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PHL tapping ADB consultants in drafting new deal for water firms, says DOJ chief

Justice Secretary Menardo Guevarra on Wednesday said the government will be tapping consultants from the Asian Development Bank (ADB) to help in the revision of the economic and financial terms of the new concession agreement to be offered to water concessionaires Maynilad and Manila Water.

Guesting at the Kapihan sa Manila Bay Forum, Guevarra said he was informed by Finance Secretary Carlos Dominguez III about the engagement of consultants from the ADB.

He noted that the Department of Finance (DOF) was heavily involved even in the crafting of previous contracts with the water concessionaires.

“In fact, they’re going to have a meeting this afternoon in Malacañang with the Department of Finance in the Office of the President and I assume that one of the matters that we are going to take up later is the engagement of the ADB consultants for the purpose of guiding the government side in the matter of revision of the economic and financial terms of the water concession agreement,” Guevarra said.

The DOJ chief also stressed that it may take six months to finish the draft concession agreements, which will then be presented to the water concessionaires for comments.

“The whole process may last six months. That is a conservative estimate on my part…. We’ll be sitting down with the water concessionaires, I know that they are waiting,” Guevarra noted.

The DOJ secretary said the legal and constitutional issues pertaining to the concession contracts have already been resolved by the DOJ.

Thus, Guevarra said the legal team is only waiting for the input of the DOF on economic terms  such as water rate-setting mechanism, factors to be considered such as inflation rate and exchange rate, expenditures that can be validly included in the concession agreement and a determination of what can be and cannot be taxed.

Earlier, Guevarra said the government is still open to discuss with Maynilad and Manila Water  the proposed amendments on the concession contracts.

He stressed that government’s takeover or nationalization of water distribution as authorized under Sections 17 and 18, Article XII of the Philippine Constitution, is the government’s last option.

Earlier, President Duterte lambasted Manila Water and Maynilad and threatened to file a case of economic sabotage against the two water firms due to the “onerous” 1997 contracts with the government.

Duterte made the remark after Guevarra disclosed that the Justice department found the extension of these contracts to 2037 irregular, considering that the extension was granted 12-13 years before the original expiration of the 25-year concession agreements in 2022.

Among the provisions in the old contracts that should be struck down for being onerous, DOJ said, are the prohibition on the government’s interference in the rate-setting mechanism of the two water firms and the Metropolitan Waterworks and Sewerage System.