By Hannah Torregoza
Senator Sherwin Gatchalian on Thursday called for a renegotiation of business agreements entered into by the Metropolitan Waterworks and Sewerage System (MWSS) with Manila Water Company, Inc. (Manila Water) and Maynilad Water Services, Inc. (Maynilad), saying the business tax provision under the water concession agreement should be scrapped.
With the tax provision, water consumers are burdened with paying the tax obligations of Maynilad and Manila Water such as charitable contributions, expenses for basketball games, sports clinics, and other forms of donations, among others.
In an earlier Senate hearing, Gatchalian questioned the inclusion of the business tax provision under the water concession agreement that enabled the two water concessionaires to skirt away from paying their tax obligations and passing it on to consumers instead.
Thus, he said MWSS, being a regulatory body, should renegotiate its agreement with the two concessionaires to make it advantageous to water consumers.
“With so many lawyers, you were able to include this business tax provision in the contract…You practically paid nothing. You literally passed on to consumers your capital expenditures, debts, and even corporate income tax,” Gatchalian told executives of the water concessionaires during the hearing.
“But the chief regulator finally caught you that is why we now have this problem. All I can say is, you violated public trust because in the first place you were just given a privilege to distribute water,” Gatchalian pointed out.
The senator also berated the water companies for claiming they are not a public utility when their business entails them to provide a basic utility that is considered a prime commodity.
“Even if you say you are not a public utility, your business is comparable to a public utility. And if you say public utility, that includes public trust,” Gatchalian said.
“You even included in the charges basketball and charitable events you had. How can we trust these concessionaires? As it turns out, whenever you tried to wriggle out, you succeeded in wriggling out. But then you were caught in the end,” Gatchalian told representatives of the water concessionaires during the hearing.
The MWSS has already revoked the extension of concession agreements with both water concessionaires until 2037, which the water regulator itself approved in a board resolution in 2009. The said revocation, in effect, ends the water firms’ concession in 2022.
This development came despite the decision of Manila Water and Maynilad to waive the arbitral awards granted in a ruling made by the Permanent Court of Arbitration in Singapore. In separate arbitral ruling, the government was ordered to pay P7.39 billion to Manila Water, and P3.4 billion to Maynilad. The awards were given after the government denied the two concessionaires application for water rate increase.
As this developed, Malacañang dispelled speculations that President Duterte is allegedly seeking to install his own oligarch to run the water distribution operations in Metro Manila and nearby areas.
Presidential Communications Secretary Martin Andanar said the President has railed against the contracts sealed with Maynilad and Manila Water due to the alleged onerous provisions under the concession agreement and not because he wants to pass the business to his ally.
“Oh no, definitely not! The main point here is that we should not be entering into onerous contracts,” Andanar said in a television interview.
On rumors that the Villar family, which owns Prime Water Infrastructure Corp., might take over the water operations from Maynilad and Manila Water, Andanar said: “I don’t think so. I think the purpose here is to send the message to both Maynilad and Manila Water that the President is not accepting this kind of reasoning and this kind of onerous contract.”
Meanwhile, Justice Undersecretary Emmeline Aglipay-Villar on Thursday denied allegations that her husband’s family has vested interest in the review of the government’s water concession agreements with Manila Water and Maynilad.
“The department conducted a disinterested review of the concession agreements and I don’t want to even dignify further by answering further accusations,” she told reporters at the sidelines of the 5th Manila International Dialogue on Human Trafficking held at the Manila Hotel.
The undersecretary, who is married to Department of Public Works and Highways (DPWH) Secretary Mark Villar, is part of the team which conducted the review of the concession agreements. The review report, which was submitted to President Duterte, pointed out the onerous provisions of the contracts. (With reports from Genalyn Kabiling and Jeffrey Damicog)