Manila Water trying to rehydrate P8-B Pangasinan deal

According to reporting, Manila Water [MWC 17.80, down 1.6%] [link] and the Government of Pangasinan are exploring “an opportunity to revisit the conditions precedent of the old contract and renew the partnership for the benefit of Pangasinenses.” The previous agreement, a 25-year P8 billion bulk water concession, was effectively terminated on December 31 due to Pangasinan’s failure to fulfill certain “conditions precedent” of the agreement. Pangasinan Governor Ramon Guico said that the province was “not at fault” for causing the agreement’s termination, adding, “The contract died a natural death, not because of any violation of any terms and conscious of the contract by the provincial government.”

MB bottom-line: Looks like Enrique Razon’s willingness to walk away from in-progress deals might have lit a small fire under the provincial government to get them back to the table. In the world of contracts, a “condition precedent” is something that one party must do (or not do) before a certain date in order for the agreement to become effective. These “CPs” usually involve acts or certifications that solidify some underlying assumptions of the business model at the core of the deal, or improve one party’s faith in the other party’s ability to make payment under the terms of the deal. Governor Guico is right that the contract would have died a “natural death” if one or more CPs were not satisfied before the deadline, as failure to satisfy a CP is not a breach of the contract so much as it is a failure to activate the contract. Still, if the CP belongs to Pangasinan to satisfy, it’s up to Pangasinan to get it done. According to this news, it sounds like both sides might better understand what needs to happen before a proper 25-year agreement can be signed. Let’s see if they get it right in Round 2.

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