Palace bares key features in new gov't-Manila Water concession deal

Malacañang on Monday revealed some of the key features in the revised concession agreement between the government and Manila Water.

At a press briefing, presidential spokesperson Harry Roque said the new deal signed by Manila Water and Metropolitan Waterworks and Sewerage System (MWSS) has the following key features:

1. Removal of government non-interference clauses. Government will no longer be liable when fulfilling its regulatory functions to protect the consumer.

2. Recognition of Manila Water as a public utility, which makes it more accountable to the government and the public.

3. Removal and addition of provisions that unduly compromise medium and long term government liabilities (contingent liabilities) such as:

• Removal of the National Government's Performance Undertaking for future debt
• All debt and expenditures of the Concessionaire must be reviewed and approved by the Regulatory Office
• All fully recovered assets are immediately transferred to the government to ensure there is no double payment at the end of the contract
• Material Government Adverse Action (MAGA) is limited only to actions of the Executive so that the National Government is not liable for things outside of its control

The new deal, Roque added, has the following advantages to the consumer:

1. Corporate Income Tax cannot be charged to the consumer unlike in the previous Concession Agreement.

2. There is Tariff Freeze until December 31, 2022.

3. The tariff adjustment for inflation will only be 2/3 of the Consumer Price Index unlike the previous contract which had a 100% inflationary impact.

4. Removal of the Foreign Currency Differential Adjustment (FCDA) which will result in the much lower tariff increases and protect the consumer from possible tariff spikes because of foreign exchange movements.

“This proves that the President is for the interest of the Filipinos,” Roque said.

With the signing of a new deal, Roque said he would ask President Rodrigo Duterte for guidance since the latter previously tasked him to work on possible charges to be filed against Manila Water and Maynilad.

With the signing of a new deal, Roque said he would ask President Rodrigo Duterte for guidance since the latter previously tasked him to work on possible charges to be filed against Manila Water and Maynilad.

“I will find out what the next order of the President is now that there is already a revised concession agreement,” Roque said.

Holding the water companies criminally liable, however, needs further study, according to Justice Secretary Menardo Guevarra.

“That is a totally different matter and that needs further studies. And besides, somebody’s got to put up the complaint before the Department of Justice or before the Office of the Ombudsman,” Guevarra said in the same press briefing.

“Right now, we have not heard of any party who has filed or is attempting or thinking of filing something like that with the Office of the Ombudsman or with the Department of Justice.”

Roque said the new deal is patterned after the joint venture agreement of Bases Conversion and Development Authority (BCDA) and Malaysian firm MTD Capital Berhad for building sports facilities in New Clark City as advised by the Asian Development Bank.

“We are confident that this new agreement protects the government and the consumers,” Roque said.

The new MWSS-Manila Water deal came more than a year after President Rodrigo Duterte said that the Philippine government will not comply with court rulings ordering government compensation to water concessionaires due to poor services.

These court rulings include the Permanent Court of Arbitration's office in Singapore's decision ordering the Philippine government to pay Manila Water P7.39 billion for the company’s losses from June 1, 2015 to November 22, 2019 or during the time Manila Water was barred from raising water rates.

The same court also ordered the Philippine government to pay Maynilad Water Services Inc. P3.424 billion in revenue losses from unimplemented rate adjustments.

Roque, however, also said on Monday that the next concessionaire deal to be renegotiated will be the one between the MWSS and Maynilad.

“The negotiations with respect to that will start immediately and we will be proposing essentially the same terms and conditions as those that were contained in the revised agreement with Manila Water,” Guevarra said.

“But of course, we recognize the fact that Maynilad is differently situated compared to Manila Water so there will be probably a lot of discussions also with respect to possible modification of the terms and conditions.” —KBK, GMA News