Water firms don't need to tap loans after earning 'billions' — Palace
MANILA, Philippines — Water firms do not need to tap loans to fund their operations because they have already earned "billions" from their concession contracts, Malacañang said Thursday.
Presidential spokesman Salvador Panelo claimed the parties behind the water concession deals had conspired to commit what he described as a "colossal fraud and rip-off."
He said the concession contracts enabled the water firms to earn billions so they cannot claim that their services would be affected if banks stop lending money to them.
"Some of those concessionaires stated that it may affect the service because no banks, loans are forthcoming, I read about that. My reaction is, excuse me, you have reeked billions of profits during the years from 1997 up to the present," Panelo said in a press briefing.
"What do you need loans for? You have the money in your pocket," he added.
The government's concession deals with Manila Water and Maynilad were signed in 1997 and were supposed to last for 25 years. The deals were extended by 15 years in 2009 or 13 years before they expire.
Last month, Duterte scolded water distributors Manila Water and Maynilad for allegedly using their concession contracts to "screw" the country and threatened to file graft, plunder, and economic sabotage charges against their owners and state lawyers behind the deals. Water regulator Metropolitan Waterworks and Sewerage System (MWSS) has revoked the extension of the concession contracts in compliance with Duterte's order.
In a recent disclosure to the Philippine Stock Exchange, Metro Pacific Investments Corp., Maynilad’s controlling shareholder, said while the water concessionaire can finance its current projects, the shortening of the concession term would prevent it from commencing new projects to improve the system. Banks have suspended lending money to Maynilad to finance its new capital expenditure program, the listed investment management and holding company said.
Earlier this week, Duterte said he would offer new contracts to Manila Water and Maynilad but clarified that there is no guarantee that the water concessionaires would not be prosecuted if they accept them. The president said he would "nationalize" water distribution if the water concessionaires refuse to accept the new contracts.
Panelo said Duterte is bent on running after those who were behind the water concession deals, which the president had described as "onerous."
"What is apparent to the president is that there has been a conspiracy between certain parties to commit this colossal fraud and rip-off...Who are involved in this conspiracy is another matter and if we find out who they are, then the law has to take its course, regardless of who are involved," the Palace spokesman said.
Panelo also assured the public that the administration would publish the text of the contracts offered to the water firms.
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