Palace: Duterte only wants water concession deals renegotiated, not rescinded

MANILA, Philippines — President Rodrigo Duterte is not yet seeking the rescinding of the government's agreements with water concessionaires but wants the contracts amended to remove "onerous" provisions, Malacañang said Sunday.

Duterte has lambasted Manila Water and Maynilad over the concession agreements that he claimed are disadvantageous to the government and has threatened to file economic sabotage, graft and plunder charges against those who crafted the deals.

The president has also ordered the Finance department and the solicitor general to draft new deals that are favorable to the government and the public. Some legal experts, however, said the president cannot just rescind the agreements since the action has to go through the courts.

"The president was not talking about rescinding (the agreements). Didn't he say that he wants the contracts fixed because the contracts are wrong? They are talking. If they agree, there would be no more problems. If not, then there would be filing of charges," presidential spokesman Salvador Panelo said in a radio interview.

Panelo said the concession agreements have to be modified before the parties could talk about a settlement.

"(The contracts) have to be fixed first. The two parties will negotiate. They will be discussing terms and how to fix the things that the President was reacting to," the Palace spokesman said.

Asked to react to the Metropolitan Waterworks and Sewerage System's (MWSS) call to defer water rate hikes while talks are ongoing, Panelo replied: "Everything is possible. All of these can be discussed."

"It can be deferred if they are not yet ready to implement," he added.

The Philippine government has lost arbitration cases against Manila Water and Maynilad and has been ordered by a Singapore arbitration court to pay more than P10 billion in damages to the water concessionaires.

Last year, the arbitration court ordered the government to pay P3.42 billion in damages to Maynilad for the company's losses that originated from the MWSS's refusal to implement a tariff adjustment for 2013 to 2017.

Last week, a Singapore court also directed the government to pay P7.39 billion in compensation to Manila Water for losses incurred from the delayed water rate increases since 2015. Duterte has declared that he would not heed the court orders because the agreements are "contrary to public policy."

Panelo said among the provisions in the concession deals that the president wants removed are those that bar the government from intervening in rate adjustments and those that require the state to indemnify water firms against losses that stem from regulatory actions.

"We discovered onerous provisions and we need to change them. The two companies said they are willing to negotiate. I think that's OK," Panelo said.