President Rodrigo Duterte’s order led the industry regulator to cancel the extension of concession agreements with Maynilad Water Services Inc. and Manila Water Company Inc., Justice Secretary Menardo Guevarra said Wednesday.
The President's directive was based on the Department of Justice’s recommendation after finding that the contracts extended to 2037 had no legal basis, Guevarra said.
“The ball is now in the concessionaires’ court,” the Justice chief said in a message to reporters, emphasizing that 2022 is the “proper time” to review the agreements as provided in the respective contracts.
Regulator Metropolitan Waterworks and Sewerage System (MWSS) on Wednesday revealed that the agreements that were extended from 2022 to 2037 have been canceled.
Duterte criticized the 22-year-old concession agreements after Manila Water won a P7.4-billion arbitral award from the Permanent Court of Arbitration in Singapore.
Maynilad also won a P3.4-billion arbitral award in 2017.
But the companies said they were no longer pursuing the awards and that they will coordinate with the government to review provisions in the agreements that the government considered disadvantageous to its interests.
Duterte has threatened a government takeover of the operations of water services for Metro Manila if he would not get a satisfactory explanation regarding the concession agreements.
Asked for the legal basis, Guevarra said the president may have been thinking of Section 17 of Article XII of the 1987 Constitution.
This provision allows the government to “temporarily take over or direct the operation of any privately owned public utility or business affected with public interest” during times of national emergency or when public interest requires drastic government action.
Guevarra was also asked if present circumstances actually warrant a takeover. He said he would not answer the question “unless it’s the president who will ask it.” —VDS, GMA News