Guevarra denies gov’t bent on replacing water concessionaires

December 18, 2019

Justice Secretary Menardo Guevarra denied that the government is bent on replacing Metro Manila’s two concessionaires due to alleged onerous provisions in the concession agreements.

“No, we are not even thinking about that,'' said Guevarra  Tuesday. allaying speculations that Maynilad and Manila Water will be replaced as water distributors in Metro Manila.

“We are just renegotiating their contracts,” Guevarra said.

Guevarra said the Department of Justice found “onerous" or "disadvantageous" provisions in the government’s 1997 concession agreements with Maynilad and Manila Water.

These include a prohibition on government interference in rate-setting and a provision for indemnity in case it does.

President Rodrigo Duterte has denounced the water concessionaires due to a  clause that holds the government liable if it interferes with the implementation of agreed water rates and accountable to indemnify the companies for losses incurred.

The Permanent Court of Arbitration in Singapore ordered the Philippine government to pay Maynilad around P3.6 billion and Manila Water P7.4 billion as compensation for losses or damages due to the liability clause.

Manila Water and Maynilad are no longer pursuing their respective arbitral  ruling.

The government earlier hinted out that Manila Water and Maynilad should come up with a new concession agreement with the government.

The concession agreements that have been extended to 2037 were cancelled by the Metropolitan Waterworks and Sewerage System (MWSS) in its board meeting last Dec. 5.

“So if we don’t have any agreement, then we have to go to court so the rescission may be actually done,” Guevarra warned.

Rescission is terminating a contract by mutual agreement or because of fraud or some legal defect.

“But only then will we open the field to other competitors.  It does not follow that if the parties do not agree, it will be open to third parties. It doesn't work that way,” Guevarra explained. DMS