Congress to end water duopoly

A party-list legislator has intimated President Rodrigo Duterte and Congress would join hands to destroy the duopoly of Maynilad and Manila Water in distributing water services in the metropolis following their threats to impose higher rates against consumers.

House Deputy Majority Leader Bernadette Herrera of Ang Bagong Henerasyon Party-list group said in a statement Saturday their threats of higher rates and of other dire consequences as a result of the cancellation of the extension of their agreements with the government would not work.

“Incoming concessionaires can always pay off whatever claims of the old concessionaires may have as long as proper auditing procedures are done so that the consumers will be protected,” Herrera said.

Herrera, who started to investigate these allegedly onerous water contracts in 2010, said the Philippine Competition Commission and the Department of Justice “should closely watch and even anticipate their manipulations and machinations.”

“This 18th Congress and the Duterte administration will apply the full force of our criminal, civil, and administrative laws against Maynilad and Manila Water,” she said.

She added: “We in Congress will work together to create the competitive environment necessary for new investors to come in to challenge your water services stranglehold in Metro Manila and surrounding provinces, as well as in other areas where you have entered into service agreements.” 

She said Metro Manila, with nearly 13 million residents, has grown so big that even four water concessionaires could be tapped to serve the premier region.

Although Malacañang has implied that “cronies will not be allowed” to take over the water distribution and sewerage service in Metro Manila, Herrera said Congress would help open up the water sector in the metropolis to new investors.

Reports are rife that two major financiers of Duterte when he ran for the top political post in 2016 would be ready to take over the services now being provided by Manila Water and Maynilad.

“The economy is much stronger now than when you entered into those service contracts in the late ‘90s. I believe the concession areas in the Greater Manila Area have grown much and can be divided into at least four and still be large enough to be profitable,” Herrera said.

In effect, Herrera wants to allow the entry of the two major campaign contributors of Duterte into the water services in the metropolis.

She added: “Instead of just East and West Zones, the concession areas can be North, South, East, and West.”

“To make future operations profitable, the sewerage and water treatment aspects of water services can be spun off and opened up to more investors,” she added.

On Thursday, Duterte warned private water concessionaires he would order the military to take over their operations and throw executives of Maynilad and Manila Water in jail as economic saboteurs over what he called onerous provisions in their service contracts with the government.

“Don’t fool me and say that, ‘We will leave and you will lose water.’ I will order the Armed Forces to operate your water,” he said during a party of former Senator Manny Villar.

“Then I will declare the suspension of the writ of habeas corpus but only against economic saboteurs...and I will arrest all of you, for I want to see a billionaire in jail,” he added.

On Friday, the Palace blasted the two concessionaires for saying their rates would rise 100 percent if the government insisted on revoking the extension of their concession agreements.

In a statement, Presidential Spokesperson Salvador Panelo slammed the two companies for recanting on their earlier pledge to Duterte to defer the implementation of their approved increase in water rates in January 2020.

Next month, Maynilad is scheduled to increase water rates by P1.95 per cubic meter, while Manila Water is slated to raise its base tariff by P2 per cubic meter.

Panelo said Manila Water and Maynilad apparently did not care about the plight of water consumers.

“We note that the two Metro Manila water concessionaires, Maynilad and Manila Water, have threatened to increase the water rates by 100 percent, following the decision of the MWSS (the Metropolitan Waterworks and Sewerage System) revoking the extension of their concession agreements,” he said.

Manila Water and Maynilad wrote separate letters to Duterte on Dec. 10, expressing their willingness to make amends following threats of facing charges of economic sabotage and even expropriation from the President.

“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. These concessionaires can do their worst and continue with fleecing the consumers while the President will do his best in serving and protecting the interest of the people,” Panelo said.

Duterte has repeatedly claimed that the government’s concession agreements with the two water concessionaires contain “onerous” provisions that are disadvantageous to the public.

He has been lambasting the two companies after the Permanent Court of Arbitration in Singapore ordered the Philippine government to pay Manila Water P7.39 billion for the non-implementation of water hikes from June 1, 2015 to Nov. 22, 2019.

The PCA also upheld its October 2018 ruling ordering the Philippine government to pay P3.4 billion for Maynilad’s losses from March 11, 2015 to Aug. 31, 2016.

Duterte has ordered the filing of appropriate criminal, civil, and administrative charges against the owners and legal counsels of Manila Water and Maynilad, as well as the agents and lawyers of the government agencies involved in the crafting of the water concession deals.

Duterte’s actions prompted Manila Water and Maynilad to send him a letter, signifying their intent to cooperate with the government to settle the issue.

Panelo on Friday released the letters, which are still under review by the Chief Executive, “for the sake of transparency.”

Manila Water chairman Fernando Zobel de Ayala, in his letter, relayed to Duterte his company’s decision not to collect the P7.39 billion it won in an arbitration case against the government.

Zobel also assured the President that Manila Water informed state water regulator MWSS on Dec. 3 of its plan to “work out an arrangement that will effectively defer the implementation of the approved water charge.”

He also noted that Manila Water has agreed to “immediately start with the discussions and expedite the negotiations” with regard to its supposed “illegal, onerous or disadvantageous” agreement with the government.

“Mr. President, we heed your call to revisit and re-negotiate certain provisions of the concession agreement. We fully share your mandate to put the interest of the people as the primary objective,” Zobel’s letter read. “We will work closely with the proper government agency to make sure that the P7.39 billion arbitral award will not have to be paid by the government directly or through the customers.”

Meanwhile, Maynilad chairman Manuel Pangilinan and president and chief executive officer Ramoncito Fernandez assured the President that they would cooperate with MWSS in reviewing and possibly amending the concession agreement.

Pangilinan and Fernandez guaranteed that just like the President, their desire is to also “provide our people access to water and waste water services at affordable rates.”

Despite this, the MWSS announced on Tuesday that it has revoked the resolution extending by 15 years the 25-year concession agreements with Manila Water and Maynilad signed in 1997 during the leadership of then-President Fidel Ramos. This would mean their roles as concessionaires would end in 2022, unless their agreements are renewed.

An MWSS resolution in 2009 extended their contracts to 2037, but the same agency revoked the extension this month, after the President’s order to have the agreements reviewed.

Panelo said the water concession pacts with Manila Water and Maynilad “violate every prohibited act of the law.”

“All legal options are open to him (Duterte),” Panelo said.

Panelo also said Duterte would not be swayed by nor enticed into the proposed settlements by Manila Water and Maynilad.

“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 (by) nor enticed into accepting a compromise. Dura lex sed lex (The law is harsh but it is the law),” he said.

Panelo noted that water was a natural resource and the people’s access to it is a basic human right and is constitutionally protected as well.

“Any measure therefore in derogation of this right requires government intervention,” he added.

The Department of Justice, meanwhile, justified the MWSS move to revoke the extension of their concession agreements.

Justice Undersecretary Marrk Perete said the MWSS’ decision to cancel its earlier extension of its concession agreements with the two water concessionaires needed approval from a court.

“The burden of taking action based on an interpretation of the contract is assumed by the executive. In assuming that burden, it need not obtain prior court approval,” Perete said.

“Only in case of disagreement will resort to judicial intervention prove necessary,” Perete added.

“Take note the proper time to renew the contract is upon the expiration of the concession agreement in 2022, as expressly provided in the agreements themselves,” Justice Secretary Menardo Guevarra said.

The MWSS had granted a 15-year extension in 2009 for Manila Water and in 2010 for Maynilad, ahead of the original expiration of the agreements in 2022.

However, the MWSS board canceled the extension of its contract with Maynilad and Manila Water on Dec. 5.

Duterte earlier slammed a Singapore-based arbitration court’s decision ordering the government to pay the two distributors a total of P10.8 billion as compensation for losses incurred for non-implementation of rate increases.

This week, both Maynilad and Manila Water announced that they would no longer collect the awards and vowed to work with government on possible revisions to their concession agreements.

Guevarra, meanwhile, asked Justice Undersecretary Emmeline Aglipay-Villar to inhibit herself from participating in the ongoing review of the government’s water concession agreements with Manila Water and Maynilad to remove suspicions of a vested interest.

Villar, a former congresswoman, is the wife of Public Works Secretary Mark Villar and the daughter-in-law of Senator Cynthia Villar and businessman Manny Villar.

The Villar family owns the water utility PrimeWater Infrastructure Corp., which is headed by Senator Villar’s eldest son, Manuel Paolo Villar.

Based on DOJ’s review, several provision of the existing contracts of Manila Water and Maynilad are disadvantageous to the government as these prohibit government interference in rate-setting and contain a provision for indemnity in case of such interference.

The undersecretary on Friday said she would inhibit herself from participating in the review.

“To eliminate any cloud of doubt on the impartiality of the department’s review and renegotiation of the water concession agreements with (MWSS)… I am inhibiting (myself) from any involvement in the department’s review and renegotiation of the said agreements,” she said in a memo to Guevarra.

Finance Secretary Carlos Dominguez III said Friday the concession contracts must be closely scrutinized.

“We have to look at the entire contract. I’ve actually talked to the Ayalas and one of the partners of Maynilad and I already told them ‘You guys should also put yourselves in our position and see what

items are disadvantageous to the government, then you should make your proposals already so we don’t have to go through this long, drawn-out discussions,” he said.

“This is my personal opinion. The contracts should recognize that times change and you cannot fix the return on a fixed basis. It should be referenced to what the interest rates are at that particular time,” he said.

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Topics: Bernadette Herrera , Rodrigo Duterte , Maynilad , Manila Water , Ang Bagong Henerasyon Party-list
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