Regulator mulls Manila Water penalties

THE METROPOLITAN WATERWORKS and Sewerage System (MWSS) said on Tuesday it was studying the prompt imposition of penalties against the Manila Water Company, Inc. for current service disruptions, marking a shift from its statement the day before that penalties will have to be incorporated in rate rebasing done every five years.
Leaders of the MWSS were summoned to a meeting with President Rodrigo R. Duterte that was to take place late in the afternoon of the same day in Malacañan Palace.
“We are studying that right now. We are exploring that option of imposing it by June or July,” MWSS-Regulatory Office Chief Regulator lawyer Patrick Lester N. Ty told the Senate Committee on Public Services when pressed on the matter in a public hearing.
The committee, led by Senator Grace S. Poe-Llamanzares, questioned Mr. Ty after he said the regulator does not have authority to promptly impose penalties for noncompliance with requirements in concession agreements.
It was the same stand he took the day before in a hearing at the House of Representatives, prompting Speaker Gloria M. Arroyo to tell reporters afterwards that lawmakers will have to tighten sanctions under such deals.
In the same hearing on Tuesday, Senate President Vicente C. Sotto III said Article 10.4 of the concession agreement between the MWSS and Manila Water provided that failure to meet any service obligation for more than 60 days, or 15 days “in cases where the failure could adversely affect public health or welfare”, will subject concessionaires to financial penalties.
“The amount of any such penalty shall be equal to 25% of the costs that, in the reasonable opinion of the Regulatory Office, the concessionaire will incur in order to meet the service obligation in question,” the provision read in part.
Mr. Ty explained that the MWSS penalizes concessionaires through rate rebasing, noting that the same provision said that penalties “shall be rebated to customers” every five years.
“Admittedly, the regulatory office has only been imposing it during rate rebasing, but there’s no provision that prohibits the regulatory office from doing that earlier,” Mr. Ty said.
CAUTIOUS
He said the regulator is looking at imposing any sanction by July since the immediate priority is to restore services to all areas in Metro Manila’s “east zone” that has been entrusted to Manila Water since 1997.
“One, we want to focus first on fixing things; second, we expect the next monthly bill will be very low because the usage of everyone will be very low; and third, of course, to observe due process,” Mr. Ty said.
“If we just impose [penalties] on Manila Water, they can actually file an arbitration case and — I’m not sure if you’ve known — we have been losing our arbitration cases,” he added, to which Ms. Poe responded: “Maybe you should get better lawyers.”
For his part, Manila Water President and Chief Executive Officer Ferdinand M. dela Cruz said the company will comply with penalties that MWSS will impose, provided these are in accordance with the concession agreement.
“We will comply with the process and there’s a process and whatever comes out of that performance review and the required penalties, if it is within the framework of the concession agreement process, Manila Water will comply,” Mr. dela Cruz told the panel.
Among others, the concession agreement requires provision of “uninterrupted 24-hour supply of water to all connected customers in the service area”.
SUMMONED TO MALACAÑANG
In a chat with reporters on Tuesday afternoon, Presidential Spokesperson Salvador S. Panelo said Mr. Duterte was scheduled to meet later that day with MWSS officials to check on compliance with his order to the agency last Friday to instruct Metro Manila’s two water concessionaires to tap more water from Angat Dam in order to improve service delivery.
“Siguro mage-explain ’yung MWSS… Siguro magre-report sila kung ano na nangyari. Di ba may directive siya? baka magre-report, O, ano na nangyari sa directive ko,’ baka ganun,” he told reporters.
In his statement last Friday, Mr. Panelo said: “The President is aware and concerned about the (suffering) of the residents of Metro Manila due to the present water crisis.”
He added that Mr. Duterte ordered the MWSS to “demand from the Manila Water Company, Inc., Maynilad Water Services, Inc. and other responsible offices to release water from Angat Dam by noon time today, March 15.”
He said further that the expected water releases “should be sufficient for 150 days to cover affected areas in Metro Manila.”
“In the event of failure to act or comply with this directive, the President will personally go to them and make the responsible officers account for such failure,” Mr. Panelo also said.
Water services have improved somewhat since then as Manila Water secured the green light to tap deep wells to augment supply for a limited time. — Charmaine A. Tadalan with ALB