MANILA, Philippines — Malacañang said Tuesday that President Rodrigo Duterte has told Manila Water Company Inc. and Maynilad Water Services Inc. to accept the new water contracts prepared by the government or risk having their concession deals terminated.
Duterte has verbally attacked both Manila Water and Maynilad Water Services Inc. after a Singapore-based arbitration panel ordered the Philippine government to indemnify the two water providers for losses they suffered from an unenforced rate hike.
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The president has accused both companies of having government contracts with "onerous" provisions that are disadvantageous to the public.
The Metropolitan Waterworks and Sewerage System, the Philippines’ water regulator, has rescinded the 15-year extension of the water concession deals, derailing the two utilities’ long-term plans.
In a statement, presidential spokesman Salvador Panelo warned both Manynilad and Manila Water that the government will take over the water sector and jail those involved in the crafting of the present contracts should the two firms reject the new agreements.
The existing contracts will expire in 2022.
“The chief executive is giving the water concessionaires the option of accepting the new contracts without any guarantee of not being criminally prosecuted together with those who conspired to craft the very onerous contracts which are void ab initio for violating the Constitution and the laws of the land,” Panelo said.
“Should Maynilad and Manila Water refuse to accept the new agreements, the chief executive will order the cancellation of their present water contracts,” he added.
In 1997, Manila Water and Maynilad took over the water sector and improved services in the capital, which previously suffered from hours of shortages after the state-run MWSS inefficiently allocated water.
Justice Secretary Mernardo Guevarra earlier said the government will only consider giving the contracts to other water providers should renegotiation with the current concessionaires collapse.
“We have to go to court so that the rescission [of the contracts] may be actually done,” Guevarra said.
As of 2:36 p.m. Tuesday, shares in Ayala-led Manila Water were up 14.17%.
Meanwhile, shares in Metro Pacific Investments Corp. — which holds the majority of economic interest in Maynilad — were up 3.44% while DMCI Holding Inc., a shareholder of Maynilad, climbed 5.38%.
Editor's Note: Manuel V. Pangilinan, the chairman of Maynilad, is also chief executive of PLDT. A unit under PLDT's media conglomerate has a majority stake in Philstar Global Corp., which runs Philstar.com. This article was independently produced following editorial guidelines.