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‘Concession extension lowered water rates’

MANILA, Philippines — The 15-year concession extension the Metropolitan Waterworks and Sewerage System (MWSS) granted to Manila Water Co. in 2009 resulted in lower water rates, one of Metro Manila’s two water utilities said on Saturday.

The Ayala group subsidiary said in a statement that from 2008 to 2012, the MWSS approved a tariff increase of P13.22 per cubic meters that was to be implemented in tranches over the five-year rate rebasing period.

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But the extension of the concession in 2009 resulted in water rate hikes being cut down to just P3 per cubic meters for that period, Manila Water said.

The concession was set to expire in 2022 but the MWSS granted the extension 13 years earlier on Manila Water’s pledge to increase capital expenditures for wastewater projects.

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The extension would have prolonged the concession until 2037 but, on Dec. 5, the MWSS revoked the extensions of the concessions of both Manila Water and Maynilad Water Services Inc.

MWSS deputy administrator for engineering Leonor Cleofas said the revocation of the extensions revert the concession agreements to their original expiry of 2022.

The MWSS board passed a new resolution revoking the 2009 extension in compliance with the recent directive of President Duterte who expressed outrage at onerous provisions in the water concessions.

On Dec. 4, former President Fidel Ramos, who approved the water concession in 1997, argued that the terms of the original deal were the best that could be negotiated at the time.

Conciliatory moves

Duterte’s ire sparked after the Permanent Court of Arbitration (PCA) in Singapore ruled in favor of the two concessionaires which wanted to be reimbursed for supposed losses after their concessions were extended.

In separate conciliatory moves, the two concessionaires said they would waive the monetary renumeration directed by the PCA, defer a planned water rate increase on New Year’s Day and agree to renegotiate the concession agreements.

But the President continued to rage and threatened on Thursday to order a military takeover of the two water companies, seize assets bought with consumers’ monies, and arrest their owners and officials for economic sabotage.

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Asked what were the legal bases of such moves, Justice Secretary Menardo Guevarra on Saturday said the Constitution empowered the Chief Executive to do so.

“Under the Constitution, the State may temporarily take over or direct the operations of privately owned public utilities or businesses affected with public interest: in case of national emergency and when public interest requires it,” Guevarra said in a statement.

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TAGS: Manila Water, Maynilad Water, MWSS, Permanent Court of Arbitration, Water firms, water rates
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