09 October 2013
Debt & Public Finance
Manila, Philippines —The Freedom from Debt Coalition said that Manila Water’s challenge to the recent decision by the Metropolitan Waterworks and Sewerage System (MWSS) to slash water rates for both concessionaires shows the fundamental infirmities of the concession agreement which the government signed in 1997.
“We have always said that this was a lop-sided agreement. While the water concessionaries may appeal unfavorable decisions to international arbiters, no such recourse is available to ordinary consumers. All previous rate-rebasing exercises had resulted in unpopular hikes in water rates. Yet, consumer complaints were simply brushed aside,” Ric Reyes, FDC president said.
FDC also argued that the move by Manila Water to block an otherwise pro-people adjustment in the water rates should lead the Philippine government to re-evaluate its penchant for signing on to trade agreements and investment treaties. Manila Water has two foreign partners, United Utilities of UK and Mitsubishi of Japan. The Philippine government has entered into a bilateral investment treaty (BIT) with UK since 1981 which includes provisions for investment dispute settlement by international arbitrators. For Japan, the government has JPEPA which is considered a free trade agreement and bilateral investment treaty.
“FDC and other civil society organizations have long cautioned government to think twice about signing off our right to set regulations within our own borders. Entering into multilateral and bilateral trade agreements which favour investor’s rights over people’s welfare erode our sovereignty and weaken our ability to defend people’s rights,” Reyes said.
“The move by the water concessionaires to go to arbitration highlights the dangers of bilateral investment treaties as well as investment rules embedded in bilateral and multilateral trade agreements that our government has either signed or is planning to sign. The Manila Water example is but the latest in a string of cases where our government’s right to decide where public or national interest lies is challenged based on an investors right to profit,” Reyes added.
FDC cited two cases filed with the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), one by German company Fraport related to the construction of NAIA Terminal 3 and the orther by Belgian dredging firm Baagerwerken Decloedt En Zoon (BDZ) in connection with the canceled Laguna lake dredging project.
“It’s time to renegotiate the concession agreement with Manila Water and Maynilad and to rethink international investment agreements,” Reyes said.