Manila Water open to ‘workable solution’ on P7.4-B award

MANILA, Philippines — Manila Water Co. has said it was more than willing to find a “workable solution” to the decision of an international arbitration court directing the Philippine government to pay the company P7.4 billion in compensation for preventing it to raise rates.

But President Duterte is upping the ante against the firm and another water distributor he both accuses of economic sabotage.

The President has ordered the filing of criminal, civil and administrative charges against the parties, including government lawyers and agents, involved in crafting what he considered onerous water concession agreements, his spokesperson, Salvador Panelo, said on Wednesday. (See related story on Page A7.)

Manila Water and Maynilad Water Services Inc. have been distributing water in Metro Manila and parts of Cavite and Rizal provinces since the Ramos administration privatized water distribution in Metro Manila in 1997.

In a statement, Manila Water said the decision of the Permanent Court of Arbitration in Singapore was in connection with the “breach of the [concession] procedure committed by officials of the previous administration.”

The publicly listed company said that before the arbiter’s decision became public, its chair, Fernando Zobel de Ayala, and other senior officers met with Finance Secretary Carlos Dominguez III for guidance.

“We informed him [Dominguez] 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,” Manila Water said.

‘Workable solution’

It added that it “is more than willing and have started to work with the incumbent administration to come up with a workable solution to the arbitration decision.”

When sought for comment, Maynilad officials said they were still preparing a statement.

A day after Mr. Duterte threatened to put behind bars officials of Manila Water, its shares of stock slumped 6 percent.

The President on Tuesday accused Manila Water and Maynilad of treating water like a commodity and not a natural resource. He also ordered the drafting of new contracts that would be favorable to the state.

His outburst came after the Department of Justice (DOJ) found 12 provisions in the concession agreements disadvantageous to the government and the public, including the prohibition against government interference in rate-setting and indemnity for possible losses in case of such government interference.

Because of these provisions, the government was ordered by the Singapore arbitration court to pay Maynilad about P3.6 billion and, recently, Manila Water, P7.4 billion as compensation for “losses or damages,” Justice Secretary Menardo Guevarra said on Tuesday.

Money-making venture

In a statement, Panelo pointed out that under the Constitution, the country’s natural resources belong to the state, and it was indisputable that water was intended for the use, enjoyment and welfare of the citizens.

“Our water concessionaires in Metro Manila, Rizal and Cavite, however, have not only abused the arrangement of delivering and distributing the state-owned water to the citizens but have treated the same as a commodity and a money-making venture, instead of considering it as a public service,” he said.

Distributing water has been a highly profitable business for both Maynilad and Manila Water, earning them billions of pesos every year.

Maynilad’s net income was P4.78 billion in 2010, P5.83 billion in 2011, P6.38 billion in 2012, P6.94 billion in 2013, P8.26 billion in 2014, P9.55 billion in 2015, P6.75 billion in 2016, P6.85 billion in 2017, and P7.37 billion in 2018.

The net income of Manila Water was P5.78 billion in 2013, P5.83 billion in 2014, P6.13 billion in 2015, P6.19 billion in 2016, P6.14 billion in 2017, and P6.64 billion in 2018.

Panelo said Mr. Duterte’s directive was part of his constitutional mandate to serve and protect the Filipino people, and that it would be complied with regardless of the power or influence of the groups involved.

He blasted the government personnel who allowed these contracts to be drafted and signed.

“It is apparent that some members of the government have not only looked the other way but have, in fact, purposely guided the hands of those who have raped our economy for their own personal gain,” Panelo said.

Take-it-or-leave-it basis

But Manila Water said it was the government that unilaterally determined the terms of the agreements, which were offered to bidders on a take-it-or-leave-it basis.

Since winning the concession that covers the eastern portion of Metro Manila as well as Rizal, it has spent at least P166 billion to improve water and wastewater services, the company said.

“Because MWSS (Metropolitan Waterworks and Sewerage System) decided to pay our services and reimburse our costs with the water tariff that we collect, the concession agreement contains a procedure for the adjustment of water rates in accordance with the MWSS Charter,” it said.

“The [Philippine government] undertook to respect the procedure, which is under the full control of MWSS from beginning to end,” it added.