Revise, keep water deals

Water contracts can still be fixed prior to expiry

While President Rodrigo Duterte remains firm in going after the onerous contracts of water concessionaires Maynilad Water Services Inc. and Manila Water Co. Inc., the Department of Trade and Industry (DTI) said it is not too late to revise the deals prior to their 2022 expiry.

“It has to be corrected, that’s just the point and that’s what (the President wants)… they have to agree on a new contract where there are no so-called onerous provisions,” DTI Secretary Ramon Lopez told reporters.

Mr. Duterte had alleged that the deals inked in 1997 and extended in 2009 until 2037, included provisions which were burdensome to taxpayers and barred the government from interfering with rate adjustments.

The contracts extending the water firms’ operations from 2022 to 2037 were canceled by the Metropolitan Waterworks and Sewerage System and the Department of Finance. the Department of Justice were hence tasked to review the existing agreements.

Lopez said both companies can still apply for tax incentives such as an income tax holiday also given them at the start of their commercial operations, should they pursue a reinvestment scheme.

“Just in case the provisions have been corrected and if it is a priority area, then why not? Of course, there’s an assumption that the contract (has been fixed),” he said.

Malacañang, meanwhile, said the public have to wait whether President Rodrigo Duterte will give an earth-shaking announcement on 6 January with regards to the issue on water.

“Let’s see. We just have to wait,” said Chief presidential Legal Counsel and spokesman Salvador Panelo said in a radio interview.

At the same time, Panelo said President Duterte has not changed his stance with water concessionaires Maynilad and Manila Water.

The Chief Executive, according to Panelo, also assured the public that for as long he is the President he will not allow the water concessionaires to further aggravate them.

“He did not like the current contracts with the concessionaires and he will not allow, while he is in office, the water firms taking advantage of the consumers,” Panelo said.

“For him what they did is not only a violation of public interest but a violation of the Constitution. That’s why there is a need for change,” he noted.

Previously, the President lashed at Ayala-led Manila Water and the Manny Pangilinan-owned Maynilad for collecting services they never rendered to millions of their customers in the capital region.

No less than the President ordered the review of the contracts following the massive water shortage that hit Metro Manila last April.

The 25-year contracts with Manila Water and Maynilad provided that the private consortia will supply water, manage the distribution system and improve and expand the east zone concession area.

The original agreements will end 2022 but these were prematurely extended during the term of former President Gloria Macapagal-Arroyo in 2009 to last until 2037.

In an address in Malacañang, Mr. Duterte warned the two firms of expropriation if their explanation regarding the onerous agreements are not satisfactory.

“If you fail to satisfactorily explain, I will expropriate everything. You can file cases against me, anyway it will only be two years remaining for me,” he said previously.

Manila Water’s franchise area spans Mandaluyong, Marikina, Pasig, Pateros, San Juan, Taguig, Makati and parts of Quezon City and Manila. It also services Antipolo City and the Rizal towns of Angono, Baras, Binagonan, Cainta, Cardona, Jala-Jala, Morong, Pililla, Rodriquez, Tanay, Taytay and San Mateo.

Maynilad’s assigned areas are Manila (except San Andres), Pasay, Parañaque, Caloocan, Muntinlupa, Las Piñas, Valenzuela and parts of Makati and Quezon City, including the municipalities of Navotas and Malabon. Its franchise area also covers Cavite City, and its municipalities of Bacoor, Imus, Kawit, Noveleta and Rosario.

On views that the threats to the water firms’ business operations could jeopardize investor confidence in the Philippines, DTI’s Lopez said that such contracts signed with the firms over two decades ago were “not the norm.”