MANILA, Dec 11 (Reuters) - The Philippines' water regulator
said on Wednesday it has cancelled the 15-year extension of
concession deals it signed with the country's two largest
utilities after pressure from President Rodrigo Duterte.
Duterte described the concession agreements with Manila
Water Co Inc MWC.PS and Maynilad Water Services as "onerous
and disadvantageous" to the public, prompting them to be revoked
in a move that could turn off investors at a time the government
is seeking foreign capital to modernise its infrastructure.
Metropolitan Waterworks and Sewerage System, the country's
regulator, told lawmakers it had revoked last week a decision
extending the water concession deals with the two utilities
until 2037, sending their shares tumbling more than 13%. The
existing concessions will expire on 2022.
The firms, which are servicing a combined 16 million
customers, secured 25-year concession agreements in 1997, which
were extended in 2009 by a further 15 years.
Duterte acted after Manila Water and Maynilad won
arbitration cases in Singapore against the government.
The arbitration court in Singapore ordered the Philippines
government to pay the utilities a combined 10.8 billion pesos
($212.14 million) in compensation. The companies had said they
would forfeit any damage claims to avoid angering the president.
"These companies not only have inefficiently delivered water
to the households, but exacted unconscionable amounts from the
taxpayers," Salvador Panelo, Duterte's spokesman, said in a
statement.
The water utilities' woes display a violation of the
sanctity of contracts, Guenter Taus, former president of the
European Chamber of Commerce of the Philippines, told Reuters.
"It does not instil investor's confidence. You can't just go
out and revoke contracts," Taus said.
The embattled companies' shares continued their decline on
Wednesday, with Manila Water slumping 14%.
Maynilad stockholders Metro Pacific Investments Corp
MPI.PS and DMCI Holdings Inc DMC.PS sank 13% and 13.4%,
respectively.
Manila Water president Jose Rene Almendras told lawmakers
the company has yet to study the impact of the regulator's
decision.
"There should be a clean process because we have commitments
both in terms of capital expenditures, projects and loans,"
Maynilad chief operating officer Randolph Estrellado said.
($1 = 50.91 Philippine pesos)