DOJ finds ‘disadvantageous’ provisions in gov’t deals with Maynilad, Manila Water

The government stands to lose billions of pesos to Maynilad and Manila Water because of two "disadvantageous" provisions in its 22-year-old agreements with the two water concessionaires, the Department of Justice (DOJ) said Tuesday.

The Metropolitan Waterworks and Sewerage System's (MWSS) 1997 concession agreements with the two water companies prohibit government interference in rate-setting and contain a provision for indemnity in case of such an interference, Justice Secretary Menardo Guevarra said.

He said these two provisions were the reason why the government was ordered by an arbitration court in Singapore to pay Maynilad around P3.6 billion and Manila Water P7.4 billion as compensation for losses or damages.

These are also the "most notable" among a dozen provisions that the DOJ deemed "onerous or disadvantageous to the government and the consuming public" when it reviewed the agreements upon orders by President Rodrigo Duterte, Guevarra said.

The Justice chief said Duterte ordered the review at the height of the water crisis earlier this year, but that the matter was not discussed by the Cabinet until last November and again on Monday night for updates.

GMA News Online has sought comment from Maynilad and Manila Water.

The Singapore-based panel ordered the government pay Manila Water P7.39 billion in years' worth of losses due to the MWSS' reduction of water rates instead of an approval of their proposed rate hikes. Maynilad scored an order for a P3.424-billion reimbursement in 2017.

Duterte 'visibly upset'

The Office of the Solicitor General has said the award for Manila Water is not final and executory and that the government is studying all available remedies to challenge the ruling.

"Kaya there was an impassioned discussion last night," Guevarra said in a message to reporters. "PRRD was visibly upset, if not angered, and we're expecting him to make a public statement today on the [government's] intended course of action."

The DOJ also found in its review that the extension of the concession agreements to 2037 was "irregular" considering that the extension  was granted 12 to 13 years before the original expiration of the contracts in 2022, he said.

He said the Cabinet adopted certain recommendations but did not disclose further details out of what he said was deference to the president.

Maynilad and Manila Water, meanwhile, are appealing a loss before the Philippine Supreme Court (SC). They were ordered to pay fines of more than P921 million each for violating the Philippine Clean Water Act.

The SC ruled that the two companies failed to connect all existing sewage lines in establishments and households to an available sewerage system within the period set by law.

In their appeals, the firms warned of the impact of such an “impossible” undertaking on Metro Manila traffic. They also claimed that government agencies failed to cooperate with the concessionaires to meet their legal obligations. — BM, GMA News