P79-billion Manila Water refund ‘utter greed’

1

A water watchdog is extremely disappointed with a demand of Manila Water Co. Inc.’s (MWCI) that the government should pay it now for its anticipated P79 billion in losses from 2015 to 2037.

Advertisements

In a statement, Water for the People Network (WPN) on Wednesday said “the move for arbitration and demand for public compensation for the [MWCI’s] projected losses is an utter display of greed.”

Ayala-owned Manila Water had filed a notice of arbitration that urged the government to pay it approximately P79 billion.

The amount is reimbursement for the company’s projected losses from 2015 to 2037 or until the concession expires.

Manila Water claims that the losses will arise from anticipated decrease in the rate of return because of the government’s refusal to implement its petition for a rate increase during the last rate rebasing.

Its action was in relation to the government’s promise to indemnify the company from any losses brought about by any move of the Metropolitan Waterworks and Sewerage System (MWSS) entailing a reduction in rates under a concession agreement.

The watchdog said the water firm’s demand only showed “how the concession agreement between government and Manila Water severely undermines the public’s right to water.”

According to the WPN, since water services were privatized in Metro Manila in 1997 purportedly to make it more efficient and economical, rates have gone up by about 171 percent for Maynilad Water Services Inc. (MWSI) and 300 percent for Manila Water as of 2011.

Corporate profits, meanwhile, have also gone up by 19 percent for Manila Water and 48 percent for Maynilad, which also has a concession agreement with the government.

“The provision for third-party or international arbitration also disregards the government’s sovereign regulation of rates for more affordable water. The public is made to shoulder the cost of this facility employed by private companies to secure their profit-taking. The last time that MWCI and MWSI took to arbitration was after the MWSS ordered to cut rates on revelations that the two companies’ pass-on charges anomalously included donations, recreational activities and even the corporate income tax,” it said.

“Fees for an Australian expert alone cost P271,000 per day for services rendered in the Philippines and P34,000 per hour for work rendered in Australian offices. Older arbitration processes amounted to about P140 million,” the group disclosed.

The water watchdog said it is high time for the government to scrap the “anti-consumer” concession agreements.

“Through these [concession agreements], private water concessionaires, on top of being granted guaranteed profits, can demand more. This practically gives private investors’ interests supremacy over public good,” it added.

“[The] government should take hold of the country’s water resources and ensure public benefit first and foremost. Otherwise, with the Aquino administration bent on clinching more public-private partnership deals, passing the PPP Law and entering the Trans-Pacific Partnership, public utility consumers’ woes are bound to pile up,” the watchdog said.

Share.
loading...
Loading...

Please follow our commenting guidelines.

1 Comment

  1. Manila Water’s “basis” for this claim is not the concession agreement but the Letter of Undertaking with FVR’s government which says that the concessionaire shall be indemnified if MWSS cuts the rate “below the level that would otherwise be applicable in accordance with the concession agreement.” Now the appeals panel has already upheld MWSS’s position and ruled a rate reduction in accordance with the agreement. So what argument is Manila Water clinging to?

    Not only is this company blind with greed, it has also hired completely idiotic lawyers. Or are they doing this merely to lift their stock price? Last time I heard, their stock was down worse than the market after the case announcement. Greediots.