"Some parts of the new contract with Maynilad are considered non-negotiable."
The new concession agreement between the government and Maynilad Water Services Inc. is an example of how regulatory agencies can protect Filipino consumers and make sure that private utility companies provide crucial services at fair and equitable rates.
Justice Secretary Menardo Guevarra said the government, through the Metropolitan Waterworks and Sewerage System (MWSS), has signed the new concession agreement that has been transmitted to Maynilad for signature.
Significantly, the new agreement includes a waiver by the water company to its P7.4 billion indemnification award rendered by the Singapore Permanent Court of Arbitration in 2019, after Maynilad sued the government for rejecting its petition to raise water rates.
The waiver would remove the need for a government payout.
Guevarra said that in its talks with Maynilad, some parts of the new contract were considered non-negotiable.
They include the removal of the non-interference clause, which barred the government from interfering in the water utility’s business operations, including the setting of water rates.
The new agreement will also no longer allow the water utility to charge its corporate income tax to consumers through its water bills, or to obtain government guarantees for future debts.
The new agreement also disallows foreign currency differential adjustments that in the past were billed to customers, and stipulates a government audit and a more transparent governance mechanism.
“The onerous provisions…have been removed, contingent liabilities of the government have been substantially reduced, and a framework for better service to the public has been put in place,” Guevarra said.
President Rodrigo Duterte pushed for the revision of the water concession deals with Maynilad and the other private water concessionaire, Manila Water, as early as December 2019 after a Justice Department panel of reviewers found numerous onerous provisions in the agreements.
This approach, which emphasizes consumer protection and public service, should be applied as well to other privately owned utility companies, such as those involved in providing power and telecommunications services.
For far too long, Filipino consumers have been at the mercy of large corporations that have used their financial muscle or near-monopoly power to charge unreasonably high rates for poor service. Certainly, none of these, too, should be allowed to charge their corporate taxes to their customers. In the same way, too, as with water concessionaires, the rates charged to customers must be reasonable and fair—and subject to a regular and vigorous review by the concerned regulatory agencies.