Duterte threatens Manila Water, Maynilad with expropriation

MANILA, Philippines – President Rodrigo Duterte renewed his threat of an immediate government takeover of water distribution and treatment operations, the latest in his spat with water concessionaires Manila Water and Maynilad.

Duterte said he would expropriate the firm's assets and operations if he is not satisfied with their lawyers' explanation of what he believed to be problematic provisions in their concession agreements.

Kapag hindi ako ma-satisfy, I will expropriate everything, kunin ko lahat (If I am not satisfied, I will expropriate everything, I will take everything),” Duterte said on Tuesday, December 10, in Malacañang. 

Tutal, dalawang taon na lang, tapos na ako (Besides, after two years, I’m done),” he added. 

Expropriation means the government will take the assets and operations of Manila Water and Maynilad to do what it will. The government can take over water distribution and treatment itself, or else give the assets to other private firms that will take over the operations.

Justice Secretary Menardo Guevarra, however, has admitted that the government is not yet capable of taking on such operations by itself.

Expropriation has to be justified. Manila Water and Maynilad can run to courts to challenge it. In such cases, the government often cites its right to expropriate property for the public good.

Duterte’s latest threat means it’s possible that Manila Water’s and Maynilad’s deals with the government to operate water services will end even before their expiration in 2037.

Manila Water and Maynilad have concession agreements with the government in which the government grants them exclusive rights to operate and maintain water utilities in specific areas in a given period of time.

Previously, Duterte only wanted to draw up new concession agreements or take out certain provisions in the agreements he and government lawyers find “onerous.”

What sparked these threats? Duterte’s beef with Manila Water and Maynilad started with the water shortage in March which led him to study the two firms’ agreements with the Metropolitan Waterworks and Sewerage System (MWSS), a government corporation. 

He concluded that the agreements were unfair to the government and could easily be abused by the companies. But people involved in crafting those deals, crafted in 1997, have said some of the provisions were necessary to sweeten the deal for private firms to take on water distribution and treatment which had been very costly and risky. (READ: Risky business: Why gov't made sure Manila Water, Maynilad would earn)

Duterte’s outrage over the deals was then recently sparked by Manila Water’s victory over the government, handed down by an arbitration court in Singapore. The decision ordered the Duterte administration to pay P7.4 billion to Manila Water for not allowing the firm to increase water rates, in violation of the concession agreement. This did not sit well with Duterte. 

Not only did he revive his threat to cancel the concession agreements, he also refused to pay the P7.4 billion. Manila Water has since decided not to demand the payment and even announced it will not implement a January round of hikes. – Rappler.com

Pia Ranada

Pia Ranada covers the Office of the President and Bangsamoro regional issues for Rappler. While helping out with desk duties, she also watches the environment sector and the local government of Quezon City. For tips or story suggestions, you can reach her at pia.ranada@rappler.com.

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