The Freedom from Debt Coalition (FDC) calls on the National Economic and Development Authority (NEDA) to immediately reject the proposed Maynilad quasi-re-organizational plan. NEDA’s decision is crucial and urgent as it will end the MWSS Board’s vacillation in drawing the full $120M on Maynilad’s performance bond. The said bond will expire on July 31, 2004.

Amendment 2, the Metropolitan Waterworks and Sewerage System’s (MWSS) compromise deal with Maynilad Water Services, contains the plan to bail out the bankrupt water distribution company from its financial quagmire. Instead of collecting the full Php8 billion outstanding concession fees (which now stands at P9.7B) from Maynilad, MWSS will risk the people’s money and have it converted into 63% equity in the financially insolvent corporation.

The government’s entry, through the MWSS, as majority shareholder of Maynilad would also mean sharing the responsibility of ensuring payment for the company’s liabilities amounting to more than P19B. This is tantamount to passing on the public the debts of a private company.

The gravity of Amendment 2’s effect, once the scheme is approved, should have sent a sense of urgency to agencies concerned in the process of reviewing the plan. NEDA’s issuance of a Board Resolution is one of the conditions required in Amendment 2’s full effectivity.

NEDA’s decision will also affect the MWSS Board of Trustees’ determination to draw on Maynilad’s performance bond. Despite the recent Supreme Court’s ruling allowing MWSS to touch the US$120M bond, MWSS remains irresolute—several days after issuing a resolution to get the whole bond, the MWSS Board issued another to defer its collection and wait for NEDA’s Board resolution. This is alarming considering that the performance bond will expire three weeks from now. Despite Maynilad’s propaganda that it will renew the bond, no effort is seen forthcoming as the deadline to renew has already passed.

The Office of the Government Corporate Counsel’s (OGCC) opinion on Amendment 2, another condition for its full implementation, is also dependent on NEDA’s review.

It has been two months since Judge Reynaldo Daway of Quezon City Regional Trial Court Branch 90 directed NEDA to come up with its report but up to now it has failed to do so. FDC is deeply suspicious that NEDA will make the announcement at a time when the public is off-guard. Similar to what MWSS officials did when they disclosed that MWSS has agreed to a compromise deal with Maynilad. Despite promises to keep the out-of-court negotiations transparent, MWSS and Maynilad signed the agreement first before making it public.

FDC challenges the NEDA Board, if they are upholding public interest and if they want to be worthy of public trust, to reject Amendment 2 now!

The Supreme Court ruling lifting Judge Daway’s stay order already invalidates the purposive reason why the government has agreed to Amendment 2. There is no more basis to implement this debt-to-equity scheme, which is claimed to be the best option left so that the government can collect on Maynilad’s outstanding concession fees.

FDC reiterates its position that the MWSS-Maynilad compromise deal is a losing proposition. We call on NEDA to reject Amendment 2 now and uphold the drawing of the full $120M on Maynilad’s performance bond.

The National Executive Committee
Freedom from Debt Coalition

FDC Calls:

Draw the full $120 on Maynilad’s performance bond now!
SCRAP Maynilad Contract Amendment No. 2!
Boot Maynilad out of the water distribution sector!
Genuine government takeover of the West Zone concession!

FDC Chapters