Manila’s water problems (2)

PHILIPPINES - In Brief 17 Dec 2019 by Romeo Bernardo

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The fortunes of Metro Manila’s water concessionaires have taken a turn for the worse since they drew the President’s ire two weeks ago. First, in an attempt to defuse his anger, the water firms announced that they are waiving the combined P10.8 billion (about $212 million) awarded to them by the Permanent Court of Arbitration in Singapore and will defer raising water rates scheduled for January next year. Soon after, they were told that the Board of Trustees of the Metropolitan Waterworks and Sewerage System (MWSS) has cancelled the extension of the CA from 2022 originally to 2037, revoking an earlier (2009) Board resolution allowing the 15-year extension. All the while, the President’s haranguing continued, lately threatening expropriation and military takeover of water distribution if the supposed onerous provisions in the CA are not removed. The string of bad news has taken its toll on the share prices of the water firms and their parent companies, with latest estimates indicating over P130 billion lost in the local stock market traced to the sharp drops in the prices of four firms with interest in the water concessions[1]. The west zone concessionaire has also said that given the shortening of the concession term, banks have suspended lending it money to finance new capital expenditures. Although a renegotiation of the concession agreement is all but certain at this point, the Secretary of Finance has been trying to calm market jitters by emphasizing that the contracts will merely be reviewed, something that the water firms themselves have said they are open to. He said that he has asked the principals of the two water firms to “put yourselves in our position” and ...