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Water exec apologizes to Duterte; MWSS move hit

/ 05:30 AM December 12, 2019

MANILA, Philippines — The head of  Ayala-controlled Manila Water Co. Inc. on Wednesday apologized for “angering” President Rodrigo Duterte over the alleged onerous provisions of the water concession agreements granted to it and Maynilad Water Services Inc.

“It’s unfortunate that the President got angry. We did not intend to burden the President with problems,” Manila Water president Jose Rene Almendras said at a Senate hearing.

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Almendras issued the apology as a Manila Water director and the president of Maynilad objected during a hearing in the House of Representatives to the “unilateral decision” — on Duterte’s orders — to revoke the renewal of their concession deals for another 15 years.

The two executives expressed “very grave concern” over the action of the Metropolitan Waterworks and Sewerage System (MWSS) to rescind the board resolutions extending its contracts with Manila Water and Maynilad until 2037.

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‘Not proper’

The 25-year water concession agreements, originally signed in 1997 under the Ramos administration, will lapse in 2022. But these were extended during the Arroyo administration.

The MWSS, according to deputy administrator for engineering Leonor Cleofas, arrived at the decision to revoke the extension during its Dec. 5 board meeting.

“On the part of Maynilad, we only learned of this [on Wednesday], or one or plus hours ago,” Maynilad president Ramoncito Fernandez told the joint House good government and public accounts panel.

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

Manila Water director and board member Antonino Aquino told the panel that he shared the same view.

In the Senate, Almendras  said Manila Water was willing to sit down with the MWSS and discuss the contents of its concession contract that Duterte found to be disadvantageous to the government.

Compensation

“We heard that you have waived the arbitral award. What’s the reason behind it? Why does the President have to get upset (before you do it)?” Sen. Christopher “Bong” Go asked Almendras, referring to the decision of a Singapore-based arbitral tribunal that ordered the government to pay P7.4 billion to Manila Water.

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The amount was compensation for losses the company incurred when it was not allowed to raise tariffs from June 1, 2015 to Nov. 22, 2019.

“We apologize if the President got angry because of the arbitral ruling … What happened is that we could not prevent the decision (of the arbitral court) from being handed out since the case has been filed in 2015. It’s beyond our control,” said Almendras, a Cabinet secretary and energy secretary during the Aquino administration.

“We don’t want to go against the President. What he has been doing is for the good of the people and we’re supportive of him,” he added.

Duterte earlier said the government would not pay any compensation not only to Manila Water but also to Maynilad, which the Permanent Court of Arbitration earlier awarded P3.4 billion for losses from March 2015 to August 2016.

Manila Water and Maynilad filed cases against the government in the arbitration court, invoking a provision in their concession agreements  that barred the government from interfering in setting tariffs. The contracts also allow the two concessionaires to pass on to consumers the arbitration  expenses.

At the House hearing on Tuesday, Almendras and Fernandez said Manila Water and Maynilad would no longer seek payment from the government of the combined P10.8 billion awarded to them by the arbitral court.

They waived the payments amid threats from Duterte to imprison and charge with economic sabotage officials of the two companies and government lawyers who prepared and approved the deals, which the President considered onerous. He also threatened to expropriate the assets of the two companies.

Letters from MVP, Ayala

The two companies formalized the offer to waive the award in separate letters to Duterte.

The President has received the letters of  Manuel V. Pangilinan (MVP)  of Maynilad and Fernando Zobel de Ayala of Manila Water informing him of their decision not to collect the compensation awarded to them by the arbitration court, according to presidential spokesperson Salvador Panelo.

Both dated Dec. 10, the letters  also  said Maynilad and Manila Water would heed the President’s call to talk with officials of the companies and were willing to amend or revise the provisions of their agreements that are onerous to the government and to consumers, Panelo said.

“The President will evaluate this development, as well as study the practical and legal consequences of the situation, before making any decision on what measure to undertake next,” he said.

He reiterated Duterte’s desire to meet the lawyers involved in the preparation the water concession agreements with the two companies.

Palace directive

At the hearing in the House on Wednesday, Assistant Government Corporate Counsel Howard Randy Arzadon said it was the “directive of Malacañang” to cancel the extension of Manila Water and Maynilad’s concession deals.

Arzadon said the MWSS first revoked Board Resolution No. 2009-72, dated Aug. 16, 2008, “pertaining to renewal or extension of the concession period of Manila Water Co.”

It then revoked Board Resolution No. 2010-172, dated Sept. 10, 2009, extending the concession period of Maynilad Water Services.

The President of the Philippines through the Department of Finance signed the extension of the contract with Maynilad, according to Fernandez.

—With a report from Leila B. Salaverria

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TAGS: Jose Rene Almendras, Manila Water, Maynilad Water, Ramoncito Fernandez, Rodrigo Duterte, water concession agreements
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