MWSS revokes water deals’ extension reso
THE Metropolitan Waterworks and Sewerage System (MWSS) on Tuesday confirmed that it has revoked the resolution extending by 15 years the 1997 concession agreements with Maynilad Water Services Inc. and Manila Water Co.
At the continuation of the joint hearing of the House Committee on Good Government and Public Authority, House Committee on Public Accounts, MWSS Deputy Administrator for Engineering Leonor Cleofas told lawmakers the decision to revoke the board resolution, adopted in 2008, was reached last December 5.
The 2008 board resolution sought to extend the concession agreements with the water companies until 2037. The 25year concession agreements of the two water firms are set to expire in 2022.
“It was on the agenda that the board tackle the resolution on the approval of the extension of the concession agreement,” Cleofas said.
“That was brought about by the directive of the President tackled in the Cabinet meeting; they are now revoking the board resolution adopted in 2008,” Cleofas added.
The cancellation of the resolution was confimed by MWSS a day after concessionaires Manila
Water and Maynilad said they will no longer ask the government to pay a total of P10.79 billion in arbitral awards given by the Permanent Court of Arbitration in Singapore, covering their losses arising from government’s refusal to allow tariff hikes.
The two companies’ top officials, meanwhile, raised serious concern over the unilateral revocation of the resolution extension, with one executive hinting at possible rate hikes as the huge multibillion investments they
made would have to be recouped in a much shorter period.
Not enough
CleOfAs admitted, meanwhile, that the current resources of MWss are not enough to manage the water resources being provided by the Maynilad and Manila Water.
“We can’t handle [the water resources currently provided by the two concessionaires] with our existing resources,” she added.
Also, MWss Deputy Administrator Chris Chuegan said that if contracts are canceled, new water firms may now come in.
“However, it is not clear if water prices will increase after the contracts end. It is possible to [conduct] rebidding or another bidding wherein new operators may come in,” Chuegan added.
According to the Department of Justice (DOJ), one of the onerous provisions they found from reviewing the 1997 concession agreements is the premature extension of these contracts until 2037.
Manila Water is a subsidiary of Ayala Corp. while businessman Manuel V. Pangilinan’s Metro Pacific Investments Corp. owns a controlling stake in Maynilad.
2 firms concerned
DurInG the hearing, Maynilad President and CeO ramoncito fernandez and Manila Water board member Antonino Aquino said they received the decision of the MWss on Wednesday.
“It is with very grave concern that we view this action. We believe it’s not proper to unilaterally revoke the agreement,” fernandez said.
for his part, Aquino said the water firm has drafted its spending plan based on the extended concession agreement.
Aquino added the cancellation of concession agreement may affect the “recovery period” of Manila Water.
“We presume that all of our investments will be recovered for that extended period of time. The longer our recovery period, the lower the tariff will be,” he said.
earlier, President Duterte said he is keen on meeting officials from Manila Water and Maynilad, as well as the government lawyers who were behind the 1997 water concession agreements, which the DOJ described as “onerous.”
The Chief executive has also reiterated his threat that those behind the government contracts with the water concessionaires are liable for “economic plunder.” Prior to this, Duterte accused them of committing economic sabotage.
The President has been lambasting the water concessionaires after the PCA in singapore ordered Manila to pay east zone concessionaire Manila Water P7.39 billion for the nonimplementation of water-rate increases that occurred prior to his presidency. The PCA had also ruled on a similar case filed by west zone concessionaire Maynilad Water services Inc., ordering the state to pay P3.4 billion for Maynilad’s losses from March 2015 to August 2016.
Duterte to read letters PresIDenT Duterte, meanwhile, will be publicly reading the letters of Maynilad and Manila Water before the public, Malacanang announced on Wednesday.
Presidential spokesman and Chief Presidential legal Counsel salvador s. Panelo said this a day after the President threatened anew to take over the operations of the water concessionaire if he will not be satisfied after hearing the side of the water firms.
“The Chief executive will read the letters of Maynilad and Manila Water before the public for transparency and to show that all the steps being undertaken by the government in resolving this issue with the two Metro Manila water concessionaires are aboveboard and legitimate,” Panelo said.
According to Malacañang, the separate letters of Maynilad and Manila Water basically state that they are heeding the call of the President and are willing to revisit the concession agreements for revisions of the onerous provisions of the government with water firms. Moreover, the water concessionaires also said they will no longer pursue their combined P11-billion claim against the government.
While there is no definite date when the President will be reading the letters publicly, the Palace said the Chief executive will evaluate the development, as he will study the practical and legal consequences before making any decision on what measure to undertake next.
“PrrD wants to speak first with all the lawyers involved in the preparation, negotiation and drafting of the present concession agreements and determine the reason why they allowed the incorporation of onerous provisions,” he said.
“The filipino people have just been protected from paying a total amount of at least P10.8 billion, an obligation which has no legal basis, to private entities. These companies not only have inefficiently delivered water to the households but exacted unconscionable amounts from the taxpayers,” he added.