The government will require water suppliers to comply with targets on water distribution, sewerage and sanitation in the proposed new water concession agreement for Metro Manila and the deal will be terminated if they fail to meet the targets or if their performance is unsatisfactory.
These, according to Cabinet Secretary Karlo Nograles, were among the provisions of the new contract that the government is crafting as it reviews the 1997 water concession agreement that President Duterte deemed to be “onerous.”
“In our review of the contract, we saw that targets, in terms of water services that they should be fulfilling, were not set at all. And it seems that the setting of the targets was lopsided since it’s the water concessionaires that set the targets. We will no longer allow that,” he said.
“We have to be setting the targets and we have to have the mechanisms in place to be able to audit them. We have to audit if they are complying with the targets,” he added. “Our technical experts will come in and we will be setting our targets, so at the very least we want to see quality improve.”
‘Not kill them’
Nograles made the remarks as state lawyers from the Department of Justice and Office of the Solicitor General continued to consolidate and finalize a new water concession agreement, tasks that Justice Secretary Menardo Guevarra said would take at least six months.
Guevarra had earlier assured water concessionaires that the new agreement would not “kill” them but Nograles said the new agreement would be “most advantageous to the general public” and would remove provisions deemed onerous.
The new agreement will not allow water firms to pass on business taxes to consumers nor foreign arbitration in cases of dispute.
“We also clarified that this is a public utility. This is a natural resource. This is for the benefit of the people and the general public so the government must regulate it,” Nograles said. “The government stands firm that this is a public utility and therefore subject to regulatory processes.”
He said the drafting of the agreement was moving forward except for technical aspects that needed input from experts and economic managers.
But once the final agreement is completed, it will be on a “take it or leave it” basis so there is still the possibility of nationalizing the water distribution system should the two water firms reject the deal.