26 October 2007
The Freedom from Debt Coalition today asked the Metropolitan Waterworks and Sewerage System (MWSS) to stop the re-bidding of the 84 percent government stake in Maynilad Water Services, Inc. because the state-owned corporation “acted beyond its mandate” when it decided to enter into an agreement involving a capital infusion into the cash-strapped company.
Francis Isaac, FDC vice president for Blue Drop Campaign, citing the Commission on Audit (COA) memorandum dated 25 October 2005, stressed that the bidding is illegal because the infusion of capital by the MWSS, under the Debt and Capital Restructuring Agreement (DCRA), into the debt-saddled Maynilad constitutes an ‘ultra vires’ act or is beyond its mandate. The DCRA or the Maynilad Rehabilitation Plan lays down the fiscal assumption of the on-going re-bidding process.
Said capital infusion will be sourced from a World Bank loan, guaranteed by the government, amounting to US$31 million.
“We, the consumers, will be the victims here because it is us who will shoulder the burden of paying this financial assistance of MWSS to cash-strapped Maynilad,” stressed Isaac.
Isaac cited the same COA memorandum explicitly stating that the DCRA is “grossly disadvantageous on the part of the MWSS” because the latter would now have to shoulder the debts of Maynilad, apart from addressing its own maturing liabilities.
“This, therefore, raises questions on the right of MWSS to resell its ‘agreed upon’ majority ownership in Maynilad since its authority to enter into such an agreement remains questionable and unsettled,” said Isaac.
The state-owned MWSS has recently extended the bidding date for the government’s stake in Maynilad as requested by the four pre-qualified bidders. These bidders now have until November 7 to submit their technical and financial proposals, extended from the original deadline of October 24. The turnover of facility is on December 18, extended from the original deadline of December 12.
The four pre-qualified bidders include: DM Consunji, Inc. and Metro Pacific Group; Manila Water Co., Inc.; Noonday Asset Management Asia Pte., Ltd of Singapore; and, Karunakaran Ramchand of India. ###