02 March 2004
We are unnerved by the silence and inaction of the Metropolitan Waterworks and Sewerage System (MWSS) over Maynilad’s delaying tactics to avoid payment of its overdue concession fees. We are appalled by the lack of transparency of all the ongoing processes and negotiations especially as we gather from vague news reports that MWSS is paving the grounds for a possible debt-to-equity swap to relieve Maynilad from its financial difficulties.
We also find it extremely imprudent for MWSS to take out another $220 million loan to pay for maturing obligations that Maynilad’s concession fees are supposed to shoulder. These moves are unthinkable especially with the fiscal crisis that the government cannot extricate itself from. FDC opposes any bailout. Why does the government insist on bailing out Maynilad?
We are similarly aghast by MWSS’s lack of decisiveness to declare a Concessionaire Event of Termination when Maynilad had itself placed under receivership. Under section 10.2 of the concession agreement, one of the grounds for Concessionaire Event of Termination is as follows:
- The Concessionaire shall make an assignment for the benefit of creditors, petition or apply to any tribunal for a receiver or a trustee for itself or of any judicial or other proceedings by reason of its financial difficulties under any reorganization, arrangement, readjustment of debt, dissolution, or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or,
- There shall be commenced against such party any such proceeding which shall remain undismissed for a period of 60 days, or such party shall by any act indicate its consent to, approval of, or acquiescence in, any such proceeding or the appointment of any receiver of, or trustee for, it or any substantial part of its property, or shall suffer any such receivership or trusteeship to continue undischarged for a period of 60 days; or,
- There shall be any reorganization, arrangement, readjustment of debt, dissolution, or liquidation with respect to such party which does not involve a judicial proceeding.
MWSS should, at the first instance, have already terminated Maynilad’s contract after its various attempts to avoid payment of P8 billion it owes the government. Instead, MWSS allowed itself to enter into out-of-court negotiations with the private water operator for amicable settlement of their dispute.
We have put in much effort to monitor developments every step of the way but the secrecy with which MWSS has dealt with Maynilad completely denied public access to the negotiations. The right to information affecting public interest is guaranteed by the Constitution. Citizens have the right to know what is happening. We have the right to know where public funds are going.
We hope for your immediate response, and a briefing from your office will be most welcome.THE NATIONAL EXECUTIVE COMMITTEE
FREEDOM FROM DEBT COALITION
24 February 2004
Freedom from Debt Coalition