Maynilad claim for P3.4-B sovereign compensation still unresolved –DOF

The Department of Finance (DOF) has yet to resolve Maynilad’s claim for a P3.44-billion sovereign guarantee pending the commencement of the second round of arbitration proceedings against the company.

Finance Secretary Cesar Purisima told lawmakers at the budget briefing of the Development Budget Coordinating Committee (DBCC) at the House of Representatives that the issue on Maynilad’s claim is now with the Office of the Solicitor General (OSG).

“We are in the process of choosing who our arbiter representative is,” he said.

Purisima gave an update on the arbitration case in response to Bayan Muna party-list Rep. Neri Colmenares’ query on whether the government has allocated funds to pay the water concessionaire.

Colmenares claimed that DOF has asked for P5 billion to cover Maynilad’s sovereign compensation.

Maynilad filed a claim for a P3.44-billion sovereign guarantee to cover losses from Jan. 1, 2013 to Feb. 28 2015 stemming from the delayed implementation of an approved rate hike.

By the concessionaire’s estimates, it is losing P208 million monthly due to the delay in raising its tariff rates.

Pressed for more details, Purisima said the DOF has asked Malacañang and the OSG for clarification, as well as guidance on how to proceed with the case.

"We have not made a decision to pay. In fact, we brought it up with the DOJ (Department of Justice) to appreciate the legal issues involved in that letter as well as of the performance undertaking... So up to now, it's still being resolved,” he said.

The Finance secretary admitted that the 1997 concession agreement signed by the government with the Maynilad and Metropolitan Waterworks and Sewerage System (MWSS) is a "cause of concern" since it could affect the country's credibility.

"When the contract was entered into, there were terms. The reading of the DOF of the terms of the contract in 1993 between the republic and these concessionaires was that it was allowed, and in fact several administrations of the MWSS respected that contract from 1993 to 2013," Purisima said.

"There's been precedent already and then suddenly, there's been a change of administration in the MWSS and then we changed,” he added.

At the same hearing, Budget Secretary Florencio Abad clarified that while the P30-billion unprogrammed item called the risk management program in the general appropriations bill can be tapped should the government need to pay Maynilad, the money wasn’t allocated especially for that purpose.

"In case there are cases such as this where the government is compelled to pay, at least we have an appropriation item which can be activated by excess or  new sources of revenue that can be generated in 2016,” he said. —KBK, GMA News