DOF chief allays investor concerns on water firms’ woes

DAVAO City, Philippines — The head of the country’s economic team yesterday gave assurance that the government’s review of concession agreements with water companies should not negatively impact investor confidence in the Philippines.

Finance Secretary Carlos Dominguez is confident investor confidence will not wane as the government is simply making sure that its contracts with Manila Water and Maynilad are not onerous.

“People have to understand that what is being reviewed are terms that are onerous to the Philippines, to the nation--it’s not the government, it’s the taxpayer,” Dominguez said.

Dominguez said the water firms have shown willingness to cooperate with the government to discuss improvements in their concession agreements.

“In fact, let me tell you, just to show you that this review is acceptable, when we bid out the contract for the water concession in New Clark City, these onerous terms were not there. And yet, Manila Water bid so it must be acceptable to them. There’s no issue, or there should not be an issue,” he said.

 Asked if this would set a precedent for other investors with contracts with the government, Dominguez said:  “if they were made with onerous contracts, I think it’s only right for the administration to review them.”

President Duterte accused Manila Water and Maynilad of fleecing the public through onerous contracts forged with past administrations.

The Metropolitan Waterworks and Sewerage System (MWSS) canceled the extension of both companies’ concession agreements to 2037.

Maynilad disclosed to the Philippine Stock Exchange that banks had suspended loans which would have been used to finance new capital expenditures.

Both companies saw a drop in their shares after the government revoked the extension of their contracts.

The two concessionaires, however, found a new ally in the MWSS, which prefers the Metro Manila-based distributors as suppliers rather than have new ones.

“They are already familiar with this and they have already laid out the plan for the development of water source,” MWSS administrator Emmanuel Salamat told reporters yesterday.

“That is the advantage because if we are going to start again, we will again begin another arrangement,” he said.

Salamat pointed out that MWSS is not shutting the water firms out, saying only board resolution on the extension has been cancelled.

“What the President said is to renegotiate. And the concessionaires are being given the chance to be heard,” he said.

Water firms meanwhile warned that the cancellation of the contract extension could result in significant increase in water rates after 2022.

“The price of water is related to the capacity of the company to invest and to improve, that’s what needs to be talked about. Everytime we are challenged, our capacity to invest, to get financial support will also be challenged,” Maynilad president and chief financial officer Ramoncito Fernandez said.

For its part, Manila Water board member Tony Auino said the government as represented by the Regulatory Office and MWSS, is always a party on the setting of rates. “It is not unilateral and we are not the only ones computing the tariff,” he said.

“There has to be a lot of discussion and cooperation moving forward. We have expressed willingness to sit down so we could understand the rationale behind it and make solutions together,” Fernandez said. -With Louise Maureen Simeon