New water contracts a better way

“It would not do the country any good if such cases of economic sabotage are to be filed against the two water concessionaires, since these won’t bring about faster solutions.

President Duterte has threatened to sue two water firms for economic sabotage, coming after a Singapore arbitral court granted Manila Water Co. Inc. and another concessionaire, Maynilad Water Services Inc., for what he called a “screwing” of Filipinos.

The international arbitral court last week ordered the Philippine government to pay Manila Water P7.39 billion in indemnification for losses incurred after being barred from raising rates.

It was also the same tribunal that had ordered the Philippine government in July 2017 to reimburse Maynilad P3.4 billion for losses from March 2015 to August 2016, with its ruling that the water firm is allowed to recover its losses from September 2016 onwards.

But the President appears to have found an unlikely ally in the leftist group Bagong Alyansang Makabayan that dared him to revoke the government’s contracts with the two water concessionaires and sue them for economic sabotage.

“Just do it,” said Bayan secretary general Renato Reyes. “We agree with the Department of Justice’s (DoJ) findings that there are many lopsided and questionable provisions in the contracts that are inimical to consumer interest.”

But does filing criminal and administrative charges of economic sabotage solve anything?

In Duterte’s view, the concession contracts of Manila Water and Maynilad are disadvantageous to the public because they prohibit the government from adjusting water rates. But it has to be pointed out that it was the previous government that agreed to the prohibition, when it should not have done so.

Still, the President can always order his DoJ Secretary and even the Solicitor General to file in court a case of economic sabotage, but an independent court would likely find the case of economic sabotage against the two water firms too weak to flourish, especially as the contracts favoring the water firms were agreed to and signed under the previous government of then President Fidel Ramos.

It was under the Ramos administration when the move for water privatization in Metro Manila started.

It is on record that water privatization in Metro Manila began when then President Ramos instructed the government in 1994 to solve what he called the water crisis in Manila by engaging with the private sector.

Clearly, whatever onerous provisions in the contracts are, these were granted by the then Ramos government and if anyone should be held accountable and yes, even charged with economic sabotage, for coming up with such contracts and onerous provisions, it should then be Ramos and his boys, who were then in control of government.

In the case of the Manny Pangilinan-led Maynilad, the water concessionaire’s contract forged under the Ramos government was hardly a handiwork of the present leadership, since Maynilad was still owned and operated by the Lopezes.

Maynilad also made it clear that it is willing to sit down with government to resolve issues, saying that, “We have not done anything wrong and we hope the President understands that the contract we have inherited was actually written, reviewed and approved by the government at the height of the Metro Manila water crisis in 1996.”

“We only have a view and idea of what they want to be reviewed, but we are waiting for formal communication. We are willing to discuss with the government what they want to be reviewed,” it added.

In any case, it would not do the country any good if such cases of economic sabotage are to be filed against the two water concessionaires, since these won’t bring about faster solutions. Court cases can take forever in this country.

Also, why bother with court cases when both water firms appear to be willing to work things out with the Duterte administration?

The Ayala-led Manila Water firm is reportedly willing to come up with a “workable solution” with the government on the recent arbitration decision that entitled it to indemnification for unenforced rate hikes.

Manila Water was quoted as saying that it is working on a mutually acceptable manner of implementation of the arbitral award, while stressing that the case was filed due to a violation incurred by the previous administration.

Also, the President has ordered Solicitor General Jose Calida and Finance Secretary Carlos Dominguez III to draft a new contract that would be “really favorable” to the public and the government.

There is room for corrections in these contracts deemed disadvantageous to the water-consuming public. However, it doesn’t make sense for the government to use the threat of economic sabotage when there is still a lot of room for coming up with workable solutions along with new contracts to be forged between parties, especially contracts that would be of benefit to the public.