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Manila Water, Maynilad contract delay
Manila Water and Maynilad, the two largest water concessionaires in the Philippines, are facing a contract delay that could potentially affect the water supply of millions of people in the country.
The delay is due to the government’s decision to review the contracts of the two companies, which were signed in 1997 and set to expire in 2022. The review was prompted by allegations of onerous provisions in the contracts, including the companies’ ability to pass on to consumers the cost of corporate income tax and other expenses.
The review has been ongoing since 2019, and the government has yet to come up with a decision on whether to renew the contracts or to put them up for bidding. This has caused uncertainty for Manila Water and Maynilad, as well as for their customers.
The delay has also affected the companies’ plans for expansion and improvement of their services. Manila Water, for instance, had planned to invest P53 billion ($1.1 billion) in infrastructure projects over the next five years, including the construction of a new water treatment plant and the rehabilitation of existing facilities. Maynilad, on the other hand, had planned to invest P135 billion ($2.8 billion) in the same period, including the construction of a new sewage treatment plant and the expansion of its distribution network.
Without a clear decision from the government, these plans are now on hold, and the companies are unable to move forward with their projects. This could potentially lead to a shortage of water supply in the future, as the demand for water in the Philippines is expected to increase due to population growth and urbanization.
The delay has also affected the companies’ financial performance. Manila Water reported a 14% decline in its net income for the first half of 2021, while Maynilad reported a 9% decline in its net income for the same period. Both companies attributed the decline to the delay in the contract renewal.
The delay in the contract renewal has also raised concerns among investors, as the uncertainty could affect the companies’ stock prices and their ability to raise funds for their projects.
In conclusion, the delay in the contract renewal of Manila Water and Maynilad is a cause for concern for the companies, their customers, and the Philippine government. It is important for the government to come up with a decision soon, to provide clarity and certainty for all parties involved. The decision should also take into consideration the interests of the companies, their customers, and the public, to ensure a sustainable and reliable water supply for the Philippines.