Manila Water says arbitral award stems from breach by previous admins, not Duterte’s

An international court decision ordering the Philippine government to pay Manila Water Co. Inc. P7.39 billion to cover years of losses from unrealized rate increase stemmed from a breach of the concessional agreement committed by officials of the previous administrations, the company said Wednesday.

“The arbitral award issued in our favor is for acts in breach of the procedure committed by officials of the previous administration, not the Duterte administration,” Manila Water said in a statement.

The water concessionaire issued the statement after President Rodrigo Duterte on Tuesday threatened to arrest individuals behind what he said were “disadvantageous” concession agreements entered the government entered into with Manila Water and Maynilad Water Services Inc.

A Singapore arbitral tribunal ordered the Philippine government to pay the Manila Water P7.39 billion representing the losses it suffered from 1 June 2015 until 22 November 2019.

“The Tribunal ruled that Manila Water has a right to indemnification for actual losses suffered by it on account of the Republic’s breach of its obligation,” the concessionaire said.

Two years ago, the arbitral court also ordered the government to reimburse Maynilad P3.424 billion in revenue losses from January 1, 2013 to March 10, 2015.

The water concessionaires separately took the government to court after the Metropolitan Waterworks and Sewerage System (MWSS) denied their respective petitions to increase water rates in their concession areas. Instead, regulator MWSS reduced the rates.

Though they won before an international tribunal, Manila Water and Maynilad are appealing a loss dealt by the Supreme Court last August ordering the companies to pay more than P921 million each for violating the Philippine Clean Water Act.

“We wish to reiterate that Manila Water is more than willing and have started to work with the incumbent administration to come up with a workable solution to the arbitration decision,” the water firm said.

Upon receiving information about the arbitral award, Manila Water said its chairman, Fernando Zobel de Ayala, together with a few other senior officers of the company sought “guidance and met with Finance Secretary Carlos Dominguez before it became public.”

“We informed him that we are willing to come up with a mutually acceptable manner of implementation of the arbitral award considering that this case was filed due to a violation incurred not during this administration,” the company said.

Dominguez acknowledged the company’s proposal to “work very closely with his office to find a mutually acceptable scheme to address the award,” Manila Water noted.

In 1997, the government, led by President Fidel V. Ramos, solicited bids for concession agreements with MWSS to address the water crisis in Metro Manila due to the incapability of the same Metropolitan Waterworks to maintain viable operations because of technical inefficiencies and enormous financial debts, Manila Water said.

“The government unilaterally determined the terms of the agreements, which were bidden out on a take it or leave it basis.”

Manila Water was one of many local and international corporations who responded to the government’s call for a public-private partnership to solve the water crisis.

It offered the lowest fee to serve as water concessionaire. The mode of payment the MWSS decided on was through the water tariff to be collected by the concessionaire’s customers. Manila Water was awarded the concession agreement for the East Zone.

“Manila Water has diligently discharged its obligations as concessionaire of MWSS, spending over P166 billion to improve water and wastewater services,” it said.

"We have installed over 5,500 kilometers of pipes and built 2 new filter plants, 32 new reservoirs, 113 pumping and booster stations, 40 additional wastewater treatment facilities and five times more sewer network capacity to improve the MWSS facilities in the East Zone.”

Manila Water said its investments resulted in the expansion of water service coverage in the East Zone from 67% serving around three million people to 93% coverage serving over seven million people.

“This includes an additional two million customers from the poor and marginalized sector, who used to buy vended water in buckets or pails delivered by vendors in pushcarts,” it said.

“Manila Water services allowed them to save about 90% of what they used to pay for water. We also reduced water losses from 63% to less than 12%, saving 700 million liters per day of water,” it added.

As the MWSS decided to pay for its services and reimburse its costs with the water tariff, the concession agreement contains a procedure for the adjustment of water rates in accordance with the MWSS Charter.

“The Republic of the Philippines undertook to respect the procedure, which is under the full control of MWSS from beginning to end,” it said.

In 2009, recognizing the compelling need for more water and wastewater investments, the administration of then President Gloria Macapagal-Arroyo extended the concession agreement to 2037. —Ted Cordero/VDS, GMA News