Extension of Maynilad, Manila Water concession deal canceled, says MWSS

The extension of concession agreements with Maynilad Water Services Inc. and Manila Water Company Inc. to 2037 from 2022 has been canceled, the Metropolitan Waterworks and Sewerage System (MWSS) said on Wednesday.

MWSS deputy administrator Leonor Cleofas confirmed this development during a joint hearing of the House Committees on Good Government and Public Accountability and on Public Accounts.

During a meeting last December 5, the MWSS board decided to revoke a previous resolution approving the extension of the concession agreement, Cleofas noted.

The board resolution was to extend the concession agreement by another 15 years from 2022, she said.

“It was on the agenda that the board should tackle the resolution on the approval of the extension of the concession agreement—that was in 2008 and 2009,” Cleofas noted.

“Based on the recent directive of the Office of the President and the Cabinet … they are now revoking ... I think the word is revoking the board resolution adopted in 2008,” she added.

MWSS deputy administrator Chris Chuegan said, however, that if the concession agreement expires by 2022, there may no longer be price adjustments.

“Hindi clear kung tataas ang presyo dahil pag natapos ang kontrata, pwedeng ipa-rebid or magkaroon ng another bidding wherein new operators may come in. Dapat naka-schedule tayo ng rate rebasing nung 2023,” he said.

“Wala nang pagkakataon na mag-recompute kasi tapos na ‘yung huling rate rebasing which is 2018,” he added.

The companies, however, were concerned about the “unilateral” revocation of their concession agreements’ extension.

Maynilad president and CEO Ramoncito Fernandez noted it was only this morning that they learned about such development.

“We would like to react that it is with very grave concern that we view this action. We believe also that it’s not proper to unilaterally revoke the agreement,” he said.

For his part, Manila Water board member Antonino Aquino also noted that their spending plans were based on the extension that was some about 10 years ago.

“We presume na mababawi ang lahat ng investment natin for that extended period of time. Kung mas mahaba ‘yung ating recovery period, mas mababa ang magiging epekto sa taripa,” he said.

The concessionaires also bucked a statement by the regulator MWSS that there would be no more rate adjustments after the concession agreements expire in 2022.

“We’re still computing, but definitely it will go very high because the rational of the extension at that time was to mitigate any spikes in tariffs or presyo ng tubig because kailangan mag-invest pa ng mga water concessionaires nang mas malaki,” Fernandez said.

On Tuesday last week, President Rodrigo Duterte threatened to run after individuals responsible for what he claimed were disadvantageous concession agreements the government entered into with Maynilad and Manila Water.

The President protested a provision in the contracts that hold the government liable if it interferes in the implementation of agreed water rates, and accountable for indemnifying the utility the companies for losses incurred.

The Permanent Court of Arbitration in Singapore has ordered the Philippine government to pay Maynilad around P3.6 billion and Manila Water P7.4 billion as compensation for losses or damages due to the liability clause.

But Manila Water and Maynilad are no longer pursuing their respective arbitral wins and will instead coordinate with the government to review supposedly onerous provisions in the concessions deals.

The company said they are also open to delaying the water rate increase scheduled in January next year.  —VDS, GMA News