Duterte won’t allow onerous provisions in Chinese-funded water projects, Palace says

January 2, 2020

President Rodrigo Duterte would not allow onerous provisions in the contracts on Chinese-funded projects, such as the P12.2-billion New Centennial Water Source-Kaliwa Dam Project.

In a press briefing on Thursday, Presidential Spokesperson Salvador Panelo said that Duterte is willing to review the contracts.

"That goes without saying that the President, for as long as you point out that there is onerous provision, he will immediately look at it," he said when asked if Duterte is willing to review the loan agreement for the Kaliwa Dam.

This was one of the Chinese-funded projects cited by Bayan Muna Partylist Rep. Carlos Zarate as being worse than the concession agreements with Manila Water Company, Inc. and Maynilad Water Services, Inc. due to alleged onerous provisions.

He said if after Duterte found out there is really an onerous provision, it will be removed and the contract would continue to take effect.

Zarate cited that the loan agreements for the Kaliwa Dam and the Chico River Pump Irrigation Project were highly favorable to China, citing that in case of dispute or default in payments, it would be resolved under Chinese laws and by a tribunal in China.

Checking on the loan agreements for both projects as posted on the Department of Finance website, the deal for the Kaliwa Dam was signed on Nov. 20, 2018 between the Metropolitan Waterworks and Sewerage System and the Export-Import Bank of China.

For the Chico irrigation project, it was signed on April 10, 2018 between the Philippine government through the DOF and with the same Chinese bank.

For the dam project, the deal provides that it "shall be governed and construed in accordance with the laws of China."

It also states that in any dispute in connection with the agreement, it shall be resolved through "friendly consultation."

But if no settlement can be reached through such consultation, each party shall have the right to submit such dispute to the Hong Kong International Arbitration Centre for arbitration. Hong Kong is part of China.

With regard to the Chico irrigation project, it also provides that the governing law are the laws of China and any dispute, if not resolved through friendly consultation, could be submitted to the China International Economic and Trade Arbitration Commission in Beijing for arbitration. 

Duterte has threatened to file syndicated estafa against and send to jail owners and officials of Manila Water and Maynilad due to "onerous" and "disadvantageous" provisions in the 1997 concession agreements and the extension of these deals in 2009 even if they were yet to expire in 2022. Celerina Monte/DMS