Senate panel wants to synch expiry of Manila Water, Maynilad franchise, concession deals

The Senate Committee on Public Services is looking into how it can synchronize the expiration dates of the Metro Manila water concessionaires' revised concession agreements, which will be in 2037, and their proposed franchise extensions, which will be in 2046.

During the Senate panel’s hearing on the two bills extending the franchises of Manila Water and Maynilad for another 25 years, Poe raised concerns that there would be an interval between the concession agreements' expiry and the end of the proposed franchise extensions.

“There is a revised concession agreement, effectively extending it to 2037. On the other hand, the proposed bills grant a 25-year franchise which if approved this year will end in 2046,” Poe, chair of the Senate Committee on Public Services, raised.

“So what will happen after 2037? Will there be a bidding again?”

The Senate panel is tackling the House Bills 9422 and 9423, approved by the House of Representatives early August. 

House Bill 9422 is titled "An Act Granting Maynilad Water Services, Inc. a Franchise To Establish, Operate, And Maintain A Water Supply And Distribution System And Sewerage and Sanitation Services In The West Zone Service Area of Metro Manila and Province of Cavite."

On the other hand, House Bill 9423 is titled "An Act Granting Manila Water Company, Inc. A Franchise To Establish, Operate and Maintain The Waterworks and Sewerage System In The East Zone Service Area of Metro Manila And Province of Rizal" obtained 206 affirmative votes and seven no votes.

The approval of the franchise bills was criticized as being “railroaded.”

Poe vowed to scrutinize the measures in the Senate. 

Senate Majority Leader Juan Miguel Zubiri said that extending the concession agreements’ deadlines for 25 years, in relation to the timeline of the proposed franchise bills, would be “more advantageous to our consumers” as this will stretch the payment terms of loans of the water concessionaires which are passed on to consumers.

For his part, Manila Water chief regulatory officer Donato Almeda said, “We actually totally agree with Senator Zubiri; if we may be able to extend the concession agreement to coincide with the expiry of the franchise, that will redound to consumers for a lower tariff.”

Likewise, Maynilad president and CEO Ramoncito Fernandez said, “We fully support the possibility to synchronize the life of our concession and the franchise.”

“This will definitely lead to the benefit of customers as this will smoothen the required tariff adjustments to recover long-term investments,” Fernandez said.

Poe asked the Metropolitan Waterworks and Sewerage System (MWSS) if it can legally extend the expiration of Manila Water and Maynilad's concessions to synchronize them for the 25-year period for the proposed franchises. MWSS Board member Elpidio Vega replied, “Yes, it can be done as long as the different revisions will be consistent in a way it will not render nugatory the provisions of the revised concession agreement.”

“Second, it should be stated clearly what will be the role of the MWSS in these specific franchise bills which are being proposed in relationship with the concessionaires,” Vega said.

Poe said that probably most of the provision of the revised concession agreements will remain.

“I would imagine the major amendment will just be the date of expiration,” she said.

“If that would be the case, the problem also is the issue that would arise as to what would happen after these revised concession agreements and the role of the MWSS with regards to the control, regulation of the water sources and the assets of the government,” Vega said.

With this, Poe required the MWSS to send a board resolution regarding their position about reconciling their revised concession agreements with Manila Water and Maynilad with the Congressional franchise “so that we only have one deadline as opposed to having two timelines.”

Manila Water corporate secretary Benny Tan said that under the revised concession agreement, the MWSS has two options when the accords expire in 2037.

“Number is to re-bid the contract. Number two, it has the option to do other things that they may find necessary under the circumstances. We are seeing if the Congress provides authority to MWSS to extend the revised concession agreement when public interest so requires, it will fall under number two option,” Tan said.

The Senate panel then moved to proceed with the technical working group to craft the committee report. — BM, GMA News