• Embattled water firms lash back at detractors

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    “Don’t fix what it ain’t broken.’’

    This is how a corporate lawyer speaking for the beleaguered water concessionaires Maynilad and Manila water questioned the motives of the group calling for the rescission of the concession agreement entered by the private firms and the Philippine government.

    In a press forum in Quezon City, lawyer Argee Guevarra said it is premature to label the protests as a “water scam’’ citing that the perceived controversy is artificial with the possibility of a competitor wanting to take over the water concession business.

    Being a client of one of the water concessionaires, Guevarra sees no reason for the rescission of the concession agreement after the water service of the utilities has improved.

    He also challenged the critics of the concession agreement to show that they are legitimately pursuing the interests of Filipino consumers by respecting the agreements entered into by the Metropolitan Waterworks and Sewerage System (MWSS) with their two concessionaires or face the risk of going to arbitration.

    The two water firms he stressed should not take the blame for the fiasco since the charges are all stated in the provisions of the concession agreements made by the government and offered to the two water firms several decades ago.

    Guevarra added that these contracts were made to improve the water distribution system in the Metro Manila and other concession area.

    Under the agreement, Guevarra said the two water firms are legally bound to respect the obligations as set forth by the MWSS board.

    These obligations are being dictated by the MWSS board and the two firms have nothing to do with it.

    Based on the concession agreements, the two water firms provide a business plan that proposed activities meant to improve water and wastewater services.

    Without a go signal from the MWSS, these activities will not be implemented.

    The fees and charges made by these two water firms follow strict provisions of the deals they entered into with the MWSS with the concessionaires are only allowed a market-driven rate of return that is determined by MWSS.

    With the agreement, the profit margins of Maynilad and Manila Water should be around the same level as similar companies in other countries that are comparable to the Philippines.

    Rate increases are submitted every five years, to allow a lower collectible rate from consumers.

    Guevarra noted that the appeal of the water firms to increase water rates at this time covers the staggered recovery of investments they have made during these past five years and other economic factors.

    As a business enterprise, Guevarra said that it is a normal business practice to recover even income taxes, which are mostly shouldered by customers as stated in the concession agreements.

    “We must recognize that these concession agreements are private-public partnerships.

    What drives private enterprises from entering into these risky investments is simply a chance to give public service and get at least a profit, at the end of the day,’’ Guevarra said.

    “The question that I would like to propound to groups who want to rescind these agreements is this—who will be foolish enough to replace these firms as concessionaire partners with MWSS? “ he added.

    Jing Villamente

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