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PHL agreed to water terms in 1997 when fiscal position was weak — Dominguez

phl agreed to water terms in 1997 when fiscal position was weak dominguez - PHL agreed to water terms in 1997 when fiscal position was weak — Dominguez

THE Philippines “gave up its sovereignty” in negotiating the water privatization contracts in 1997 at a time when the government could not improve its water distribution system using its own resources, Finance Secretary Carlos G. Dominguez III said.

“When the contracts were bid out in 1997, the Philippines was paying 700 basis points over the benchmark for its loans, 7% over the loans. Right now, we are paying less than a third of 1% over the loans. Our situation has changed. Apparently in 1997, in order to attract bidders, the government gave up its sovereignty,” Mr. Dominguez said at an event in Makati City Thursday.

He said that the water contracts in 1997, which are being reviewed, led to the “surrender” of the government’s duty to protect the people.

“If you really read the contracts… the government appoints a regulator and that regulator, together (with the water companies), we’re supposed to come up with the rates. If I don’t agree with the regulator, the concessionaire has the option to go to arbitration… in Singapore to decide for us, and the government is prohibited from making any comments. That is a surrender of the government’s obligation to protect its (people).. so we are saying that’s the fundamental problem… That’s what we are looking at the moment,” he said.

Asked on the status of the water agreements with Manila Water Co., Inc. and Maynilad Water Services, Inc., Mr. Dominguez told reporters that “the case is still under discussion.”

Justice Secretary Menardo I. Guevarra has said that consultants from the Asian Development Bank (ADB) will help the government revise the economic and financial terms of the agreements.

Mr. Dominguez said contract reviews are normal.

“We are reviewing it in order to update the contracts to the new reality that we are in now,” he added.

Mr. Guevarra, whose department is leading the review, is waiting on the input of the Finance department, especially on the financial and economic terms.

President Rodrigo R. Duterte said last week that the government will offer new contracts to Maynilad and Manila Water without “onerous” provisions, under threat of nationalization if they do not accept. — Beatrice M. Laforga

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