Business people are frowning in exasperation over the arbitrary and whimsical decisions of the Metropolitan Waterworks and Sewerage System. First it slashed the proposed rate adjustments of its two private concessionaires Manila Water and Maynilad in violation of the 1997 concession agreement, prompting the two to file separate arbitration cases before the International Chamber of Commerce’s International Court of Arbitration in Singapore. And now that the ICC has come out with a decision approving the proposed rate adjustment of Maynilad, MWSS decides it’s okay to ignore the ICC ruling for Maynilad and instead apply the decision handed down for the separate case filed by Manila Water.
What? Run that by us again? To explain–ICC ruled in favor of Maynilad’s rate adjustment last December (but MWSS withheld implementation saying it is waiting for the ruling on Manila Water’s separate case.) Last April 21, the ICC handed out a decision favoring MWSS over Manila Water in the latter’s rate adjustment case. Two separate cases with two separate decisions. Which should tell us that the ICC ruled based on the individual merits of the respective cases.
However, MWSS thinks it can flout the ICC decision by immediately and fully implementing the ruling handed down for Manila Water, but on the other hand chooses to disregard ruling on Maynilad, proceeding to slash down the approved rate adjustment for the latter. So now the regulator finds itself in more legal mess with Maynilad filing a second arbitration case before the ICC, seeking compensation amounting to P3.44 billion in losses plus another P208 million more for every month since Dec. 28, the date when the ICC Appeals panel handed down the ruling favoring the water concessionaire.
Our stoolies tell us Maynilad has strong support from the business community on this second arbitration case protesting MWSS’ whimsical actions, saying the delayed and selective enforcement of the ICC ruling case is the latest evidence of the government’s penchant for changing business rules at random that have for long unsettled foreign and local investors.
Moreover, the surprise move by MWSS to get the Supreme Court involved by seeking the latter’s interpretation of the separate ICC rulings on the Maynilad and Manila Water cases will lead to the kind of judicial encroachment or intervention similarly frowned upon by the business community, our stoolie further noted.
In the first place, arbitration proceedings are meant precisely for warring parties to settle their disputes outside the courts. So why bring the SC into the picture?
"There is no reward for MWSS’ stance, which is an all-downside proposition, with the whole country paying the price. When government officials seek new foreign investments, they will have to explain why a valid contract and a final and binding arbitral award were not respected by a government agency,” Maynilad chief finance officer Randolph Estrellado said, adding that respect for the law and contracts should be observed.
All of these sort of make businessmen think that the selective and whimsical decisions of MWSS and its officials depend on whether these people are having a bad hair day or woke up on the wrong side of the bed. Of course, the populist posturing can also be a ploy to deflect attention from graft accusations, with the Office of the Ombudsman recommending the filing of graft charges against a former executive.
While no one readily welcomes any rate increase in most any thing, the glaring truth is that the increase will go towards enhancement of services and more importantly, to reach areas that are not currently being served. Ordinary consumers actually stand to be the biggest losers with the refusal of MWSS to heed the ICC decision because the continuing losses will undermine long-term plans to expand services–precisely since Maynilad spends P10 billion every year on capital expenditures for service enhancement, our stoolie pointed out.
This capriciousness and arbitrary tendencies will negatively impact poor and low-income consumers in areas that are not yet served by the concessionaire and therefore are forced to buy water for suppliers that charge them almost an arm and a leg. As mentioned in a study conducted by the Philippine Institute for Development Studies, consumers who used to buy water from kariton water peddlers had to pay as much as 13 times more for their water requirements before being serviced by the concessionaires.
Considering this (typical) wishy-washy arbitrary tendency of the government agencies like the MWSS, can anybody blame people like PCCI Securities Brokers Corp. research head James Lago for saying, "It’s not fun to do business in the Philippines”?
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