MWSS Board Chairman and concurrent OIC Administrator Reynaldo V. Velasco hailed the Revised Concession Agreement (RCA) between the government and Manila Water Company, Inc, as a testament to President Rodrigo Duterte’s resolve to protect the interest of the Filipino consumer and the national government.
He made the statement following the signing by the government and Manila Water of the RCA as he thanked Manila Water for working with the National Government to finalize the contract.
Chairman Velasco, who signed the RCA for MWSS, 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, Office of the Government Corporate Counsel, among others, that collectively pursued, over several months the completion of the new concession agreement.
“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.
The new CA 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 new CA provisions to protect the government’s interest is the removal of government non-interference clauses and the removal of conditions 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; 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 IncomeTax cannot be charged to the consumer; tariff freeze until 31 December 2022 that will help consumers recover from the economic impact of COVID pandemic; tariff adjustment for inflation will be 2/3s of the Consumer Price Index unlike the previous contract which had a 100% inflationary impact; and removal of the Foreign Currency Difference Adjustment to prevent tariff spikes.
With the RCA signed, Manila Water’s concession in the East Zone is affirmed until 31 July 2037.