MANILA, Jan 7 (Reuters) - The Philippine government will
take over the capital's water distribution services if the two
largest water firms refuse to accept the terms of new contracts
that will be offered to them, the presidential spokesman said on
Tuesday.
Maynilad Water Services Inc and Manila Water Co Inc MWC.PS
serve a combined 16 million customers under 25-year concession
deals signed in 1997, but President Rodrigo Duterte labelled the
agreements "onerous and disadvantageous" for ratepayers.
The firebrand leader in December ordered criminal charges
filed against the two companies, including their billionaire
owners. Earlier that month, they had won arbitration cases in
Singapore against the government. "The chief executive is giving the water concessionaires the
option of accepting the new contracts minus the onerous
provisions without any guarantee of not being criminally
prosecuted together with those who conspired to craft the very
onerous contracts," Salvador Panelo, Duterte's spokesman, told a
news conference.
"Should Maynilad and Manila Water refuse to accept the new
agreements, the president will order the cancellation of their
present water contracts, order the nationalisation of water
services in their respective areas of operation," Panelo said.
Manila Water and Maynilad did not immediately respond to
requests for comment.
The market cheered the news that the two firms would be
allowed to continue to operate if they adhered to the
government's conditions.
Manila Water, which fell as much as 73% and lost as much as
$556 million in market value last month, rallied nearly 15% on
Tuesday after the announcement, while parent firm Ayala Corp
AC.PS , which shed up to $875 million in market capitalisation,
gained 1.5%.
Maynilad owners Metro Pacific Investments Corp MPI.PS and
DMCI Holdings Inc DMC.PS , rose 3.2% and 3.9%, respectively, on
Tuesday. The two firms collectively lost as much as $1.45
billion in market value after Duterte's criticism.
Last month, the state water regulator cancelled a 15-year
extension of the water utilities' concession after pressure from
Duterte. The existing concessions will expire in
2022. The Permanent Court of Arbitration in Singapore last month
ordered the Philippine government to pay Manila Water 7.4
billion pesos ($145.55 million) to recoup foregone revenues from
rate increases that were rejected by regulators. Maynilad won a
separate arbitration last year.
The companies had said they would forfeit any damage claims
to avoid angering the president, who enjoys high public approval
ratings.
($1 = 50.84 Philippine pesos)