Water firms may also bid tax holidays goodbye

The Board of Investments (BOI) is now more cautious about giving tax breaks to the two embattled water concessionaires on the heels of President Duterte’s aggressive callouts.

BOI Chair and Trade Secretary Ramon Lopez said last week he was still open to giving Maynilad Water Services Inc. and Manila Water Co. Inc. tax breaks, only if their contracts with the government were renegotiated to the President’s liking. “Just in case the provisions are corrected and the [new investment] is a priority area, why not? Of course. The only [issue] here is if it’s a priority project, but that is under the assumption that their contracts are already okay,” he told reporters.

“We wont give incentive the way [things are] right now,” he added.

The fate of the water concessionaires is in question after Mr. Duterte accused the companies—run by two of the country’s largest conglomerates—of being onerous and disadvantageous to the public.

The pressure had forced Ayala’s Manila Water and Metro Pacific’s Maynilad to cave in, waiving about P11 billion in combined arbitral awards from their water tariff dispute with the government’s water regulator, the Metropolitan Waterworks and Sewerage System (MWSS).

The MWSS, following Mr. Duterte’s orders, canceled the 15-year extension of the water concessions that was approved in 2009 under the Arroyo administration. Without the extension, the 25-year water distribution contracts would lapse in 2022.

For years, the companies have benefited from income tax holidays approved by the BOI, records showed. “When they (BOI) took it up before, I think it was more of the project, the need to promote the project to happen, so I don’t know if the BOI was asked to review the contract,” Lopez, who was not yet part of the BOI board back then, said.

Prompted by a water crisis in the ’90s during the Ramos administration, the responsibility over managing the water supply in Metro Manila was given to the private sector.

Early this month, an irate President questioned the contracts, saying the two concessionaires failed to provide quality service to their customers. The statements triggered a stock rout of $2 billion in the past few days. INQ