Government ordered to pay Manila Water ₱7.4 billion

Published November 29, 2019, 12:00 AM

by manilabulletin_admin

By Madelaine B.Miraflor

It’s good news for Manila Water Company, Inc. and bad news for the Philippine government when the Arbitral Tribunal ordered the latter to pay the Ayala-led company nearly ₱7.4 billion for preventing the implementation of its water rate hikes a few years ago.

manila water logo

In a regulatory filing, Manila Water told the local bourse that it has received from its legal counsel the award rendered by the Tribunal in the arbitration proceedings between the listed firm and the Philippine government constituted under the Permanent Court of Arbitration (PCA). The proceedings were held in Singapore.

The Tribunal ruled that Manila Water has a right to indemnification for actual losses suffered by it on account of the Philippine government’s breach of its obligation.

It then ordered the latter to indemnify Manila Water the amount of ₱7.39 billion representing the actual losses it suffered from 1 June 2015 until 22 November 2019 and to pay 100 percent of the amounts paid by Manila Water to the PCA and 85 percent of Manila Water’s other claimed costs.

For its part, Manila Water said that it will work with the Philippine government “for an orderly and managed satisfaction of the award”.

Metropolitan Waterworks and Sewerage System (MWSS) Administrator Emmanuel Salamat, on the other hand, said that as of now he is “yet to see the whole facts of the case.”

If the government will comply with the Tribunal’s order, it will be the end of the string of bad news Manila Water had caught itself in over the last months.

In April, the MWSS Board has ordered Manila Water to pay a total of ₱1.134 billion — ₱534-million fine and additional ₱600-million fund to be allotted for the development of new water supply source — in connection with the water shortage that occurred last March in the areas serviced by the concessionaire.

The penalties are aside from Manila Water’s self-imposed penalty amounting to ₱500 million that aim to provide financial relief to its customers affected by the water shortage.

This has caused Manila Water’s earnings to go down in the last two quarters.

Also in April, Maynilad Water Services, Inc., who suffered the same fate as Manila Water a few years ago, said it is “willing to drop” the arbitration case it earlier filed against the Philippine government.

This happens as President Rodrigo Duterte ordered his administration to review Maynilad’s concession agreement with the government amid speculation that the deal was crafted to the disadvantage of the Filipino people.

The arbitration case would have allowed the Pangilinan-led company to recover as much as ₱3.4 billion the country supposedly owes it based on the decision of the Tribunal.

Such amount was supposed to cover Maynilad’s delayed implementation of tariff adjustments for the rate rebasing period of 2013 to 2017.

Then last year, the Singapore High Court upheld its earlier decision and grant the arbitral award in favor of Maynilad, compelling the Philippine government to pay the company the aforementioned amount.

The Philippine government has not yet honored the decision until today.