'Like a gun on their heads': Economist blasts new water concession contracts


Posted at Jan 07 2020 10:31 PM

MANILA - The government's offer of new contracts to Metro Manila's water concessionaires is a "case of bullying," an economist said on Tuesday. 

"It's like putting a gun on their heads," said Calixto Chikiamco, president of the Foundation for Economic Freedom. 

He also warned that the "take it or leave it" contracts may have a negative impact on investments and the country's credit rating. 

Malacañang earlier said it was giving water concessionaires Manila Water and Maynilad the "option" to accept a new contract that will replace existing deals that supposedly had onerous provisions.

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If the two firms refuse the new agreements, President Rodrigo Duterte said he would order the cancellation of their existing concessions and the "nationalization of water services" in their respective areas.

Chikiamco said this move would have a "reputational cost" for the country. If the concessionaires accept the new contracts, the impact on investments will be limited to deals involving public-private partnerships, he said. 

"But if the outcome is cancellation and nationalization, that will have a negative impact across the board, all foreign investments," Chikiamco said in an interview with ANC. 

"Any unilateral cancellation, abrogation will have a negative impact on credit rating," he added. 

The capital's water security will also be affected by a government takeover of water distribution. 

"We know already what happens whenever the government runs something, whether that's the MRT or even the old Nawasa."

The capital's water services regulator, meanwhile, said there are no plans yet to nationalize the water distribution system. 

“Wala pa naman tayong plano,” said Metropolitan Waterworks and Sewerage System Administrator Emmanuel Salamat. 

The MWSS chief said they still have to see the details of the new concession agreement and wait for the reaction of the two concessionaires.

Justice Secretary Menardo Guevarra said the concessionaires will be given the chance to discuss and renegotiate the agreements that the government is drafting. 

Ayala-led Manila Water went up 12.3 percent to P10.78 at the end of trading Tuesday. 

Its shares went down to as low as P6.03 per share following Duterte's threats to cancel the company's contract in December last year. 

The Pangilinan-led Maynilad is not listed on the stock exchange. - With a report from Vivienne Gulla, ABS-CBN News