MANILA – The revised concession agreement signed between the government and Manila Water Company is beneficial to all, Metropolitan Waterworks and Sewerage System (MWSS) Board Chairman and Acting Administrator Reynaldo Velasco said on Tuesday.
“The contract is both advantageous to the Government, a big win for the Filipino people and the consuming public, and that it is commercially and economically viable to the investors and concessionaire,” he said.
Velasco attributed the new water concession agreement to President Rodrigo Duterte’s resolve to protect the interest of the consumers and the national government.
He thanked Manila Water for working with the government to finalize the contract.
Velasco also lauded the collective efforts of the government panel involving several top officials from the Office of the Executive Secretary, the Department of Finance, Department of Justice, Office of the Solicitor General, OGCC, among others who collectively pursued over several months the completion of the new concession agreement.
He signed the contract for MWSS in his capacity as board chairman and acting administrator.
The revised agreement is modeled after the New Clark City joint venture agreement of the Bases Conversion and Development Authority (BCDA) which was developed with the assistance and advice of the Asian Development Bank (ADB).
Among the provisions of the new agreement to protect the interest of the government are the removal of government non-interference clauses; and removal of provisions that duly compromise medium and long-term government liabilities.
These include removal of the national government’s performance undertaking for future debt; all debt and expenditures of the concessionaire must be reviewed and approved by the regulatory office; all fully recovered assets are immediately transferred to the government to ensure there is no double payment at the end of the contract, and Material Government Adverse Action (MAGA) is limited only to actions of the Executive so that the National Government is not liable for things outside of its control.
To protect the interest of the consumer, the following are provided for: corporate income tax cannot be charged to the consumer; tariff freeze until December 31, 2022; tariff adjustment for inflation will be two-thirds of the consumer price index unlike the previous contract which had a 100 percent inflationary impact; and removal of the foreign currency differential adjustment that will result in much lower tariff increases, and protect the consumer from possible tariff spikes because of foreign exchange movements.
In its disclosure, Manila Water said the tariff freeze until the end of December 2022 is aligned with the government’s program to assist the disadvantaged sector and to contribute to the recovery of the economy post-Covid-19.
With the signing of the revised Concession Agreement (CA), Manila Water’s continuation of the concession until July 31, 2037 is affirmed. (PNA)