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Honor water deals, groups urge gov’t

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Metro Manila’s two water concession firms have yet to recover some P105 billion in costs spent over the last decade and a half, yet some regulators want to change the rules—and these firms’ ability to recover their investments—midway through the game.

Given this predicament, four major business groups yesterday warned that unilateral moves to modify or abrogate the agreements of Manila Water Co. and Maynilad Water Services Inc. would “undermine faith” in the sanctity of contracts between government and private investors.

In a joint statement, the Employers Confederation of the Philippines (Ecop), the Foundation for Economic Freedom (FEF), the Management Association of the Philippines (MAP) and the Philippine Chamber of Commerce and Industry (PCCI) scored the “reckless statements” and calls for unilateral changes, even abrogation of contracts, made by various parties and even government agents whose responsibility was to deliver the obligations under those contracts.

“Such statements, if accepted, could reinforce perceptions that there are risks to investing under the Philippine public-private partnership (PPP) program—something we do not believe the government intends. We caution against actions that undermine faith in government’s seriousness of commitment to its own flagship PPP program,” the groups stressed.

Manila Water (controlled by the Ayala group) and Maynilad (under the PLDT group) have invested a combined P105 billion to improve water service facilities in Metro Manila’s east and west concession zones.

Company sources disclosed that Manila Water was set to start recording positive cash flows on its investments only by 2018, while Maynilad would do so by 2017. Their concession agreements run until 2022.

In its statement, the business groups pointed out that the Manila Water and Maynilad deals were some of the most successful examples of PPP projects, the model for which has even been replicated overseas. And under this PPP program, investors and financiers are asked to commit huge sums of money on projects with long recovery periods, 20 years or longer, on the promise that the government will honor its contract obligations and will do so with consistency and fairness.

“We note that the 16-year-old Philippine Water PPP has contributed much to improve public welfare by having more than doubled the number of customers served, provided a 24-hour water service availability level that meets health standards, while addressing the needs of millions in the poor communities. None of this was available before,” the statement read.

“The improvements in service delivery came after the two concessionaires poured in a combined P105 billion in investments to expand and upgrade the water and sewage network, achieved without adding to government’s fiscal burden or public debt exposure,” the groups said.

“What’s a pity is that this successful, internationally recognized model PPP has not been replicated outside Metro Manila where the water situation remains at woeful pre-privatization MWSS (Metropolitan Waterworks and Sewerage System) standards. Poor water and sanitation pose significant health risks to millions of people, while a well-run utility creates much positive benefit to its customers, and to the environment,” the groups said.

The gains made under the PPP program with the MWSS must not be put at risk. Rather, these gains ought to be imitated elsewhere across the country through similar PPP arrangements so that the UN Millennium Development Goal of universal access to potable water could be achieved, the groups further said.

“We, therefore, urge Philippine authorities to faithfully adhere to the terms of the concession agreements, including following the provisions on dispute settlement that call for international arbitration in the event of differences. Demands for tariff adjustments need to be framed strictly within the agreements, and be mindful of the public’s need,” they added.


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Tags: Business , Government , Investments , water concession firms

  • eight_log

    To Manila Water and Maynilad inclusive growth is to fleece everybody even those receiving dole out from the government for their very own growth!!!! And to further compound their profits, they make the vat-paying consumers pay their corporate tax … IF THIS IS NOT IMMORAL I DON’T KNOW WHAT MORALITY IS!!!!

  • Porky Caberoy

    I was so relieved when I heard that Maynilad would be installing new pipes in my hometown of Imus. Presently, we’re using a deep well, but our pump is all the time breaking down, and when it works, water pressure is often a trickle.

    Now we have these – people – who want water to be distributed by the government?! I wish they could live where I am now, enjoying the novelty of waking before daybreak just so I can fill our drum with the day’s water supply, or driving to Metro Manila to beg water from relatives.

    Particularly galling is that response from a certain ignoramus who shall remain nameless who is a master at dreaming up cute nicknames for people more intelligent than s/he, but offering nothing in the way of solutions. The whole lot of them should be shipped off to North Korea so they can experience their ‘people’s paradise’.

    News flash, Einsteins at IBON, WPN and all the other Red fronts: Yelling or endless repetition isn’t going to make your argument more convincing. The P500M new pipe project is what convinces me. Can you match that?

    • eight_log

      P500M … 20% of your corporate tax paid by the consumers???? THAT IS YOUR CAPEX PAID FOR BY THE CONSUMERS!!!!

  • Mary Anne Celestino

    Well, isn’t this a surprise? The only dissenting voice presents the old ‘basta mayaman, masamang tao’ polemic. This fellow should write for teleseryes where the rich characters are invariably the villains.

    Note the trucated phrases, something right out of the painted red banners they’re always carrying. Perhaps I was expecting too much for these groups to present a plausible argument. But it’s all insults. No logic, no data, no sense.

    Their strategy is simple: Demand nationalization, which will lead to deteriorating service and widespread dissatisfaction. The government gets unseated, and they move in, with every industry pre-nationalized neatly for them to feast on.

    Oddly, while they demand nationalization for cheaper water, they cannot convincingly guarantee that efficient water service will continue.

    PNoy tells us that our Public Private Ownership suffers from lack of funds and know-how. That would have been the case in a nationalized industry, but PPP would enable the private partner to inject the needed resources if the public arm falls short.

    Mr. President, your administration is enjoying the peace brought on by efficient water service. This will surely add to the inclusive growth you mentioned, but giving in to the noisy and illogical minority claiming to speak for the majority will just destroy what you have worked so hard to win.

  • joboni96

    Employers Confederation of the Philippines (Ecop), the Foundation for Economic Freedom (FEF), the Management Association of the Philippines (MAP) and the Philippine Chamber of Commerce and Industry (PCCI)

    ito ang mga yumayaman
    sa kayamanan nating mga pilipino

    mga dayuhan, intsik switik, at collaborators
    sipain na mga ito

    mga walang perang umaasa lang sa utang
    sa pera nating mga pilipino sa bangko

  • jaketajonera

    I also listened to PNoy speak about INCLUSIVE GROWTH at yesterday’s SONA. In the Philippine context, that is only possible under private partnership. Interestingly on the other side of the fence yesterday, were the leftists who were calling for the opposite “NATIONALIZATION of power and water.” This is their agenda and has been their agenda ever since the founding of the Communist Party-National Democratic Front in the PH in the Sixties. This model (State run enterprises) has failed everywhere on the planet (Soviet Union disintegrated, and China well, has sold out its Maoist ideology so as to let Capitalism to the hard work of creating jobs and feeding a Billion people. Well there still is North Korea.

  • jaketajonera

    You enjoy safe clean water 24×7 from your tap. People forget how BAD our water situation was before privatization such that it was even difficult to find a clean toilet in Manila through the 80s and 90s. Actually the complaints against Manila Water and Maynilad are well ABSURD. But when you look at who’s complaining, you’ll see its the usual suspects — radical leftists who try so hard to agitate the people (oh they’ve been trying since the 60s). I wouldnt listen to them. Nobody does. Oh except MWSS’s Chief Regulator Caparas, who obviously doesnt understand business or the dyanmics of a public utility under privatization.

  • eight_log

    The gov’t to honor watered deals???? Perhaps if it passes thru an RO element!!!!!



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