Palace insists government won't pay damages to water concessionaires

MANILA, Philippines — The Duterte administration is not inclined to pay damages to water concessionaires for the losses they incurred from the deferred implementation of rate hikes, insisting that their concession deals are unfair and "against public policy."

The government has suffered setbacks in the arbitration cases involving the supposed breach of its obligations with Maynilad and Manila Water and has been ordered by a Singapore court to pay more than P10 billion to the water firms.

Last year, a Singapore-based court ordered the government to pay P3.42 billion in damages to Maynilad for the company's losses that stemmed from water regulators' refusal to implement an upward tariff adjustment for 2013 to 2017. Earlier this week, the Permanent Court of Arbitration in Singapore ruled that the government should pay P7.39 billion in compensation to Manila Water for losses incurred from the delayed water rate increases since 2015.

But Malacañang insisted that the concession agreements signed by the government and the two water distributors are "onerous."

"No, The contracts are onerous. They are disadvantageous to the government," presidential spokesman Salvador Panelo told radio station dzXL Thursday.

Panelo said the deals could be rescinded if they go against public interest.

"Under the Constitution, the president has the duty to serve and protect the people. So on the basis of that, the president can do things that can either annul, rescind contracts that are against the interest of the people or public policy," Panelo said.

"These are the contracts that are against public policy. Once the court declares them to be such, they would be annulled," he added.

Last Tuesday, President Rodrigo Duterte accused Manila Water and Maynilad of turning water distribution into a money-making scheme and threatened to file economic sabotage charges against everyone behind the agreements.

Duterte in particular, criticized a provision of the contracts that prevent the government from stopping rate increases. He ordered the finance department and the solicitor general to draft a new concession agreement that is favorable to the government and the public.

Panelo claimed that the government officials who signed the contracts were controlled by the owners of the water concessionaires.

"They (officials) would not have allowed (the signing of the contracts) if they were promoting the interest of the nation," the Palace spokesman said.

"If the government cannot provide the service, the private corporations can do it. But the provisions of the contract should be fair, not one-sided," he added.