Duterte to Ayalas, Pangilinan: Agree to 'fair' water contracts, I’ll forget cases
MANILA, Philippines – President Rodrigo Duterte told the business tycoons behind Metro Manila’s two water concessionaires that he would put their quarrel behind them if they agree to new concession contracts crafted by his government.
He also asked them to “return” money to the government to make “amends” for fees the concessionaires have imposed on the public for decades.
“Naloko ang tao ng ilang taon (People were fooled for how many years). I’m willing to forget. Just give us a contract that is fair and also a return of the money of the people,” Duterte said in a speech aired on Friday, June 5, from Davao City.
He said the companies could pay back the money to the government in "installments."
“Okay na ako basta mabawi lang ang pera ng tao (I’m okay as long as the people’s money is returned). Even in installments...but you have to make some amends,” he added.
What's this all about? In December last year, Duterte threatened to scrap the concession agreements of Manila Water and Maynilad Water Services after Manila Water won its case against the government over water rates.
Manila Water is a subsidiary of Ayala Corporation. Tycoon Manny Pangilinan's Metro Pacific Investments Corporation owns a controlling stake in the other water concessionaire, Maynilad Water Services.
Duterte turned the tables on the two water companies, accusing them of exploiting “onerous” provisions in their contracts with government to make more money. He then ordered Justice Secretary Menardo Guevarra to draft new agreements which the companies would have to agree to or else he would nationalize water distribution – an empty threat since the government eventually admitted it lacked the capability to run such operations.
In mid-January, Guevarra described the new draft contracts as “equitable” and said they differ from the old contracts in that they no longer contain “illegal provisions.” Specifically, they supposedly give the government more say in the setting of water rates. The rate-setting mechanism in the old deals was what outraged Duterte the most.
The old contracts contained a rate escalation mechanism designed to ensure the concessionaires would recoup their investments. Back in 1997, when the deals were crafted, these provisions were seen as necessary to convince the private sector to invest in water distribution because of the water shortages during that time. (READ: Risky business: Why gov't made sur Manila Water, Maynilad would earn)
Accept new deals, or else. In his Friday speech, Duterte said he is about to review the new contracts drafted by the justice department.
He warned that if Manila Water and Maynilad reject the government-proposed deals, he would file cases against the company executives.
"You can have your contracts if it is to your liking, but if it's not, then we proceed with another phase, which is really filing of the cases," said Duterte.
His thinly-veiled threat and demand for money comes as the country grapples with the coronavirus pandemic which has forced the government to take out billions worth of loans and realign government funds.
The President has often publicly problematized over how to source funds for the crisis.
In early May, Duterte apologized to the Ayalas and Pangilinan for his "hurting words" after the tycoons joined other big business in helping the government respond to the COVID-19 pandemic.
The health crisis, he said, had "humbled" him. – Rappler.com