MWSS says it has no power to impose fines now on Manila Water for violations of its contract

By Chad de Guzman

The government body in charge of water privatization in Metro Manila said Monday it has no power to impose penalties now on concessionaire Manila Water despite its violation of its contract when it failed to continuously supply water to customers.

“Based on the terms of the concession agreement, Manila Water has violated their mandate to provide 24/7 water,” Metropolitan Waterworks and Sewerage System (MWSS) Chief Regulator Patrick Ty said Monday during a House panel hearing on the water crisis.

Article 5, Section 5.1.2 of the agreement reads: “The Concessionaire shall ensure the availability of an uninterrupted 24 hour supply of water to all connected Customers in the Service Area, subject to interruptions resulting from the temporary failure of items of the Facilities (where the Concessionaire acts promptly to remedy such failure) or required for the repair or construction of the Facilities where such repairs or construction cannot be performed without interruption to the supply of water.”

Ty said MWSS sent multiple notices of violation to Manila Water for the service interruptions, but said that the agency cannot hold the east Metro Manila water concessionaire immediately accountable.

“The MWSS Regulatory Office (RO) has no authority to impose fines and penalties (at) this time,” he explained.

The MWSS Regulator said the agreement it signed with Manila Water in 1997 states that should the concessionaire commit violations, the MWSS could apply penalties in the next rate rebasing. The next rate rebasing is scheduled in 2022.

“That is why the MWSS has been repeatedly requesting Congress to petition for a Department of Water and a water regulatory commission to allow the imposing of these fines and penalties,” Ty said.

When asked by Negros Occidental 3rd District Rep.Alfredo Benitez if that is a “defect” in the agreement, Ty agreed.

ACT Teachers Rep. Antonio Tinio said he was shocked that the MWSS is saying it does not have authority to impose fines and penalties when the contract clearly stipulates it does.

Article 10, Section 10.4 of the concessionaire contract states: “A failure by the Concessionaire to meet any Service Obligation which continues for more than 60 days (or 15 days in cases where the failure could adverely affect public health or welfare) after written notice thereof from the Regulatory Office to the Concessionaire shall constitute a basis for the Regulatory Office to assesss financial penalties against the Concessionaire.”

In a separate interview, House Speaker Gloria Macapagal Arroyo said a penalty provision must be added in the law.

“Perhaps in the law, we have to add a penalty provision for those who failed to comply with some parts of the concession agreement,” she said.

Manila Water President and COO Ferdinand dela Cruz said their customers will continue to experience water service interruptions until end of May, in order for La Mesa Dam to replenish its water supply.

CNN Philippines’ Correspondent Rex Remitio contributed to this report.

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