Pinoys to suffer from water deal extension cancellation

MANILA, Philippines — Local households may have to bear the brunt of the government’s decision to cancel the extension of the water concession agreement, which may result in as much as 100 percent increase in water rates after 2022.

At the continuation of the House hearing on the government’s concession deals with Maynilad Water Services Inc. and Manila Water Co. yesterday, the Metropolitan Waterworks and Sewerage System confirmed that the MWSS board has cancelled the extension of the contracts of the two water concessionaires.

“The board, based on the recent directive of the Office of the President, is now revoking the board resolution adopted in 2008,” MWSS deputy administrator Leonor Cleofas said.

The resolution approved and granted the 15-year extension of the contracts of the two concessionaires until 2037. It was issued during the Arroyo administration in 2009.

Revoking such resolution would mean the agreements would end by 2022, the original expiration date.

The latest decision of MWSS was only made known to Maynilad and Manila Water yesterday – or during the hearing.

The water firms are being given three days to file their position on the matter.

“It is with very grave concern that we view this action. It is not proper to unilaterally revoke an agreement,” Maynilad president and CEO Ramoncito Fernandez said.

“Prices will definitely go very high because the rationale of the extension at that time is to mitigate spikes in tariffs because the concessionaires had to invest more,” he added. 

While he did not give exact figures, he stressed “it will definitely be more than 100 percent.” He added “there are many factors to consider.”

Manila Water board member and former president and CEO Tony Aquino raised the same warning.

“We have already done our spending plan on the presumption that we can recover what we have spent and that the longer the recovery period is, the lower the tariff that can be passed on to consumers,” Aquino said.

“The government as represented by the Regulatory Office and MWSS are always a party on the setting of rates. It is not unilateral and we are not the only ones computing the tariff,” he added.

Fernandez said Maynilad would emphasize to the MWSS that its move would  impact heavily on efforts to improve service to customers.

“We have acted on very good faith, we have invested so much. There will be serious implications, in fact, while we are meeting here, banks are already calling our finance department asking if we can still pay our loans,” Fernandez said.

“We have put forward our own plans on how to mitigate any water shortage and that is something that we would like to continue. These projects take several years to complete,” Aquino added.

At the hearing, the MWSS admitted it cannot live without the two concessionaires or take over its operations, citing lack of resources and manpower.

“As of now, with our resources, we cannot  do it without the concessionaires,” Cleofas said.

“It will be difficult for us to take over the operations in Metro Manila, Rizal and Cavite,” she added.

MWSS said if contracts are cancelled by 2022, new operators may come in but it cannot assure that water prices will not increase.

Surigao del Norte Rep. Robert Ace Barbers also expressed concern over the consequences of the MWSS decision, as such poses a “very scary scenario.”

“This may be a bigger burden for our consumers. There should be measures to be undertaken and talked about between the government and the concessionaires,” he said.

On Tuesday, the two water firms bowed to the government by announcing they have dropped their arbitration claims of nearly P11 billion from the government.

Apart from letting go of the billions in arbitral award, Maynilad and Manila Water are also deferring the implementation of an impending rate hike starting January 2020.

Pinoys to suffer from water deal extension cancellation

Louise Maureen Simeon

MANILA, Philippines — Local households may have to bear the brunt of the government’s decision to cancel the extension of the water concession agreement, which may result in as much as 100 percent increase in water rates after 2022.

At the continuation of the House hearing on the government’s concession deals with Maynilad Water Services Inc. and Manila Water Co. yesterday, the Metropolitan Waterworks and Sewerage System confirmed that the MWSS board has cancelled the extension of the contracts of the two water concessionaires.

“The board, based on the recent directive of the Office of the President, is now revoking the board resolution adopted in 2008,” MWSS deputy administrator Leonor Cleofas said.

The resolution approved and granted the 15-year extension of the contracts of the two concessionaires until 2037. It was issued during the Arroyo administration in 2009.

Revoking such resolution would mean the agreements would end by 2022, the original expiration date.

The latest decision of MWSS was only made known to Maynilad and Manila Water yesterday – or during the hearing.

The water firms are being given three days to file their position on the matter.

“It is with very grave concern that we view this action. It is not proper to unilaterally revoke an agreement,” Maynilad president and CEO Ramoncito Fernandez said.

“Prices will definitely go very high because the rationale of the extension at that time is to mitigate spikes in tariffs because the concessionaires had to invest more,” he added. 

While he did not give exact figures, he stressed “it will definitely be more than 100 percent.” He added “there are many factors to consider.”

Manila Water board member and former president and CEO Tony Aquino raised the same warning.

“We have already done our spending plan on the presumption that we can recover what we have spent and that the longer the recovery period is, the lower the tariff that can be passed on to consumers,” Aquino said.

“The government as represented by the Regulatory Office and MWSS are always a party on the setting of rates. It is not unilateral and we are not the only ones computing the tariff,” he added.

Fernandez said Maynilad would emphasize to the MWSS that its move would  impact heavily on efforts to improve service to customers.

“We have acted on very good faith, we have invested so much. There will be serious implications, in fact, while we are meeting here, banks are already calling our finance department asking if we can still pay our loans,” Fernandez said.

“We have put forward our own plans on how to mitigate any water shortage and that is something that we would like to continue. These projects take several years to complete,” Aquino added.

At the hearing, the MWSS admitted it cannot live without the two concessionaires or take over its operations, citing lack of resources and manpower.

“As of now, with our resources, we cannot  do it without the concessionaires,” Cleofas said.

“It will be difficult for us to take over the operations in Metro Manila, Rizal and Cavite,” she added.

MWSS said if contracts are cancelled by 2022, new operators may come in but it cannot assure that water prices will not increase.

Surigao del Norte Rep. Robert Ace Barbers also expressed concern over the consequences of the MWSS decision, as such poses a “very scary scenario.”

“This may be a bigger burden for our consumers. There should be measures to be undertaken and talked about between the government and the concessionaires,” he said.

On Tuesday, the two water firms bowed to the government by announcing they have dropped their arbitration claims of nearly P11 billion from the government.

Apart from letting go of the billions in arbitral award, Maynilad and Manila Water are also deferring the implementation of an impending rate hike starting January 2020.  – With Paolo Romero