finance department on the revised contracts.

“After all in the previous contracts, the Department of Finance was heavily involved. In the same manner sila rin ’yung mai-involve (they will be involved) in the negotiation with respect to the financial terms and economic terms for example the water rate setting mechanism, ano ’yung (what) factors na dapat i-consider dyan (should be considered), the inflation rate, exchange rate what expenditure can be validly included, what cannot be, taxes, and so forth and so on,” he said in the forum.

He also said he does not see the government sitting down with the concessionaires “anytime soon,” saying the whole process could take up to six months.

The department also said the extension of the 1997 contract until 2037, 12 to 13 years before its initial expiration in 2022 is irregular.

The President also said the concessionaires committed economic sabotage following the indemnity award won by them in an arbitration court.

Manila Water disclosed last year that an arbitration court ruled in their favor, ordering the government to indemnify them P7.39 billion for the losses it suffered.

A Singapore court last year also upheld Maynilad’s P3.4 billion indemnity.

Both concessionaires said that they would not collect the award in the arbitral ruling.