Maynilad, Manila Water give up P10.8B claims

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    BY WENDELL VIGILIA and JED MACAPAGAL

    WATER concessionaires Maynilad Water Services Inc. and Manila Water Company Inc. (MWCI) yesterday said they will no longer pursue their P10.8-billion claims from the government.

    “Yes. We will abide by what the government and the President (Duterte) want,” former energy secretary Jose Rene Almendras, now Manila Water president and CEO, told the joint House hearing of the committees on public accounts and on good government.

    Almendras made the statement on the questioning of Anakalusugan party-list Rep. Michael Defensor, chair of the public accounts panel, who asked if MWCI was giving up its arbitral win.

    The Permanent Court of Arbitration (PCA) in Singapore has ordered the Philippine government to pay MWCI P7.39 billion for the company’s losses from June 1, 2015 to November 22, 2019.

    Manila Water had gone to the PCA after the government refused its demand to pay P79 billion from 2015 to 2017 for lost revenues after it was barred from raising tariffs.

    The two House panels held the hearing after Cavite Rep. Elpidio Barzaga Jr. filed a resolution following President Duterte’s threat to scrap the concession agreements entered into by Manila Water and Maynilad with the Metropolitan Waterworks and Sewerage System (MWSS) in favor of a new one which he said would “really (be) favorable to public, to government.”

    In a prepared statement that he read before the joint panel, Almendras announced that MWCI has decided to work with the government “to look for solutions to the arbitral award.”

    “We abide with what President Duterte wants which is to review the concession agreement,” Almendras said, adding Manila Water is also deferring its plan to raise water rates next month.

    Almendras said the MWCI and the MWSS have already begun discussions on the provisions in the concession agreement that the President wants reviewed “and we want the negotiations expedited.”

    Maynilad CEO Ramoncito Fernandez said Maynilad has also decided to follow the President and give up its arbitral claim.

    “We reiterate that we agree with what the President wants,” Fernandez told congressmen.

    “Our arbitral award was given in 2017 and after we followed it up to the government and were not given attention, we no longer pursued it. It is clear with the actions of Maynilad.

    Now that we are in this point, we agree to the directive of the President to already let go of the historical arbitral awards,” Fernandez said.

    The PCA has previously ruled the Philippine government should pay Maynilad at least P3.4 billion as sovereign compensation for revenue losses it incurred from Jan. 1, 2013 to Feb. 28, 2015 alongside opportunity losses of at least P208 million added for every month of delay in payment for not allowing the water concessionaire to implement its rate hike allowed under the rate rebasing provisions of their concession.

    Fernandez said Maynilad will also cooperate in the ongoing review of the concession agreement for the west concession that it won in 2007.

    Fernandez said it is also prepared to defer its plan for rate increase, depending on what will be agreed upon with the government. He warned, though, that the rate increase deferment will have implications on service sustainability and on the provisions of the Clean Water Act.

    “So you agree to the deferment for as long as you get a fair return of what you’ve invested?” Defensor asked Fernandez who said, “Yes.”

    In total, the current five-year rate rebasing period that will end by 2022 has allowed Maynilad to increase its basic charge by P5.73 per cubic meter and Manila Water by P6.22 to P6.50 per cubic meter.

    Maynilad’s basic charge per cubic meter is supposed to increase next month by P1.95, and Manila Water by P2 per cubic meter.

    Under the concession agreement signed by the MWSS alongside Maynilad and Manila Water, rate rebasing shall be conducted every five years. With the said process, water rates will be adjusted depending on the performance, expenses, earnings, unrecovered investments and service improvement plans of the water concessionaires.

    President Duterte has repeatedly complained about the “onerous” and “disadvantageous” provisions in the concession deals of the utility firms with the government, which he said were unfavorable to the government and the country.

    Among the questionable provisions were the prohibition against government’s interference in rate-setting and the provision on indemnity for possible losses in the event of such government interference.

    The twin provisions were cited by Maynilad and Manila Water when they hauled the Philippine government before the PCA, and these were likewise the basis used by the arbitral court in awarding damages to the utility firms.

    NO STOPPING REVIEW OF WATER DEALS

    Justice Secretary Menardo Guevarra welcomed the announcements of Manila Water and Maynilad, but said the review of their existing water concession agreement will push through to remove the onerous provisions.

    “This is a very positive development, although the President has said that the government will not pay these arbitral awards, at least during his term anyway, this gracious manifestation on the part of the water concessionaires nonetheless removes a potential liability from the books of account of the government,” Guevarra said.

    But the DOJ chief said the government is not really concerned about paying the two water firms but about removing the “burdensome” provisions in their concession agreements.

    “As I have said before, the issue of paying the arbitral award is not as important as ensuring that disputes arising from burdensome provisions of the water concession agreements will never happen again in the future,” he said.

    Pressed as to whether the government will pursue the review of the agreement to remove what he said are the “burdensome and onerous” provisions, Guevarra said it will definitely continue.

    “Certainly, it (review) will continue,” Guevarra said.

    On Monday, Guevarra said a composite team of lawyers from the Department of Justice, the Office of the Solicitor General, the Office of the Government Corporate Counsel and the Department of Finance has been formed to review the contracts.

    GOVERNMENT TAKEOVER

    President Duterte threatened to take over the operations of the private water concessionaires if government lawyers and other individuals involved in the drafting of the agreements fail to satisfactorily explain the inclusion of the questionable provisions.

    The President, at the oath taking of the newly appointed and promoted members of the Bureau of Fire Protection, Bureau of Jail Management and Penology, and the Philippine Coast Guard, reiterated that he wants to meet and talk with the parties who were privy to the drafting and approval of the concession deals.

    Duterte even threatened to suspend the writ of habeas corpus and drag the lawyers and other individuals involved in the preparation of the deals to force them to meet with him.

    The President said he wants to ask the lawyers: “What the fuck did you do and screwed the country?”

    “I want everybody, mga abugado noon, kung ayaw ninyo pumunta dito, I will drag them, if you will force my hand, then I will throw my last card. I will suspend [the writ of] habeas corpus at hihilahin ko kayo with economic sabotage. Ngayon, kapag hindi ako ma-satisfy, I will expropriate everything, kunin ko lahat (I want everybody, even the lawyers then. If they don’t want to come here, I will drag them. If you will force my hand, then I will throw my last card. I will suspend [the writ of] habeas corpus and will pull you with economic sabotage. Now, if I am not satisfied, I will expropriate everything, I will take everything),” he said.

    The President, at the height of the water supply problem during the summer periods, ordered a review of the water contracts, warning that he is ready to rescind them and for government to take over operations.

    CONCESSION CONSPIRACY

    Chief Presidential Legal Counsel Salvador Panelo, concurrent presidential spokesman, said former presidents Fidel Ramos and Gloria Macapagal Arroyo may be held accountable if proven that they were involved in the crafting of the “onerous” contracts.

    “If they are part of the conspiracy (they can be charged). If they are not, they cannot,” Panelo said.

    To resolve the issue, Panelo said government push for the removal of the onerous provisions in the agreements, appeal the arbitration award given by the Singapore court before the Supreme Court of Singapore, “or if they will enforce it in the Philippines by filing a petition in our lower courts, then we will oppose it”.

    Duterte has ordered the Solicitor General and Finance Secretary to craft a new contract that is more acceptable to the government.

    He also vowed to pursue “economic sabotage” and economic plunder charges against the water concessionaires, as well as those who were involved in the crafting of the deals. – With Ashzel Hachero and Jocelyn Montemayor