Water companies express concern after MWSS cancels extension of water contracts beyond 2022

By Vanne Elaine Terrazola

Water concessionaires are now left high and dry after the Metropolitan Waterworks and Sewerage System (MWSS) decided Tuesday to cancel the extension of their agreements.

Metropolitan Waterworks and Sewerage System (MANILA BULLETIN) Metropolitan Waterworks and Sewerage System (MANILA BULLETIN)

At the hearing of the Senate public services committee Wednesday (Dec. 11), officials of Maynilad Water Services, Inc. and Manila Water Company, Inc. raised concerns over the revocation of the extension of their 1997 concession agreements with the MWSS in compliance with the Department of Justice's (DOJ) findings questioning why the deals were prolonged to 2037.

President Rodrigo Duterte earlier slammed the water concession agreements as being onerous and disadvantageous to the government and the public.

Manila Water president and chief executive officer Rene Almendras asked the government to clarify their fate as one of Metro Manila's water distributors if their contract will expire in 2022.

"It's actually a very big question that is being asked everywhere right now. Our investors, our creditors, our shareholders, are all asking us the same question," Almendras responded when asked if the east zone concessionaire would keep its water distribution system when its contract with the government expires.

He said that while they have to study the MWSS' decision, notice of which was sent to them Wednesday morning, the cancellation of the extension will cause "very significant repercussions."

The Manila Water official did not elaborate on his statement but Senator Grace Poe, chairman of the Senate public services panel, said the revocation could cost the government liabilities.

Maynilad's chief operating officer Randolph Estrellado shared Almendras’ sentiment, saying their ongoing projects will be affected by the revocation of their agreements' extension.

"Tanong din po namin yan, kasi may mga water projects po kami na matatapos ho ng 2022, 2023. May mga utang din ho kaming lalagpas pa ng 2022. Dahil ginawa ho namin -- in fact, under the concession agreement, hindi po pwedeng mangutang ng lalagpas sa expiration date -- pero nong in-extend po nila yon, nangutang na ho kami para sa mga projects," Estrellado said.

(That is also our question, because we have water projects that will be completed in 2022, 2023. We also have loans that we have to settle beyond 2022. Because what we did is, under the concession agreement, we cannot seek loans for projects beyond the expiration date -- so when they extended its validity, we took out loans for our projects.)

"So ang question ho namin is kailangan, kung ano man po ang mangyari, kailangan may malinis na proseso dahil marami kaming mga commitments, both in terms of capital investments, saka loans ho," he appealed.

(So our question is, whatever happens, there should be a clear process because we have many commitments both in terms of capital investments and loans.)

MWSS Administrator Emmanuel Salamat was unable to respond to the water companies' queries, but said the agency agrees with the DOJ that the contracts were "renewed and extended in favor of the concessionaires.”

In an interview with reporters, Poe said the MWSS should clarify to the water concessionaires its move to cancel the contracts' extension as this might affect water supply and distribution in Metro Manila and other nearby areas.

"Ang sabi kasi ng MWSS ni-revoke na nila 'yong extension. So pagdating ng 2022, kung hindi sila ma-extend beyond 2022, lahat ng project nila in the pipeline matitigil. So dapat malaman natin for sure kailan matatapos ang either renegotiation," Poe said.

(MWSS said they revoked the extension. So if the contracts are not extended beyond 2022, all their projects in the pipeline will be halted. So we need to know for sure when the renegotiations will be finished.)

"And by the way, ngayong araw lang natanggap ng dalawang concessionaire ang notice (the two concessionaires only received the notices today). So they are not necessary agreed yet with the revocation order. They would like to have the time to be able to present also their side," she added.

She also appealed to the MWSS to figure out how it will protect the government from the possible consequences of cutting its deals with the private firms.

"'Yong kontrata, 'yong mga probisyon doon protektado ang pribadong sektor. So papaano natin mapoprotektahan din ang gobyerno doon sa mga bagay na katulad nyan? Ang gobyerno mismo ang nag-draft n'yan, kaya ang mga penalties d'yan na sinasabi mo, pag ine-end mo ang concession agreement magbabayad din ang gobyerno. Dapat talaga suriing mabuti 'yung mga probisyon," Poe said.

(In those contracts, the provisions protect the private sector. So how can we also protect the government in such situations? The government itself drafted those , so there are penalties there requiring the government to pay if the concession agreements are terminated. They should really look very closely at those provisions.)

The Senate committee will continue discussing the issues on the water concession deals entered into by MWSS, with more officials expected to shed light on how the controversial agreements were crafted and implemented.