Gov't not keen on 'compromise' with Manila Water – DOJ

MANILA, Philippines – As President Rodrigo Duterte himself lashes out at water concessionaires, the Philippine government said it is not keen on striking a compromise with Manila Water which just won a P7.4-billion arbitration case.

"The government is more interested in getting a new deal than in compromising the arbitral award," Justice Secretary Menardo Guevarra told reporters on Thursday, December 5.

Guevarra's statement was a response to Manila Water which said the day before that it is open to finding "a mutually acceptable scheme to address the award."

What does this mean? This means an escalation in the conflict between the Duterte administration and water concessionaires.

The latest round began on November 29 when it was announced that Manila Water won its case against the government before the Permanent Court of Arbitration in Singapore, entitling it to a P7.39-billion award for the non-implementation of rate hikes.

Livid by the ruling, Duterte threatened the Ayala family and tycoon Manny Pangilinan. Manila Water is a subsidiary of Ayala Corporation. Pangilinan's Metro Pacific Investments Corporation owns a controlling stake in the other water concessionaire, Maynilad Water Services.

Duterte has long been threatening to scrap contracts with both concessionaires, amid a persistent water supply problem.

According to Guevarra, Duterte ordered a review of contracts during the height of the water crisis last summer.

In the review, Guevarra said there were "onerous" provisions in the deals, "most notable of which" is the root of the arbitration case, the prohibition on government interference in rate-setting.

Guevarra also said the government finds onerous "the provision on indemnity for possible losses in the event of such government interference."

What will happen now? After the latest threats, Manila Water said it is open to finding middle ground, but the Philippine government rejects this, according to Guevarra.

The justice chief said they are still studying their legal options.

"We'll probably start with the drafting of a new version that excises all provisions in the concession agreement that we believe are contrary to law and public policy, as well as those that are highly prejudicial to the interest of the consuming public," said Guevarra.

He added that the Office of the Solicitor General is looking at options specifically regarding the arbitration, but that the government can take a separate route with the existing water deals.

"Some members of the Cabinet want an overhaul of the existing concession agreements. Others are thinking of more drastic actions. [The President] has asked the Department of Justice to come up with an integrated solution. We'll do," said Guevarra.

Asked if the government can scrap a contract that the previous administrations already approved, Guevarra said "the state is not stopped by the mistakes of its agents, especially if the acts committed are constitutionally or legally infirm."

"There is a contractual provision on amendments to the concession agreement," the justice chief said. – Rappler.com

 

Lian Buan

Lian Buan covers justice and corruption for Rappler. She is interested in decisions, pleadings, audits, contracts, and other documents that establish a trail. If you have leads, email lian.buan@rappler.com or tweet @lianbuan.

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