Water consumers and anti-water privatization advocates led by the Freedom from Debt Coalition warned Pres. Aquino and Sec. Cesar Purisima of the Department of Finance (DoF) not to process the P82.44 billion compensation claim that water companies are demanding from the government on the basis of sovereign guarantees issued in connection with the privatization.

“The demand for almost P83 billion to cover the water companies projected losses is outrageous and unjust and should be rejected. Why should we pay money out of the national coffers to ensure the profits of wealthy corporations when we don’t even have enough for basic social services?” Samuel Gamboa, FDC Secretary General asked.

Following the resolution of their separate arbitration cases stemming from a 2013 rate-setting dispute, Maynilad had demanded P3.44 billion while Manila Water asked for P79 billion in compensation to recover losses arising from the arbitration controversy.

 

“Just to put things in perspective, the money the water companies are asking for is significantly bigger than the P-Noy administration’s P53.9 billion 2015 allocation for basic education facilities which includes the construction of 31,728 classrooms and the repair of 9,500 more. It is more than double the P37.1 billion cost of Philhealth premium subsidies which will benefit 15.4 million poor families. Instead of being used to guarantee Maynilad and Manila Water’s profits, we should use the money to fund essential public services so we won’t have to rely on private businesses to provide them,” Gamboa said.

FDC also argued that paying compensation to the water companies legitmizes their exploitative practice of passing on their corporate income taxes to unsuspecting water consumers leading to what it calls a “tax injustice”.

“This is an issue of tax justice. A big chunk of the compensation claim is tied to corporate income taxes. If we pay Maynilad and Manila Water compensation, we are saying their unjust practice of passing their taxes on to consumers is okay. It contradicts the position taken by the government’s own regulators and the MWSS Board and puts P-Noy and Purisima on the side of Ayala’s and the Consunji’s,” Gamboa added.

Sovereign guarantees, according to FDC shift risk away from private investors and place them on government shoulders which ultimately means it’s the people who end up paying if a problem arises. 

“Sovereign guarantees like the ones the government issued to Maynilad and Manila Water are ill-advised and unjust. They expose the state to huge risks with potentially serious consequences. This is what happens when we agree to take on risk that should actually be borne by the private investor. We must end this practice now,” Gamboa said.

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