Pass ons favor takeover

The Senate and the House of Representatives, in separate inquiries, found several expenses of Maynilad and Manila Water which were tagged on to monthly bills of water users.

President Rodrigo Duterte swears in government servicemen in a ceremony in Malacañang where he said that expropriation of water firms is possible if he is not satisfied with their explanation of one-sided provisions of the concession deal with government. MALACAÑANG PHOTO

More than the onerous provisions of the water concession agreements, the government is intent on going after what President Rodrigo Duterte estimated as trillions of pesos filched from water users through the one-sided deals.

The President has warned that due to the plunder of people’s money committed by both Maynilad Water Services Inc. and Manila Water Corp., the government may initiate steps to expropriate both companies.

Department of Justice Secretary Menardo Guevarra said confiscation of the water service firms has constitutional ground.

The Senate and the House of Representatives, in separate inquiries, found several expenses of Maynilad and Manila Water which were tagged on to monthly bills of water users, including corporate expenditures that are not concerned with water distribution.

Sen. Christopher Lawrence “Bong” Go, during the Senate hearing, sought answers from the representatives of water concessionaires regarding the P56 billion billed in advance to consumers for water projects which, however, were not implemented.

“We have reports that a total of P56 billion has been billed in advance to Filipino people for water projects. What happened to these projects? Why were Filipinos made to pay for unaccomplished projects?” he expressed.

The water companies also pass on corporate income tax payments to consumers, which the Constitution does not allow.

“Is it true that you have passed on the burden of paying your income tax to the public? What is your basis for doing this? You were granted income tax holiday. Isn’t that enough?” Go asked in the middle of the hearing.

Companies which enjoy tax holidays are exempted from paying income taxes for a certain period.

Go warned the water companies not to abuse their consumers who have contributed to their growth as he swore to uphold the interests of the Filipino public.

“You know the President, he is ready to confront any problem, but he is not forgiving to crooks,” he added.

Department of Justice (DoJ) Secretary Menardo Guevarra said there is constitutional basis for the government to take over utilities under certain conditions, which would be sufficient basis if it opts to take over the operations of water concessionaires.

However, he declined to comment whether present circumstances warrant a takeover.

“I will not answer the question unless it’s the President who will ask it,” Guevarra said in a message to reporters.

“President Rodrigo Duterte could be thinking of Section 17, Article XII of the Constitution (on national economy and patrimony) providing that the state may temporarily take over or direct the operation of any privately owned public utility or business affected with public interest, under two conditions — one, in times of national emergency, and two, when the public interest so requires,” Guevarra said when asked for a legal basis.

He said a “legal basis (for a takeover) and (the) capability are different issues.”

The Justice chief also said the act of regulatory body Metropolitan Waterworks and Sewerage System (MWSS) revoking the memorandum of agreement extending the period of the concession was upon the President’s directive, which was in turn based on the DoJ recommendation.

He said the recommendation came after finding that the extension had no legal basis in the concession agreement.

“The ball is now in the concessionaires’ court. Take note that the proper time to renew the contract is upon the expiration of the concession agreements in 2022, as expressly provided in the agreements themselves,” Guevarra added.

He earlier said a takeover would be among the options available to the government if the water supply comes to a direct stop.

He added that the government is reviewing details in the 1997 agreements to weed out the onerous provisions in the deal between the government and concessionaires Manila Water and Maynilad.

The revocation of the resolutions extending the contract of the water concessionaires may lead to a huge spike in the price of delivery of water, representatives from Maynilad and Manila Water said Wednesday.

“Definitely, it will go very high because the rationale of the extension at that time was to mitigate any spikes in tariff or price of (delivery of) water because there is a need for concessionaires to invest huge amounts of money,” Maynilad president and chief executive officer Ramoncito Fernandez said during the joint hearing of the House Committees on Good Government and Public Accountability, and Public Accounts.

He also said the revocation of the resolutions extending the concession period of Manila Water and Maynilad by the MWSS is not proper.

“It is with very grave concern that we view this action. And we believe also that it is not proper to unilaterally revoke the agreement,” Fernandez said.

MWSS administrator Reynaldo Velasco on Tuesday said the MWSS Board unilaterally cancelled the resolutions which gave the two concessionaires authority to operate to until 2037.

Manila Water, represented by its former president now board member Tony Aquino, shares the position of Maynilad and said the firm has already drafted its spending plan based on the extension given to them by the government.

He explained that if the recovery period would be longer, it will have lower impact on the tariff.

While the firms are still recomputing the possible rate increase, they said a water rate hike may occur in the next years to compensate for their investments, if the government will push through in ending their contract.

Christopher Churgan of the MWSS, however, said the water concessionaires could no longer demand higher water rates.

“If the contract will be canceled by 2022, there will no longer be a price adjustment,” he said.

According to Churgan, after the contract of the two concessionaires is revoked, the MWSS can open the contract to other operators.

MWSS deputy administrator Engr. Leonor Cleofas admitted that for now it cannot deliver without the water concessionaires.

“Can MWSS deliver without the water concessionaires? Can we deliver potable water to the public without the concessionaires?” asked Deputy Speaker Prospero Pichay during his interpellation.

Cleofas answered in the negative and said MWSS lacks manpower.