Water income tax dispute subject to arbitration

By RG Cruz, ABS-CBN News

Posted at Aug 10 2015 06:57 PM | Updated as of Aug 11 2015 02:57 AM

MANILA - The Metropolitan Waterworks and Sewerage System's (MWSS) refusal to accede to a water concessionaire's demand to allow them to charge their corporate income taxes to water consumers is now going to be the subject of arbitration.

Upon questioning by Bayan Muna Rep. Neri Colmenares during the ongoing deliberations for the 2016 budget, Finance Secretary Cesar Purisima confirmed government is now in the process of choosing the arbiter for the purpose.

Colmenares told colleagues at the House Appropriations Panel that in 2013, Maynilad Water sought an P8.58 per cubic meter increase while Manila Water sought a 5.80 per cubic meter increase. Both would have led to an average increase of P300 a month.

Colmenares said the MWSS, which regulates the concessionaires, denied the request.

The two concessionaires then wrote the government to call in a sovereign guarantee.

Purisima clarified that what the Ramos administration, through then-Finance Secretary Roberto de Ocampo, issued was a performance undertaking or an assurance regarding regulatory risk.

Purisima confirmed writing President Aquino, but he clarified it was merely to express concern regarding regulatory stability.

He said MWSS wanted government to issue a performance undertaking for one of their projects.

Purisima said one of his roles as finance secretary is to protect the credibility of the country.


Colmenares then pointed out that Maynilad only sought some P3.44 billion for recovery.

Maynilad said as much in a letter dated March 9, 2015 sent to Purisima. In a separate letter dated April 23, 2015, Manila Water estimated losses for recovery at P79 billion from 2015 to 2037.

"Dapat maniwala tayo sa MWSS, bakit tayo maniniwala sa concessionaires?" said Colmenares.

Purisima, meanwhile, said he is "not in a position to give computations."

"We will also explain our position. The gist is, we need to protect the credibility of the sovereign," said Purisima, to which Colmenares replied, "What does it mean?"

Purisima maintained, "We're not siding with one or another…I do not deny I received a letter and I forwarded it to the Solicitor General. The SolGen is the proper body to appreciate legal ramifications of that letter."

Purisima added that, if ever, the undertakings will be considered a liability of the republic.

Budget Secretary Butch Abad said this will be drawn from the risk management fund (RMF) in the unprogrammed portion of the budget. The RMF has P30 billion for 2015.