Contract review does not turn off investors – Lopez

Published December 22, 2019, 12:00 AM

by manilabulletin_admin


Trade and Industry Secretary Ramon M. Lopez, also chair of the country’s premier investment promotion and generating agency The Board of Investments (BOI), categorically said that the government move to review the contract with two private water concessionaires – Manila Water Co., Inc. and Maynilad Water Services, Inc.

“It will not affect investor confidence because this is not the norm because it is one sided,” Lopez stressed adding the government would just want to correct some “onerous” provisions in the contract.

“We have to agree on a contract without these so-called onerous provisions,” he added. “We have to make the necessary corrections.”

He said the water concessionaires were done with its income tax holiday granted by the BOI for their earlier projects. When asked if BOI would still grant tax perks to future projects of these water concessionaires, Lopez said that assuming that both parties have already agreed to a revised contract and their projects are still listed in the Investment Priorities Plan, then BOI will have to grant the incentives.

“If the questionable provisions have been corrected and their projects are still eligible and listed in the priority areas, why not,” he said.

Investment registration with the BOI is more project-based. BOI has the mandate to promote and attract investments with the help of government tax incentives.
In the water concession agreement, Lopez believes that the government has a say over water rates setting.

As part of the Cabinet economic cluster, Lopez favors a review of the contract to be able to make the current contract right.

In April this year, President Rodrigo R. Duterte’s ordered the Department of Justice and the Office of the Solicitor General to look into all government contracts with companies and other countries, including the 1997 water concession agreements of the Metropolitan Waterworks and Sewerage System with Maynilad (Water Services, Inc.) and Manila Water Company (Inc.).

Justice Secretary Menardo Guevarra already signaled revisions of the water concession contract after the review found a dozen provisions that were deemed onerous or disadvantageous to the government and the consuming public.

Most notable were the prohibition on government interference in rate-setting and the provision on indemnity for possible losses in the event of such government interference.