Jul 202013

MANILA, Philippines – The government must adhere to contracts entered into with water concessionaires as doing otherwise may discourage the private sector from participating in the Public-Private Partnership (PPP) program, business groups said.

In a joint statement, the Employers Confederation of the Philippines, Foundation for Economic Freedom, Management Association of the Philippines and the Philippine Chamber of Commerce and Industry expressed concern over calls for changes as well as cancellation of contracts with water concessionaires that have been aired, including by government agents.

“Such statements, if accepted, could reinforce perceptions that there are risks to investing under the Philippine PPP program,” the groups said.

The groups said they are of the view such scenario is not something the government intends to happen.

“We, therefore, urge Philippine authorities to faithfully adhere to the terms of the concession agreements, including following the provisions on dispute settlement that call for international arbitration in the event of differences,” the groups said.

They added that demands for tariff adjustments need to be framed strictly within the agreements, and be mindful of the public’s need not just for reliable clean water, sewage and sanitation services but also for other necessary infrastructure.

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Water concessionaires Manila Water Co. Inc. and Maynilad Services Inc. are both seeking adjustments in water rates.

Manila Water is seeking a P5.83 per cubic meter increase in its basic charge while Maynilad wants an P8.58 per cubic meter rate hike for 2013-2018.

Earlier, advocacy group Water for the People Network revealed that consumers have been shouldering the costs of the corporate income taxes of both water firms at an estimated P3.1 billion per year from 2008 to 2012.

The Metropolitan Waterworks and Sewerage System (MWSS) has admitted that both water firms have been recovering from consumers the cost of corporate income taxes through monthly water bills.

The MWSS said Manila Water and Maynilad have also been transparent with the consumers as the payment of corporate taxes is reflected in the billing records.

Both water concessionaires have said in their advertisements that they are following the terms and conditions of their contract with the government.

Manila Water provides water and wastewater services for the East Zone of the metropolis, which covers Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, and most parts of Manila and Quezon City, as well as Rizal province.

The company also has projects in areas outside of the East Zone through its subsidiaries in Laguna, Pampanga, Boracay and Cebu.

Maynilad, meanwhile, serves the cities of Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan River, West Avenue, EDSA, Congressional, Mindanao Avenue, the northern part starting from the Districts of the Holy Spirit & Batasan Hills), Makati (west of South Super Highway), Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon, all in Metro Manila; the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario, all in Cavite province.

The business groups said as the water concession agreements with Manila Water and Maynilad have contributed to improving public welfare with more customers having 24-hour water service that meets health standards, the model should be replicated in other parts of the country.

“Poor water and sanitation pose significant health risks to millions of people, while a well-run utility creates much positive benefit to its customers, and to the environment. The gains made under the MWSS PPP must not be put at risk,” the groups said.

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