Palace to move vs. 1997 water deal’s onerous provisions: DOJ

Upon instruction of President Rodrigo Duterte, the Department of Justice (DOJ) reviewed the 1997 water concession agreements of the MWSS with Maynilad and Manila Water. (File Photo By Ramon FVelasquez – Own work, CC BY-SA 3.0)

MANILA — Malacañang may soon announce irregularities uncovered in the concession agreement entered into by the government with water concessionaires Maynilad and Manila Water, Justice Secretary Menardo Guevarra said Tuesday.

“Certain recommendations to the President were adopted by the Cabinet, and the President will make his public statement on this matter very soon,” Guevarra said in a message to reporters.

Upon instruction of President Rodrigo Duterte, the Department of Justice (DOJ) reviewed the 1997 water concession agreements of the MWSS with Maynilad and Manila Water.

Guevarra said his agency’s review “found a dozen provisions that were deemed onerous or disadvantageous to the government and the consuming public”.

“Most notable were the prohibition against government interference in rate-setting and the provision on indemnity for possible losses in the event of such government interference,” he added.

Due to the two provisions, the government was ordered by the Singapore arbitration court to pay Maynilad about PHP3.6 billion and, recently, PHP7.4 billion to Manila Water as compensation for losses and damages.

Guevarra said another onerous provision is the extension of the concession agreement even before the lapse of the original term.

“The DOJ also found the extension of these contracts to 2037 irregular, considering that the extension was granted 12 to 13 years before the original expiration of the 25-year concession agreements in 2022,” Guevarra said.

The water concessionaires are appealing a Supreme Court decision last August directing it to pay a fine amounting to almost PHP2 billion for violation of the provisions of Republic Act (RA) 9275 or the Philippine Clean Water Act including requirements for the two firms to provide wastewater treatment facilities and to connect sewage lines in all establishments, including households, to an available sewerage system within five years upon the effectivity of RA 9275 on March 22, 2004.

The concessionaires warn that its customers are facing a PHP26.70 per cubic meter increase in water rates if the decision is not reconsidered.