Manila Water takes govt to court over P79-B loss

By Riza Lozada

Manila Water has haled the government to an international court to demand reimbursement for expected losses computed at P79 billion, as a result of the government’s violation of the terms of its contract. 

The water company said it filed a “notice of arbitration” with the Permanent Court of Arbitration in Singapore after the government ignored the notice of claim Manila Water filed on April 23.

Through that notice, the water firm invoked the government’s commitment in a Letter of Undertaking to reimburse, through the Department of Finance (DOF), Manila Water’s losses in operating revenues arising from a “significant diminution” in the rate of return that was stipulated in its concession contract.

Manila Water signed the concession contract with the Metropolitan Waterworks and Sewerage System (MWSS), the government’s water agency, on February 22, 1997. The contract expires in 2037.

Manila Water said a significant diminution of the rate of return occurred when the MWSS unilaterally ordered the implementation of new rates that reduced by P1.66 the per-cubic-meter original basic charge stipulated in the contract. The new rates were implemented only in June, or 18 years after the contract was signed.

The projected P79-billion losses Manila Water now wants to be reimbursed were computed for each remaining year of the concession, from 2015 to 2037.

Manila Water said the government’s Letter of Undertaking clearly states that the government, through the DOF, is committed to indemnify or compensate the water firm for any revenue loss caused by any action on the part of the MWSS on the contract.