Duterte wants to talk with water firms

MANILA, Philippines — There will be no compromise with the country’s top water concessionaires until President Duterte has spoken with their owners and the government lawyers behind the concession deals that he says have led to the “bargaining away” of Philippine sovereignty.

The government, Duterte lamented yesterday, has been ordered to pay billions to water concessionaires because of agreements that he described as “classic economic plunder.” He was referring to Manila Water and Maynilad.

“We surrendered our sovereignty to them. They decide whether to raise or lower rates. When they raised the water rates, the regulator did not concur so...we paid P3 billion...Now (we are being asked to pay) P7 billion. How do you settle that?” the President said at the oath taking of newly appointed military and police officials at Malacañang.

“How will I compromise? That’s plunder. That’s the classic economic plunder. How can I now tell the people as a President, friends, ‘b****, let’s just settle this.’ Tell me. Tell me how to tell this to the people,” he added.

Later in his speech, the President appeared to qualify his pronouncement, saying he won’t settle for a compromise until he meets with the officials of the water concessionaires and the state lawyers who drafted the concession agreements.

“I want to talk to them. This cannot be settled until I talk to the concessionaire. I want to do it in front of the government lawyers, those sons of b****** who crafted these contracts,” Duterte said in Filipino.

Duterte has assailed Metro Manila water concessionaires Manila Water and Maynilad for allegedly abusing the deals they signed with the government in 1997 and has threatened to file plunder, graft and economic sabotage charges against them. Officials have said the agreements are “onerous” because they bar the government from preventing water rate hikes and allow water concessionaires to collect indemnities for losses due to regulatory actions.

Duterte had directed the finance department and the Office of the Solicitor General to come up with a new agreement that is advantageous to the public and the government.

But presidential spokesman Salvador Panelo clarified the President was merely pushing for the removal of questionable provisions in the contracts.

Duterte also chided two previous administrations for failing to stop the implementation of the contracts with the water firms.

“I cannot imagine two administrations allowing our sovereignty to be bargained away,” the President said without elaborating. 

The water concession deals were signed during the Ramos administration.

Duterte also scored Sen. Franklin Drilon for asking him to exercise caution in reviewing government deals.

“You know Senator Drilon, we are friends. I have high respect for you. But this time, I tell you, How dare you? How dare you tell me not to make any move or even to take a peek at the (contracts)...because we will be losing money. How dare you?” the President said.

The President also urged the military and the police not to allow water concessionaires to steal “trillions” from the public. He also joked about ordering the military to kill the owners of the water firms.

Don’t scrap

At an anti-corruption forum in Manila, Justice Secretary Menardo Guevarra said the government’s existing concession agreements with Manila Water and Maynilad have many good provisions and thus don’t have to be scrapped.

“The agreement itself has many good provisions, it’s just a matter of weeding out the provisions which we consider as onerous or highly disadvantageous. But the rest of the agreement could stand,” Guevarra told reporters on the sidelines of the forum.

“We are just trying to remove the provisions which should be removed, [those that are] not favorable to the people, the consuming public,” he added.

Guevarra said the Department of Justice (DOJ) is now in the process of forming a team which will draft a revised version of the concession deal that would be presented to Maynilad and Manila Water through re-negotiation proceedings.

To compose the team, he added, are lawyers from the Office of the Solicitor-General (OSG), Office of the Government Corporate Counsel, Department of Finance and the DOJ. He said they aim to come up with the draft of the revised agreement before the year ends.

“We’ll do it within the government first and once we are ready with our own version of what a good water concession agreement should be, that’s the time we will sit down with the water concessionaires,” Guevarra explained.

Guevarra earlier revealed getting instructions from President Duterte to review the water concession contracts signed during the Ramos administration in 1997.

Guevarra said his office spotted “dozens of provisions” in the contracts that were “deemed onerous or disadvantageous to the government and the consuming public.”

Among the disadvantageous provisions, he explained, 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 that the DOJ also found as “irregular” the extension of the contracts to 2037, “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 government will exert its best effort to renegotiate with Maynilad and Manila Water the government’s yet-to-be-drafted version of the concession deals. But he said state lawyers are not ruling out the possibility that the two firms will not accept the proposed revisions.

“Then we go to court. We have to go to court,” Guevarra said.

“It’s only when the courts order the rescission of the water concession agreements that the government may open the field to competition, unless the government itself can take over actual operations, which is rather unlikely,” the DOJ chief said in a follow up text message to reporters.

Earlier, a Singapore-based arbitration court ordered the Philippine government to pay P7.39 billion in compensation to Ayala-led Manila Water for the losses the firm incurred from June 2015 to November 2019 after the government rejected its proposal to increase its water rate.

Guevarra said the OSG may opt to appeal the arbitral ruling before the Singapore high court or oppose it before the Philippine courts.

“The Philippine government will surely oppose it on the ground that the arbitral ruling is against public policy,” Guevarra said.

But he stressed it would be better for the government to first await the outcome of the upcoming negotiation with the two firms before making its next move.

Ignore arbitral ruling

Senators allied with President Duterte said the Philippines may refuse the arbitral ruling and disregard the extension of the contracts awarded to the two concessionaires.

In a privilege speech, Sen. Francis Tolentino said Article 1409 of the New Civil Code provides that contracts whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy could be considered inexistent and void from the beginning.

“The award can be repudiated if the recognition or enforcement of the award would be contrary to the public policy of the State. To illustrate, the satisfaction of the arbitral award would lead to the legitimization of an otherwise void provision. Contracts entered into which are grossly and manifestly disadvantageous to the government shall be nullified,” Tolentino said.

He and Sen. Aquilino Pimentel III also questioned the move of previous administrations to renew the contracts with the two concessionaires upon their original expiration in 2022. The contracts were extended to 2037 in 2010.

“Who extends in the middle of the lifetime of a contract? For me, the agreements to extend is not yet effective because they (first contracts) are not yet expired so the Duterte administration can disregard them (extensions). We’re still in the regime of the first contracts,” Pimentel told reporters.

Pimentel said the government would not be violating any law by disregarding the extension of the contracts.

Sen. Christopher “Bong” Go, in a privilege speech, backed Duterte’s move to go after the water concessionaires to protect the welfare of Filipinos.

“The government did not enter into these agreements simply in the exercise of its proprietary function but also in the exercise of its governmental and state function to provide a fundamental public need,” Go said.

“So, if there are those who believe that money and profit are more important than the lives of Filipinos – who we have vowed to serve and whose rights we have pledged to protect – we will be standing on different sides this time,” he said.

Last Saturday during his visit to typhoon victims in Gubat, Sorsogon, Go also appealed to the water concessionaires to fulfill their obligation to the people and help end their suffering.

Meanwhile, the Bagong Alyansang Makabayan (Bayan) and other concerned groups yesterday filed a petition asking the Metropolitan Waterworks and Sewerage System (MWSS) Regulatory Office (RO) to scrap or defer the implementation of the impending water rate hike in January 2020. 

Petitioners are Bayan secretary-general Renato Reyes, Jr., Bayan Muna Rep. Carlos Zarrate, Bayan Muna chairman Neri Colmenares, Water for the People Network spokesman Reggie Vallejos and Kadamay chairperson Bea Arellano.

The petitioners argued that “given serious issues in the concession agreement and the continuing water service interruptions throughout Metro Manila, the implementation of the rate hike should be deferred.”  – Paolo Romero, Rhodina Villanueva