Water firms told: Amend ‘onerous’ pacts

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    THE Department of Justice (DOJ) yesterday said the government will be forced to take legal action against Maynilad and Manila Water if the utility firms insist on keeping the “onerous” provisions in their water concession agreements.

    Justice Undersecretary and spokesman Markk Perete said the managements of the two firms have agreed to sit down with the government to discuss President Duterte’s order to review and revise the water deals, specifically the supposedly “We hope na it can be mutually agreed upon by the parties but otherwise, the DOJ, the Office of the Solicitor General (OSG) and the Department of Finance (DOF) have drawn up a number of steps to be taken to address the matter,” Perete told radio dzBB in an interview.

    He said the government is prepared for any eventuality.

    “Kung mag-agree ‘yung concessionaires doon sa removal ng provisions na ito, o kung hindi naman, meron din naman tayong pinaghahandaan in court or outside the court (Whether the water concessionaires will agree to remove the said provisions or not, we are prepared to do battle in court or outside the court),” Perete said.

    Justice Secretary Menardo Guevarra last week said the government prefers to ink new contracts with the two water companies rather than negotiate with them in relation to the decisions of the Permanent Court of Arbitration in Singapore awarding about P10 billion in supposed losses and damages to Maynilad and Manila Water.

    Guevarra said the government is likewise challenging the decision of the Permanent Court of Arbitration (PCA) of Singapore ordering the Philippine government to pay the Ayala-led

    Manila Water Company the amount of P7.4 billion in compensation for losses incurred.
    “We are still studying our legal options. Our legal remedies are not mutually exclusive. The Office of the Solicitor General is contemplating of judicial remedies here and or abroad,” he said.

    Guevarra has also said that if the utility firms insist on enforcing the arbitral ruling, the government will oppose the move before the proper court.

    The DOJ has found a dozen questionable provisions in the water concession agreements of Metropolitan Waterworks and Sewerage System with Maynilad and Manila Water. The most noteworthy of these are the twin provisions on government interference in rate-setting and indemnity for possible losses in the event of such government interference.

    These provisions were cited by the two utility companies when they hauled the MWSS before the PCA, which awarded the Manila Water the P7.4 billion damages, and Maynilad the amount of P3.6 billion for losses.

    The justice department has also found onerous the extensions of the contracts until 2037 irregular, noting that the said extensions were long years before the original expiration of the 25-year concession agreements in 2022.

    The concession agreement took effect in 1997 and covers a 25-year period, which ends in 2022. The Memorandum of Agreement signed in 2009 extended the concession agreement for another 15 years, which is 2037.