PRESIDENT Rodrigo R. Duterte’s threat against Metro Manila’s water concessionaires sent shares of their owners stumbling at the stock market on Wednesday, along with those of the biggest local entertainment network that was also at the receiving end of the Philippine leader’s ire a day earlier.
“I would say it has to be a major factor. Investors are staying away from the stock for now as there is a lot of uncertainty regarding the concession of the two utility firms,” said Luis A. Limlingan, business development head at Regina Capital Development Corp.
On Tuesday, Mr. Duterte railed against water concessionaires Manila Water Co., Inc. and Maynilad Water Services, Inc. for allegedly onerous provisions in their contracts with the government.
He also vowed to make sure that ABS-CBN Corp.’s franchise will not be renewed when it expires at the end of March next year.
Metro Pacific Investments Corp. (MPIC), the controlling shareholder of west zone concessionaire Maynilad, was yesterday’s second top market loser as it gave up 10.71% of it share price. DMCI Holdings, Inc., which also has a stake in the water firm, fell by 3.85%. Shares in Ayala-led Manila Water fell by 4.79% while those of ABS-CBN slipped by 2.64%.
Mr. Duterte’s threat came after Manila Water on Friday disclosed to the stock market that the Permanent Court of Arbitration, an internationally recognized inter-governmental organization, ruled in the company’s favor in a case against the Philippine government. The tribunal ruled that Manila Water has a right to be paid for losses it suffered because of the Philippines breach of its obligation. It ordered the government to indemnify Manila Water the amount of P7.39 billion, among others.
“President Duterte gave a strong-worded speech last night (Tuesday) on going after the water companies about a lopsided contract with the government,” said Christopher Mangun, head of research at AAA Southeast Equities, Inc.
“Investors feel that the government can pressure these companies into submission, which could result in more losses for these companies.”
Japhet Louis O. Tantiango, research associate at Philstocks Financial, Inc. said investors reacted negatively “worrying that the water concessionaires’ operations could face hurdles from the current administration moving forward.”
On Wednesday, Manila Water said in a statement that its senior officials have met with Finance Secretary Carlos G. Dominguez III to seek guidance before the ruling of the arbitral tribunal became public.
“When Manila Water received the information about the award, our chairman together with a few other senior officers of the company sought guidance and met with Secretary Dominguez before it became public,” the company said. “We informed him that we are willing to come up with a mutually acceptable manner of implementation of the arbitral award considering that this case was filed due to a violation incurred not during this administration. Secretary Dominguez acknowledged our proposal to work very closely with his office to find a mutually acceptable scheme to address the award.”
Manila Water also said that it had diligently discharged its obligations as concessionaire of state-led Metropolitan Waterworks and Sewerage System, spending more than P166 billion to improve water and wastewater services.
“We have installed over 5,500 kilometers of pipes and built 2 new filter plants, 32 new reservoirs, 113 pumping and booster stations, 40 additional wastewater treatment facilities and five times more sewer network capacity to improve the MWSS facilities in the East Zone,” it added.
Malacañang issued a statement on Wednesday on contracts with the water firms, saying that “the President has… directed the filing of the appropriate criminal, civil and administrative charges against all those involved in the said agreements, including the latter’s owners and legal counsels, as well as agents and lawyers of the government for economic sabotage.”
“The use and delivery of water is impressed with public interest hence it is but a privilege and therefore must not be abused. Our water concessionaires in Metro Manila, Rizal and Cavite, however, have not only abused the arrangement of delivering and distributing the state-owned water to citizens but have treated the same as a commodity and a money making venture, instead of considering it as a public service,” Malacañang said through Salvador S. Panelo, chief presidential legal counsel and presidential spokesman.
He said a review of the agreements with the Manila Water and Maynilad show that they are contrary to public policy and public interest, “the same being onerous and disadvantageous to the people, relative the terms or periods, government non-interference, as well as concessionaire indemnification for losses.”
He said Mr. Duterte directed the Department of Justice and the Office of the Solicitor General to draft and prepare new contracts favorable to the state.
CLOCK TICKS FOR ABS-CBN
On ABS-CBN, Mr. Limlingan said lawmakers’ Dec. 21, 2019- Jan. 19, 2020 break “shortens their window” to act on bills renewing the franchise.
There are seven proposals to renew the legislative franchise of ABS-CBN, namely: House Bills 676, 3064, 3521, 3713, 3947, 4305 and 5608. All bills now await hearings at the Committee on Legislative Franchises.
Rep. Abraham N. Tolentino of Cavite’s 8th District, senior vice-chairman of the House of Representatives Committee on Legislative Franchises, said the committee will schedule public hearings on the bills. “Meron ’yan (There will be hearings on ABS-CBN’s renewal of franchise) definitely,” Mr. Tolentino said in an interview.
House Speaker Alan Peter S. Cayetano told reporters that there will be “more than enough time to tackle it in January (and) February.”
“Mare-renew kaya sila by that time? Depende sa kalalabasan ng hearing (Will the franchise be renewed by March 30, 2020? It depends on the hearings). I cannot preempt the committee or the issues that will be taken” Mr. Cayetano said.
On Mr. Duterte’s opposition to the franchise renewal, Mr. Cayetano said: “As you know he’s the president at meron siyang stand sa mga issues so nirerespeto natin ’yan (and he had a stand on issues, so we respect that).”
“Having said that, nirerespeto rin ng ating pangulo ’yung proseso, so hintayin na lang natin ’yung proseso na ’yun (the President respects the legislative process, so let us just let it take its course). But even the president admits that there has to be a fair process.” — with Genshen L. Espedido