MANILA -- Malacañang thinks Maynilad and Manila Water did not actually lose a big part of their fortune after the government announced that it had revoked the 15-year extension of concession agreements with the two water firms that are supposed to expire in 2037.
Presidential Spokesperson Salvador Panelo brushed aside reports that the two water firms may face bankruptcy over the cancellation of the extension of their concession agreements which will expire in 2022.
“I do not think the concessionaires lost in this business venture. They have profited so much out of these concessionaire agreements,” Panelo said in a media interview in Malacañang on Tuesday.
“They didn’t file income tax, they were in control of the rates. So how could they say they lost?” he added.
Reports showed that an estimated PHP127 billion has been wiped out of the stock market of the two water concessionaires after President Rodrigo Duterte unleashed tirades against them over the alleged onerous provisions which put the government at the disadvantage.
The decision of the Metropolitan Waterworks and Sewerage System (MWSS) to revoke the concession agreements is also causing banks to reconsider their loan arrangements.
The revocation means the two firms only have until 2022 to operate since the 2009 resolution extending the 25-year concession deals signed in 1997 is already considered ineffective.
Maynilad Vice Chairman Isidro Consunji expressed concern over the possibility that the water firms could close.
Onerous provisions must go
Initially, Duterte had expressed openness to dialogue with the owners of water concessionaires to review the alleged onerous provisions in the water deals.
But on Dec. 13, Duterte said he would leave the task to MWSS Administrator Emmanuel Salamat to negotiate with the two firms.
Whether Duterte would again change his mind or not, Panelo said what was clear is that the President wanted the onerous provisions removed.
“As far as the President is concerned these onerous provisions must go,” Panelo said.
“There will be a new contract. The original concessionaires can be the same people running it or if there are better proposals, there will be biddings of course,” he added.
Duterte’s decision to question onerous provisions began after the Singapore-based Permanent Court of Arbitration issued separate decisions, compelling the Philippine government in 2017 to pay PHP3.4 billion to Maynilad and in November 2019 to compensate PHP7.39 billion to Manila Water for the losses the two water firms allegedly suffered due to non-implementation of increases in water rates.
The President refused to pay them and instead threatened to sue them for economic sabotage.
He also floated the idea of ordering the military to take over the operations of the two water concessionaires. (PNA)
