Maynilad demand for gov’t guarantee reeks of corporate greed

February 24, 2015

by superadmin

Instead of paying Maynilad, government should start putting capital into regaining control of water service

Maynilad’s call for government to pay so-called losses from the non-implementation of the arbitration ruling is patently anti-consumer. According to advocacy group Water for the People Network (WPN), this is another basis to immediately terminate the concession agreement with the private water firm.

The group said that Maynilad’s demand for a rate hike is intended to pay costs for its corporate income tax and other questionable expenses, and therefore its claim of “losses” due to the delayed implementation of the rate increase shows uttermost corporate greed.

The water giant recently invoked a government undertaking issued in 2010 requiring the state to ‘indemnify the concessionaire in respect of any losses’ due to government’s delayed implementation of the arbitration decision favoring Maynilad. The Metropolitan Waterworks and Sewerage System (MWSS) has deferred from implementing an arbitration ruling allowing a rate hike for the water firm. This led Maynilad to demand a government guarantee, asserting that the Department of Finance should pay the company Php208 million in monthly “losses” due to the delay in the rate adjustment.

To recall, the MWSS in August 2013 denied the petitions of both Maynilad and Manila Water for a hike in its basic charge after water advocates revealed that the two water firms were, among others, unjustly charging expenses unrelated to the delivery of water service such as corporate income tax, donations, advertising, rest and recreation, the cost of future projects, etc.

Maynilad and Manila Water filed an arbitration case in the International Chamber of Commerce (ICC) to contest the MWSS decision. While the ICC in December 2014 upheld the petition of Maynilad for a rate hike, the MWSS deferred from implementing an increase until the ICC has likewise reached a decision on the case of Manila Water.

The WPN has been vocal against the arbitration process which gave Maynilad the ground to make its indemnification demand. Stipulated in the CA, arbitration is the settling of disputes among or between concessionaires and the MWSS in an international court. WPN criticizes arbitration to be in total disregard of the voice of the public, which is even made to shoulder its cost. Past arbitration rows cost over Php140 million; the cost of this arbitration round is yet to be disclosed.

WPN said that government should not give in to the demand of Maynilad because it would undermine consumer interests. The group said that instead of paying Maynilad, government should start putting capital into regaining control of water service that is genuinely publicly accessible and affordable.

WPN also reiterated its call for the termination of the CA, which for decades has embodied pro-concessionaire interests as it has eliminated public control and regulation over water service and continues to allow overbilling and under-servicing while guaranteeing profits for the two water companies. It stressed that the CA is proving even more detrimental to public welfare and interest, and should be rescinded immediately in line with a strategic reversal of MWSS privatization. (end)