ABOUT a week after President Rodrigo Duterte ordered the filing of charges against Manila Water Company Inc. and Maynilad Water Services Inc., top executives of the two companies said they would no longer collect from the government the P10.8-billion compensation awarded to them by a Singapore arbitral court.
In a congressional hearing about their water concession agreements Tuesday, December 10, Manila Water president Jose Rene Almendras and Maynilad president Ramoncito Fernandez told members of the House committee on good government and public accountablity that they were also willing to revise their contracts and defer a rate increase scheduled for January 2020.
Despite their pronouncements, the Metropolitan Waterworks and Sewerage System (MWSS) on Wednesday, December 11, revoked its board resolution in 2009 which extended until 2037 the term of the concession agreements with the two companies.
With the revocation, both concessions will end in 2022, or 25 years after these were awarded in 1997. Maynilad is the water concessionaire for the West Zone of Metro Manila while Manila Water is in charge of the East Zone.
The Pangilinan-led Metro Pacific Investments Corporation (MPIC), parent company of Maynilad, confirmed the revocation in a regulatory filing Wednesday. Maynilad is owned and managed by DMCI-MPIC Water Company Inc., a joint venture between MPIC and DMCI Holdings Inc.
“We confirm that Maynilad received a copy of the MWSS Board Resolution revoking its previous resolution involving the extension of the concession period for Maynilad. Based on the resolution, Maynilad was given an opportunity to state its position on the matter and Maynilad is currently studying the same,” MPIC stated.
In a separate regulatory filing, Manila Water (MWC) confirmed having received the MWSS letter, but stressed that the regulator merely revoked its resolution in 2009 that authorized the extension of the concession agreement.
Manila Water said the extension of the concession agreement to 2037 was implemented under a memorandum of agreement and confirmation signed by Manila Water and MWSS on October 23, 2009 and approved by then President Gloria Macapagal-Arroyo.
“Our Company confirms that we received this morning a letter from the Metropolitan Waterworks and Sewerage System (MWSS) dated 10 December 2019 informing us of its Board of Trustees Resolution No. 2019-201-CO pertaining to the ‘Revocation of Board Resolutions pertaining to the Renewal/Extension of Concession Period of Manila Water and Maynilad from 2022-2037’. In the same letter, MWSS requested us to submit our position within three days,” the company stated.
“Kindly note that the MWSS Board of Trustees Resolution No. 2019-201-CO revoked the prior MWSS Board of Trustees Resolution No. 2009-072-CO. The MWSS Board of Trustees Resolution No. 2019-201-CO does not revoke the extension of our Concession Agreement with MWSS from 2022 to 2037,” Manila Water added.
These developments triggered sell orders for MPIC, MWC, Ayala and DMCI stocks. Share prices of all four companies went down.
During the congressional hearing Tuesday, both Almendras and Fernandez said MWC and Maynilad would no longer collect from the government the P7.39 billion and roughly P3.4 billion awarded to them, respectively, by the Permanent Court of Arbitration in Singapore to compensate for foregone revenues due to non-implementation of higher rates.
Almendras also said the company will defer the rate adjustment scheduled for January 1, 2020 and was willing to find a “suitable arrangement” with the MWSS.
“The Company has agreed to and started discussions with the MWSS on the provisions of the Concession Agreement identified for renegotiation and amendment,” the company said in a disclosure to the Philippine Stock Exchange.
Almendras and Fernandez made the statements six days after Duterte, irked by the Singapore arbitral ruling, ordered the filing of criminal, civil and administrative charges against the two water concessionaires for alleged economic sabotage.
Duterte on December 4 also directed the Department of Justice (DOJ) and the Office of the Solicitor General to draft and prepare new water agreements that are "favorable to the State and the Filipino people".
Both Almendras and Fernandez expressed their willingness to renegotiate their contracts and get rid of the alleged onerous provisions.
Share prices of all four companies have been declining since Duterte ordered the filing of charges on December 4.
At the close of trading Wednesday, MWC shares had dropped by about 30 percent to P12.48 from P17.9 on December 4. Parent firm Ayala also suffered a decline to P790 Wednesday from P830 a week ago.
MPIC shares went down to P3.19 from P3.92 in one week while DMCI shares decreased to P5.11 from P6.25 a week ago. (MVI/SunStar Philippines)