Duterte Wants New Water Contracts for Philippine Capital

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Philippine President Rodrigo Duterte wants new contracts signed with Metro Manila’s two water concessionaires that defeated the government in arbitration.

“Craft a new contract that is really favorable to the public, to government and then give it to them. Accept it or nothing,” Duterte said in a speech late Tuesday. He was referring to an order he gave Finance Secretary Carlos Dominguez and Solicitor General Jose Calida to review water supply contracts.

Ayala Corp.-led Manila Water Co. and Maynilad Water Services Inc., now a unit of Metro Pacific Investments Corp., have been supplying water to the Philippine capital under contacts signed with government in 1997.

Duterte said the contracts -- which ten years ago was extended to 2037 -- are disadvantageous to the public, as these prohibit the government from interfering in rate adjustments. He said he may file economic sabotage charges against the water providers.

Manila Water and Maynilad, which is also partly owned by DMCI Holdings Inc., have won their respective cases against the government’s 2013 orders to cut tariffs. The cases stemmed from a regulator’s decision to prevent the companies from passing on to consumers income taxes and some expenses they incurred.

“We wish to reiterate that Manila Water is more than willing and have started to work with the incumbent administration to come up with a workable solution,” the company said in a statement Wednesday, days after an arbitral tribunal in Singapore ordered the Philippine government to pay the Ayala-led company 7.39 billion pesos ($145 million).

Manila Water fell 5.3% to its lowest in eight years, Metro Pacific dropped 8.9%, while DMCI declined 4.3% as of noon break. The Philippine Stock Exchange Index declined 0.8%.

In 2015: Philippines Cracks Down on Water Companies After Income Tax Spat

To contact the reporters on this story: Ditas Lopez in Manila at dlopez55@bloomberg.net;Cecilia Yap in Manila at cyap19@bloomberg.net

To contact the editors responsible for this story: Cecilia Yap at cyap19@bloomberg.net, Siegfrid Alegado

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