Palace says gov’t won’t pay Manila Water, Maynilad; concession pacts “onerous” in first place, it notes

(Eagle News) — President Rodrigo Duterte’s government will not pay Manila Water and Maynilad for losses the firms incurred due to the state’s refusal to increase water rates, despite an order from the Permanent Court of Arbitration in Singapore.

This is according to Presidential Spokesperson Salvador Panelo in a radio interview on Thursday, Dec. 5.

According to Panelo, in the first place, the concession agreements that contain the indemnification clause were “onerous” and “too disadvantageous” to the government.

“Kapag iyan napatunayan ng hukuman, iyan ay ina-annul, nire-rescind,” Panelo said.

Earlier, the PCA ordered the Philippine government to pay P7.39 billion which supposedly constitute losses incurred by Manila Water from June 1, 2015 to Nov. 22, and the amounts paid to the PCA and 85 percent of other claimed costs.

It also ordered the Philippine government to pay Maynilad P3.6 billion in similar losses.

After news of the arbitral award broke out, Duterte vowed to file economic sabotage charges against the people behind the “onerous” concession agreements.

The Department of Justice had said that apart from the onerous indemnification clause, the clause banning the government from interfering in setting rates, and the extension itself of the concession period were “irregular.”

The DOJ said the period of concession was supposed to end in 2022, but this was extended to 2037 in 2009 for Manila Water, and 2010 for Maynilad.

The DOJ said the original concession agreement, in the first place, had a clause that said the renewal of the pact could only take place at the time of expiration, not before.

“Twelve or 13 years prior to the expiration date ay nag-extend na ng period of concession without changing any grounds or conditions of the original contract,” Justice Secretary Menardo Guevarra said.

Guevarra said the Duterte administration has adopted a proposal to revoke the Memorandum of Agreement that extends the period of concession to 2037.