Water firms surrender

December 10, 2019

Maynilad and Manila Water give up billions of pesos claim against gov’t

THE two water concessionaires who were slammed by President Rodrigo Duterte blinked and will no longer force the government to pay them P7.4 billion which was decreed by an international arbitral court.

At yesterday’s joint hearing of the House committees on public accounts and good government, officials of Manila Water (MWC) and Maynilad said they decided to forgo the arbitral win against the government.

MWC President and CEO Jose Almendras said they will abide by what the government and the President want.

“Susunod po kami sa pamahalaan at sa Pangulo po,” Almendras told members of the panels.

Chairman of the House Committee on Public Accounts and Anakalusugan Rep. Mike Defensor questioned the two water companies about the arbitral cases they filed in 2015.

For its part, Maynilad CEO Ramoncito Fernandez said it  also decided to follow the President and give up its arbitral claim.

“We reiterate that we agree with what the President wants. We’ve agreed not to go after our historical arbitral award,” he said.

The Singapore-based Permanent Court of Arbitration had ruled that the Philippine government should pay the two companies with P7.4 billion  for the losses that the water concessionaires incurred after they were denied rate increases.

Also in the House hearing, the officials of the two water firms announced the deferment of the water rate increase that they intend to impose starting 2020.

Instead, the officials said they will cooperate with the government on the plan to review their concession agreements.

The Maynilad and Manila Water ran to the arbitral court after the government refused their demand for payment of P79 billion from 2015 to 2017 for lost revenues after the concessionaires were barred from raising tariffs. This is on top of the amounts that Manila Water paid to the PCA and 85 percent of other claimed costs.

The two  panels held the hearing after Cavite Rep. Elpidio Barzaga Jr. filed a resolution following President Duterte’s threat to scrap the concession agreements entered into by Manila Water and Maynilad with the Metropolitan Waterworks and Sewerage System (MWSS) in favor of a new one which he said would “really (be) favorable to public, to government.”

The  Manila Water has already informed MWSS of its willingness to temporarily suspend rate hike.

Likewise, Almendras said the MWCI and the MWSS have already begun tackling the provisions in the concession agreements that the President wants reviewed “and wants the negotiations expedited.”  

Earlier President Duterte expressed disappointment over the concession agreements which are not beneficial to the consumers.

The Department of Justice (DoJ) disclosed that there are at least 11 onerous provisions in the contracts with the two water companies.

The President also chided the two water companies for allegedly passing on corporate income tax to consumers and also for supposedly abusing the advantages included in the deals.