President Rodrigo Duterte said he may resort to tapping the military in taking over the operations of water service providers in Metro Manila if no agreement is reached on provisions of the contracts that are disadvatageous to the public.
During the birthday celebration of former Senate President Manny Villar in Las Piñas City on Thursday, the President recounted that he broached the option of a military takeover to the Presidential Security Group (PSG) in a dialogue last Wednesday.
The companies incensed the President when a water shortage occurred in March and when the Permanent Court of Arbitration (PCA) in Singapore ordered the Philippine government in November to pay P7.39 billion to Manila Water for the company’s alleged losses due to the government’s decisions to stop water price hikes. In a similar case in 2016, the PCA ordered the Philippine government to pay Maynilad P3.4 billion.
“I was talking to the PSG, don’t toy with me I told them, don’t try to scare me, we will move,” Duterte recalled.
“I will order the Armed Forces to operate. Okay soldiers, you can take over,” he indicated.
On Tuesday, the Chief Executive threatened to “expropriate everything” from Maynilad Water Services Inc. and Manila Water Corp. if officials of the two firms fail to satisfactorily give explanations on the onerous provisions in the concession agreements.
Manila Water is a subsidiary of the Ayala Corp., while businessman Manuel V. Pangilinan’s Metro Pacific Investments Corp. owns a controlling stake in Maynilad.
He also warned of a warrantless arrest of people he accused of committing economic sabotage.
“Fool me and you fool the Filipino nation. I will suspend the privilege of the writ of habeas corpus and I will arrest all of you. I want to see billionaires behind bars,” Mr. Duterte said.
“Where’s the big fish? These two sons of bitches are like crocodiles,” he said referring to the two water firms.
Duterte added that he will pursue charges against Maynilad and Manila Water regardless the outcome of their negotiations with Metropolitan Waterworks and Sewerage System (MWSS) Administrator Emmanuel Salamat.
“Talk to General Salamat. Me? I will just prepare the charges. If we fail to understand each other, that’s economic plunder,” he said.
The water concessionaires had brought upon themselves the problems they are now facing with Mr. Duterte as Department of Justice Secretary Menardo Guevarra said the non-existent water shortage that resulted in a rationing of water sparked the President’s anger.
Subpar performance caused a review of the 1997 deal with the government, Guevarra revealed, shrugging off speculation by members of the opposition that the entry of a new player was planned.
“(T)he Cabinet discussion on the concession agreements was spurred solely by the water crisis and not by any premeditated intent to bring in a supposedly new concessionaire,” Guevarra explained.
He added the DoJ had no participation in the arbitration cases. “These were handled by the OSG (Office of the Solicitor General), with the assistance of a foreign counsel,” he said.
Guevarra also declined to comment on whether the review of the agreements include reconsidering the reported designation of the private water concessionaires as anything but public utilities, which would have subjected them to limitations on the return on their investment.
“(T)he issue of whether the private water concessionaires are in fact public utilities is up for resolution by the Supreme Court,” he said.
The two private companies distribute water in Metro Manila and other parts of the country under agreements signed with state regulator Metropolitan Waterworks and Sewerage System (MWSS) in 1997.
In March, water supply interruptions started in various areas supplied by Maynilad and Manila Water due to increased demand and reduced water levels of dams amid a scorching dry season.
The President lashed at the water concessionaires after a review conducted by the DOJ showed the water contracts were “onerous and disadvantageous to the people, relative the terms or periods, government non-interference, as well as concessionaire indemnification for losses.”
Where’s the big fish? These two sons of bitches are like crocodiles.
Guevarra said another onerous provision is the extension of these contracts to 2037, considering that the extension was granted 12 years to 13 years before the original expiration of the 25-year concession agreements in 2022.
Rate hike without basis
Senator Christopher Lawrence “Bong” Go noted the decision of the MWSS to cancel the extension of contracts of the water concessionaires should not be a reason to increase water rates.
MWSS, the government agency that is in charge of water privatization in Metro Manila, decided to revoke on December 5 its board resolution to extend the contracts of Maynilad and Manila Water until 2037.
The 25-year concession agreements were signed in 1997 and were set to expire in 2022. In 2009, MWSS decided to extend the contract with Manila Water for fifteen years more. The following year, Maynilad’s agreement was also extended for another fifteen years.
Go said that the companies must focus first on meeting their obligations. He added that the President wants clear answers regarding the original agreements.
‘Do your worst’
Chief Presidential Legal Counsel and Presidential spokesman Salvador Panelo said the water concessionaires can do their worst and continue fleecing consumers while President Rodrigo Duterte will do his best in serving and protecting the interest of the people.
Panelo made the remark following the threat made by the two Metro Manila water concessionaires to increase the water rates by 100 percent following the decision of the MWSS to revoke the extension of their concession agreements.
“We recall that they offered not to implement the approved new water rates, among others, after the President publicly denounced the onerous provisions of the said contracts,” Panelo said.
“As we have previously stated, Maynilad and Manila Water each wrote a formal letter making an offer to talk about the issue and renegotiate the onerous provisions of the contracts. There has been no acceptance by the President of their offer nor has he declined it. The subject is still under review by the President,” he added.
Panelo said all legal options are open to the Chief Executive.
“It must be remembered that the President is a lawyer and a public prosecutor for many years hence knowledgeable on the provisions of the anti-graft law. An examination of the latter reveals that the contracts are on all fours with it. Stated differently, the agreements violate every prohibited act of the law,” Panelo said.
Letters made public
For the sake of transparency, Panelo said the Palace has made public the letters dated 10 December, 2019 sent by Maynilad and Manila Water to the President.
According to Panelo, the concessionaires are put on notice that the Chief Executive will not renege from his constitutional duty of enforcing the law.
“Neither will he be swayed nor enticed into accepting a compromise. Dura lex sed lex,” Panelo said.
“Water is a natural resource and access to it by the people is a basic human right, and constitutionally protected as well. Any measure therefore in derogation of this right requires government intervention,” he added.
In Maynilad’s letter sent to President Duterte through Executive Secretary Salvador Medialdea and signed by its chairman of the Board Manuel V. Pangilinan, concerning the government’s review of the 1997 Concession Agreement, as Amended and Extended between the MWSS and Maynilad (“The Concession Agreement”), he said that they wish to assure the Chief Executive of their willingness to cooperate with the MWSS reletive to have certain provisions of the Concession Agreement reviewed and amended.
With Francis T. Wakefield