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Water firms waiving P10.8-billion award

Updated @ 2:56 a.m., Dec. 11, 2019

MANILA, Philippines — Facing threats of imprisonment, charges of economic sabotage and even expropriation from President Rodrigo Duterte, officials of the country’s two biggest water concessionaires have finally backed down.

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On Tuesday, they said they would no longer seek to collect from the government close to P11 billion that an international arbitration court had awarded to them for foregone revenue from higher rates that they were unable to implement.

Manila Water and Maynilad executives also said at a hearing in the House of Representatives that they were open to renegotiating the supposed “onerous” provisions of their water concession agreements with the government to distribute water in Metro Manila and Cavite and Rizal provinces.

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Reading from separate statements, Manila Water president Jose Rene Almendras and Maynilad president Ramoncito Fernandez said they were ready to cooperate with the government in striking a new deal, without the “onerous” provisions.

The House committees on good government and public accounts on Tuesday held their first hearing on the 1997 water concession agreements, days after Duterte lashed out at the two water firms for “economic plunder.”

The Singapore-based Permanent Court of Arbitration ordered the Philippine government last month to pay Manila Water P7.4 billion from “actual losses” for the refusal of the regulator, Metropolitan Waterworks and Sewerage System (MWSS), to allow the water concessionaire to raise water rates over the past several years.

Maynilad won its own case in 2017 in the arbitration court, which directed the government to pay it P3.4 billion.

‘Gracious manifestation’

The firms invoked a stipulation in their contracts that barred the government from interfering in the setting of rates, one of the provisions that  Duterte said were disadvantageous to the government and public.

“This is a very positive development,”  Justice Secretary Menardo Guevarra said of the firms’ new position.

“Although the President has said that the government will not pay these arbitral awards, at least during his term anyway, this gracious manifestation on the part of the water concessionaires nonetheless removes a potential liability from the books of account of the government,” he added.

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Habeas corpus

Guevarra, however, stressed that the government was more concerned about removing the lopsided provisions in the concession agreements.

The issue of paying the arbitral award, he said, was “not as important as ensuring that disputes arising from burdensome provisions of the water concession agreements will never happen again in the future.”

Even as he was already aware of the water firms dropping their compensation claims, Duterte is still bent on pursuing action against Manila Water and Maynilad.

On Tuesday, the President said he might resort to taking over water distribution and treatment operations in Metro Manila should he be unsatisfied with the firms’ explanation of the contracts.

He said he would even suspend the writ of habeas corpus to compel the owners of the water firms and government lawyers who crafted the contracts to talk to him.

Defer rate increases

Anakalusugan Rep. Mike Defensor echoed the President’s statement in wanting to nullify the water concession contracts.

“[It is the duty of Congress now to] give the ammunition to the executive to process all the provisions and look into and strike a compromise with the concessionaires,” he said.

In addition to no longer pursuing its collection of the P7.4 billion arbitral award, Manila Water is willing to defer rate increases scheduled for next month, according to Almendras. It will also cooperate with the government for a renegotiation of some provisions of the agreement that the Department of Justice has questioned, he said.

“We are complying with the orders President Duterte to review some provisions of the concession agreement,” Almendras said.

Accra law office

Fernandez said the company was also willing to sit down with the government in delaying the water rate increase previously approved by the MWSS.

The House committee will invite former officials of the MWSS and the Office of the Solicitor General, as well as lawyers of the Angara Abello Concepcion Regala and Cruz (Accra) law office, who reportedly stood for the government in the failed arbitration case, and were supposedly responsible for the “onerous” provisions in the concession agreements.

The MWSS, meanwhile, has asked Maynilad and Manila Water to submit comments on the agreements.

Manila Water “has received a letter from the administrator of the [MWSS, Emmanuel B. Salamat], asking the company to submit its comments and positions on certain provisions of the concession agreements entered into by the MWSS with the company and with Maynilad,” the Ayala group subsidiary said in a one-paragraph disclosure to the Philippine Stock Exchange.

Bagong Alyansang Makabayan (Bayan) welcomed reports that the two concessionaires were no longer seeking indemnification from the government.

“We [also] welcome reports that they will not implement the approved P2 per cubic meter water rate hike in January 2020,” Bayan Secretary-General Renato M. Reyes Jr. said in a phone interview.

Based on data from the MWSS Regulatory Office, Maynilad is supposed to raise its basic charge by P1.95 per cubic meter and Manila Water P2 per cubic meter effective Jan.1.

Bayan members on Monday filed in the MWSS a petition for the suspension of water rate increases.

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Edited by KGA/atm/pdi
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TAGS: arbitration, concession agreement, Manila Water, Maynilad, water rate hike, water services
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