WATER concessionaires Maynilad and Manila Water have two choices if they want to keep their contracts: accept new drafts prepared by state lawyers, or pack up and let government take over the distribution of water in Metro Manila.
“I have this draft, it’s either you accept it or not. You do not accept it? Then there is no contract,” President Duterte said yesterday in an interview in Malacañang.
Duterte said the draft contracts will be provided to the two water utility companies for their consideration.
“(It) is a draft which we would like to be enforced instead of the old one, which we think is not good for the Filipino,” Duterte said, reiterating that he considers the old contracts as “null and void” because they contained provisions that violated the Anti-Graft and Corrupt Practices Act and other laws.
Duterte warned the two firms that if they refuse the new contracts, the government will cancel their existing concessions and take over the operations of the water utilities, as well as proceed with the prosecution of government officials and private individuals involved in the crafting of the 1997 contracts.
“It’s either they accept with no guarantee that they will not be prosecuted, or if they do not accept it, then I will nationalize the water system and prosecute them for plunder or estafa on a large scale,” he said.
The President said even if Maynilad and Manila Water agree to the terms of the proposed drafts, this will not absolve them of possible criminal or administration liabilities should the government decide to take future legal actions in connection with the crafting of the old agreements.
Chief Presidential Legal Counsel Salvador Panelo, concurrent presidential spokesman, said the Office of the Solicitor General (OSG) and the Department of Justice (DOJ) have finished the revision of the onerous provisions contained in the original water deals inked during the Ramos administration.
The draft new contracts were presented during Monday’s Cabinet meeting. Copies of the drafts, however, were not immediately made available to the media.
Panelo said the two water firms have been given the option to decide whether or not to accept the terms of the new contracts.
“The new water contracts to supplant the constitutionally-flawed water concessionaire agreements that violated every prohibited act in the anti-graft law… The President stressed that water is a God-given natural resource which cannot be treated as a mere commercial commodity and exploited to rake in billions of pesos in profits at the expense of the Filipino people. As President, he cannot keep a blind eye to this colossal rip off,” Panelo said.
Panelo echoed Duterte’s warning that if Maynilad and Manila Water reject the drafts, the government will scrap their existing deals and take over the operations of water utilities.
“Should Maynilad and Manila Water refuse to accept the new agreements, the Chief Executive will order the cancellation of their present water contracts, mandate the nationalization of water services in their respective areas of operation and prosecute all those involved, directly or indirectly, in the arrangement that led to the present suffering of the Filipino people,” he said.
Panelo added: “The Chief Executive is giving the water concessionaires the option of accepting the new contracts without any guarantee of not being criminally prosecuted together with those who conspired to craft the very onerous contracts which are void ab initio for violating the Constitution and the laws of the land.”
President Duterte ordered the drafting of new water agreements after the DOJ discovered “onerous” provisions in the old deals that were “disadvantageous” to the government and the country.
The questionable provisions highlighted by state lawyers include the prohibition against government interference in rate-setting and on indemnity for possible losses in the event of such government interference.
The government action came after the two water utility firms won separate arbitration cases in Singapore against the government and were awarded more than P10 billion in compensation for losses.
Justice Secretary Menardo Guevarra, in a message to the media, said the draft contracts have yet to be finalized since financial aspects of the agreements have yet to be discussed with finance officials.
Manila Water and Maynilad did not immediately respond to requests for comment.
The market cheered the news that the two firms will be allowed to continue to operate if they adhered to the government’s conditions.
Manila Water, which fell as much as 73 percent and lost as much as $556 million in market value last month, rallied nearly 15 percent on Tuesday after the announcement, while parent firm Ayala Corp , which shed up to $875 million in market capitalization, gained 1.5 percent.
Maynilad owners Metro Pacific Investments Corp and DMCI Holdings Inc., rose 3.2 percent and 3.9 percent, respectively, on Tuesday. The two firms collectively lost as much as $1.45 billion in market value after Duterte’s criticism.
Last month, the state water regulator Metropolitan Waterworks and Sewerage System cancelled a 15-year extension of the water utilities’ concession after pressure from Malacañang. The existing concessions will expire in 2022.
Amid criticisms on Duterte’s orders to fast-track the development of Kaliwa Dam, the MWSS yesterday said the “much needed” project’s environmental impacts will only be “minimal”.
In a statement, the regulatory body noted that its consultations with indigenous peoples (IPs) of the provinces of Quezon and Rizal reached a positive outcome last month when they adopted a resolution of consent for the project.
“This stage, which is one of the several stages in the Free Prior and Informed Consent process shows, that the IPs are able to conduct their own independent and collective discussions and decision-making in an environment where they did not feel intimidated, and where they had sufficient time to discuss in their culturally appropriate way, matters affecting their rights, livelihoods, knowledge, traditions, governance systems, natural resources,” MWSS said.
The agency also reiterated that the construction of the Kaliwa Dam is crucial in order to provide a sufficient water source for Metro Manila in the coming years since the capacity of the Angat reservoir and some other smaller sources will already be scarce between 2020 and 2025.
“Taking into account a supply buffer of 15 percent, the Angat supply capacity will be insufficient before 2020. These numbers illustrate the need for a large water supply source.
The events since March 2019 has only confirmed said projections,” the MWSS said.
Despite the intentions to complete the project the soonest, MWSS assured that it will still “exert extraordinary diligence imposed by law and remain cautious under all circumstances in the conduct of its business affairs in addressing the urgent need to develop a new water source for Metro Manila.”
Notably, the Kaliwa Dam will be constructed in the towns of Teresa and Tanay in Rizal province and General Nakar and Infanta in Quezon province. It will involve the development of a 60-meter tall dam with a riverbed elevation of 100 meters with a reservoir surface area of 291 hectares and a full supply level volume of 57 million cubic meters.
It also has a P12.2 billion project cost wherein 85 percent will be funded by China via official development assistance and the remaining 15 percent by the Philippine government. Last October, the Department of Environment and Natural Resources already granted it an environmental compliance certificate.
Earlier, west zone concessionaire, Maynilad Water has expressed support for the development of Kaliwa Dam, citing that it is “a viable long-term solution to the supply shortage that has been affecting residents of Metro Manila.”