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Maynilad could fold after Duterte threat

THE Duterte administration’s threat to shorten the government’s concession agreements with Manila Water Co. Inc. (Manila Water) and Maynilad Water Services Inc. (Maynilad) could force Maynilad to close, a company executive said.

“It appears that if the contract is shortened, ‘yung mga capex (the capital expenditure) to provide for additional water supply and wastewater treatment will be suspended dahil hindi kayang bayaran ‘yan (because it won’t be settled) by 2022. You are ensuring water shortage in the future, sigurado ‘yun (that’s certain) if this capex program is suspended,” DMCI Holdings Inc. Chairman and President Isidro Consunji said on Friday.

“Technically, if the government cancels the extension of the concession agreements, the banks can call in the loan at any time, leading to the shutdown of both companies,” he told reporters.

Consunji said Maynilad had about P42 billion in loans. “Under our loan covenant, any material change in the contract, all the loans [are] due and demandable. That’s standard for a long-term loan,” he said.

Consunji said almost P30 billion of Maynilad projects were put on hold, including its third treatment plant in Muntinlupa and in Dagat-dagatan in Caloocan City.

Maynilad is a consortium between Metro Pacific Investments Corp., DMCI Holdings and Japanese firm Marubeni Corp. through its subsidiary MCNK JV Corp. It has been servicing the Metropolitan Waterworks and Sewerage System’s (MWSS) West Zone concession area since 1997.

The 25-year water deals, sealed during the term of former president Fidel Ramos, would end in 2022, but were extended up to 2037 during the administration of President Gloria Macapagal Arroyo.

But in a recent House hearing, the MWSS revealed that the agency revoked a 2008 board resolution extending the contracts for another 15 years.

President Rodrigo Duterte had warned he would order the military to take over water distribution from the two water concessionaires in Metro Manila if “onerous” provisions of the concession agreements are not resolved.

He warned Manila Water and Maynilad not to threaten him with a potential water shortage: “I told them… don’t toy with me and scare me that you will leave us without water. I will order the Armed Forces to operate your [facilities].”

The President said he would “expropriate everything” from the two firms if they could not defend the legality of their deals and that he would suspend the writ of habeas corpus to arrest their executives.

In separate letters to the chief executive, Maynilad Chairman Manuel Pangilinan and Manila Water Chairman Fernando Zobel de Ayala expressed their intentions to renegotiate and amend their contracts.

Both Manila Water and Maynilad announced they would defer the scheduled rate hike in January next year, and that they would no longer pursue their arbitral awards worth over P10 billion against the government.

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