24 June 2004
The Freedom from Debt Coalition (FDC) demands that the GMA administration immediately collect the people’s money from Maynilad. The highest court of the land has spoken and there is no more reason for the government not to draw the full $120 million on the concessionaire’s performance bond to partly cover its long overdue P8 billion concession fees.
The Supreme Court ruling nullifying a local court’s order that previously prevented the MWSS from touching Maynilad’s performance bond strengthens FDC’s position against Amendment 2. FDC consistently urged the government to abandon a losing proposition that only passes on to the taxpayers the burden of salvaging a grossly mismanaged company from its self-made financial ruin.
FDC asserts that the government either failed to exercise wisdom or was bent on bailing out a major election campaign supporter when it agreed to a debt-to-equity scheme with the West Zone water distributor.
It should be remembered that in 2003 Maynilad and the MWSS entered into an early contract termination dispute before an International Appeals Panel. The Appeals Panel decided in favor of the MWSS to collect Maynilad’s overdue concession fees by allowing it to draw on Maynilad’s performance bond. Maynilad, however, subverted the panel’s decision by filing for corporate rehabilitation in a local court implicating the performance bond issue. The rehabilitation court issued a stay order that prompted MWSS to elevate the case to the Supreme Court. While the high court deliberated, Amendment 2 was being concocted.
The question is this: why did the MWSS not wait for the Supreme Court’s decision before it entered into an agreement with Maynilad? Preventing water service disruption is a weak excuse for bailing out a water operator that for several years has failed to achieve performance targets despite financial concessions granted by the government—successive rate increases, tax incentives among others.
Did the Office of the Government Corporate Counsel, led by Justice Undersecretary Manuel Teehankee, have little faith in the strength of their case against Maynilad? As stated in Amendment 2, MWSS’s participation in Maynilad’s quasi-reorganization will be “expressly for purposes of its financial recovery of outstanding Concession Fees…” According to the financial recovery plan, Maynilad will pay out P3-billion of its P8-billion outstanding concession fees by allowing MWSS to draw US$50 million from Maynilad’s US$120 million performance bond. MWSS will risk the remaining P5 billion in exchange for 62% equity in financially insolvent Maynilad.
Or was the legal squabble a mere stage show to mislead the public because higher forces were obdurately preserving the government’s water privatization policy at the expense of public interest?
After seven years of subjecting our largest water distribution utility to private hands, Metro Manila residents have had enough of having their basic need prioritized second only to the interests of profit-driven corporations.
FDC further asserts that Amendment 2 is nothing but a sell-out of public interest. Amendment 2 must be scrapped now! MWSS should immediately draw the full $120 million on Maynilad’s performance bond to assure the people that the West Zone concessionaire would answer for its failure to perform its obligations.
No to Maynilad Bailout! Scrap Amendment 2!
Draw $120 million on Maynilad’s Performance Bond NOW!!!THE NATIONAL EXECUTIVE COMMITTEE
Freedom from Debt Coalition