New Maynilad, Manila Water deals will be 'equitable,' says justice chief

ABS-CBN News

Posted at Jan 08 2020 09:14 AM | Updated as of Jan 08 2020 09:37 AM

A woman sits behind a row of water meters in Makati City. The Philippines is drafting new concession agreements with the capital's two suppliers to remove "onerous" items. Jonathan Cellona, ABS-CBN News/file

MANILA -- A new contract that the government is drafting for the Philippine capital's two water concessionaires will be "equitable," not something that will "kill" the utilities, a cabinet official tasked to draft the contracts said Wednesday.

The government will remove "onerous and highly disadvantageous" items in the supply contracts of Manila Water Co and Maynilad Water Services Inc, Justice Secretary Menardo Guevarra said.

"That's a good contract. It's not something that will kill," Guevarra told ANC's Headstart, when asked about an economist's comment that offering a new concession deal was like pointing a gun to the concessionaires' heads.

The government-drafted concession agreements, which will be offered to Maynilad and Manila Water in 6 months, is "something even the water concessionaires themselves will probably agree to," he said.

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Should Maynilad and Manila Water refuse the contracts, President Rodrigo Duterte could "nationalize" water services and "prosecute them for plunder or estafa on a large scale," Presidential Spokesman Salvador Panelo said on Tuesday.

Guevarra listed down major provisions which he described as "really onerous."

- A "non-interference" clause that bars the government from interfering in the rate-setting mechanism of the two companies and the MWSS or Metropolitan Waterworks and Sewerage System

- An "indemnity clause" that compels government to indemnify the companies in case of losses due its interference

- Inclusion of business taxes, concession fees, debt servicing, and cost of appealing in expenditure items that can be passed on to consumers

- Reference to the two companies as mere contractors of the MWSS instead of a public utilities, allowing them to pass on corporate income taxes to consumers

- Preference for the two companies for the grant of licenses from the MWSS for new development projects

- The two companies taking on the expropriation powers of the MWSS 

- Automatic acceptance by the MWSS regulatory office of any proposed standard water rates if it fails to act on the proposal in 30 days

- The government paying in "early termination amount" in case the concessions are canceled in case of default.