'Onerous' water deals cost gov't ₱10.8 billion, DOJ says

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Metro Manila (CNN Philippines, December 3) — The government is set to pay ₱7.4 billion to Manila Water because of "onerous" concession agreements signed in 1997, Justice Secretary Menardo Guevarra said Tuesday.

Guevarra in a statement said the Justice Department's review of the deals signed by the Metropolitan Waterworks and Sewerage System (MWSS) with concessionaires Maynilad and Manila Water revealed a dozen provisions disadvantageous to the government and the public.

"Most notable were the prohibition against government interference in rate-setting and the provision on indemnity for possible losses in the event of such government interference," Guevarra said.

Citing these provisions, a tribunal backed by the Permanent Court of Arbitration (PCA) demanded the Philippine government to pay Manila Water losses stemming from rejected water rate hikes back in 2015. Manila Water brought the Philippine government to court when the MWSS rejected its request to raise water rates for 2013 to 2017, instead telling the utility firm to slash its basic water charge by ₱2.77 per cubic meter.

The ruling comes almost three years after the PCA ruled on a similar case filed by west zone concessionaire Maynilad Water Services, Inc. The court has ordered the state to reimburse ₱3.4 billion for Maynilad's losses from March 2015 to August 2016.

Guevarra said these were tackled in an "impassioned discussion" between President Rodrigo Duterte and members of the Cabinet Monday night.

"PRRD was visibly upset, if not angered, and we’re expecting him to make a public statement today on the govt’s intended course of action," Guevarra said.

He said recommendations were also made in connection with the contracts' expiry. He noted that the extension of contracts to 2037 was "irregular," since it was granted 12 to 13 years before the original expiration of the agreements in 2022.

The DOJ reviewed these 20-year-old contracts "during the height of the water crisis last summer," Guevarra said. The Philippine Atmospheric, Geophysical and Astronomical Services Administration said Luzon will have lesser rains in the first quarter of 2020, raising fears of another water crisis in Metro Manila next year.