Statement from Action for Economic Reforms Regarding the Demand Letter to the MWSS Board

Public interest organizations, namely Action for Economic Reforms and d the Bantay Tubig network, as well as individual consumers submitted a demand letter to the Board of Trustees of the Metropolitan Waterworks and Sewerage System (MWSS) on 19 July 2004. Their urgent demand is for the MWSS Board to immediately and effectively draw on the Maynilad performance bond and to desist from further negotiating a compromise agreement with Maynilad.

Action for Economic Reforms and Bantay Tubig assert that Amendment No. 2 is unlawful for the following reasons:

First, it will effectively result in the upward adjustment of water tariffs without the benefit of notice and hearing, in violation of law and settled jurisprudence on tariff setting by public utilities, and of the property rights of the consumers.

Second, it limits MWSS to drawing only $50 million of the $120 million Performance Bond. Said Performance Bond is as good as cash and now demandable at will for the full amount. Hence, it taxes the imagination why MWSS would practically forego $ 70 million in cash in favor of Maynilad.

Third, it converts the outstanding P8.33 billion Maynilad debt into shares/equity in Maynilad. Effectively, MWSS would be buying virtually worthless shares and getting majority interest in a company whose
future is speculative at best.

The Supreme Court decision has paved the way for the drawing of the
full amount of $120 million, negating the provision in Amendment No. 2
that only $50 million would be drawn.

Action for Economic Reforms coordinator Men Sta. Ana also emphasizes
that the public should be vigilant regarding further compromises, even
if the MWSS would call on the full amount of the performance bond.
MWSS, he said, must enforce the provision in the Concession agreement
that the obligations of Maynilad to MWSS shall be made senior to other
debts. A compromise that would make this Maynilad obligation to MWSS
take a backseat would only prolong the problem that is injurious to
government, MWSS, the taxpayers and subscribers to Maynilad.

The groups have also expressed their opposition to Amendment No. 1, in
which tariffs were increased without any public hearing at all.
Further, the public interest groups say that “jurisprudence is clear
that it is unlawful to interpret a contract involving a franchise or
concession of a public utility that goes against the public interest.”
There is a strong case for the rollback and refund of at least PhP8.28
per cubic meter.

Action for Economic Reforms has also called on the MWSS Board to be
transparent and to actively disseminate the information from the MWSS
and related offices on these issues that are of great public interest.
They ask the Board to give the public access to, and be allowed to
reproduce, all documents relating to or connected with the Agreement,
Amendment No. 1 and Amendment No. 2, such as Board resolutions minutes
of the meeting, financial statements, studies and projections,
memorandums or reports of consultants, and pleadings and submissions
before courts, tribunals and arbitral bodies.

Action for Economic Reforms, Bantay Tubig and the individual consumers
are represented by the Quevedo, Malaluan and Lumba Law office.

Read Demand Letter (.in pdf, 39kb)

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