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Duterte offers new deals to Maynilad, Manila Water concessionaires

Duterte said the concession contracts of Manila Water and Maynilad Water Services Inc. are disadvantageous to the public because they prohibit the government from adjusting water rates. Photo: STAR. Sketched by the Pan Pacific Agency.

MANILA, Jan 7, 2020, Rappler. After lashing out at Maynilad and Manila Water over supposed “onerous” provisions in their government contracts, President Rodrigo Duterte gave the companies the option to accept new deals crafted on his terms as he doubled down on threats of a takeover, Rappler reported.

Malacañang said on Tuesday, January 7, that if the two companies accept the new contracts crafted by the Office of the Solicitor General and the Department of Justice (DOJ), there would still be no guarantee that they would be spared from possible criminal prosecution over the deals that the government claimed to be a “colossal rip-off.”

“The Chief Executive is giving the water concessionaires the option of accepting the new contracts, minus the onerous provisions, without any guarantee of not being criminally prosecuted together with those who conspired to craft the very onerous contracts which are void ab initio (void from the beginning) for violating the Constitution and the laws of the land,” said Presidential Spokesperson Salvador Panelo.

If Maynilad and Manila Water refuse to accept the new agreements, Panelo reiterated Duterte’s threat to order the cancellation of their present water contracts, take over water services, and prosecute all individuals “directly or indirectly” involved in crafting the current concessionaire agreements.

Panelo said there was no deadline set on the decision of Maynilad and Manila Water on the President’s offer. Asked for details on the new contracts, Panelo only said “all onerous provisions” were removed and that “terms will be very, very different from the previous one.”

“As the President previously uttered in righteous indignation and outrage to them: ‘If you will not give justice to the Filipino people, I will get it for them,'” Panelo said.

“There is a time for reckoning. That time has come,” he added.

Justice Secretary Menardo Guevarra earlier admitted that the government is not yet capable of taking on water operations by itself. (READ: Legally yes, realistically no: Duterte’s powers to take over water operations)

What prompted the new contracts? Duterte’s beef with Manila Water and Maynilad started with the water shortage in March 2019, which prompted him to order a review of the firms’ agreements with the Metropolitan Waterworks and Sewerage System.

The DOJ found a dozen “onerous” provisions following the review. However, individuals involved in the crafting of these deals in 1997 said the provisions were needed to provide incentives for private firms to take on water distribution and treatment which had been very costly and risky. (READ: Risky business: Why gov’t made sure Manila Water, Maynilad would earn)

Duterte stepped up his attack against the companies after Manila Water’s victory over the Philippine government at the Permanent Court of Arbitration in Singapore. The court ordered the government to pay Manila Water P7.39 billion for losses it incurred since 2015. This was on top of the P3 billion the government owed Maynilad, also for the delayed implementation of rate hikes since 2017.

The bigger picture: Renewed threats of a takeover, while offering the firms limited room to negotiate and find a middle ground, is seen to spook business and investors looking to enter into government agreements. Experts have emphasized that the government’s respect for the validity of contracts it enters into is an important factor in building investor confidence.

Maynilad and Manila Water have since conceded the claims to losses, saying they would no longer demand payments from the government. This, however, has failed to appease Duterte.

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