PPP still attractive, FMIC says
Credit to Author: Tyrone Jasper C. Piad| Date: Thu, 16 Jan 2020 16:36:46 +0000
Despite President Rodrigo Duterte’s dispute with water concessionaires, public-private partnerships remain to be “attractive” for both local and foreign investors, First Metro Investment Corp. (FMIC) said.
“We think that over the long run, the public-private partnerships are still attractive,” FMIC Chairman Francisco Sebastian said during a recent media briefing in Taguig City.
“I suppose these are ordinary vetting of projects. Every administration, there is always a look back, checking on the projects that have been given,” he explained.
Following the water shortage in March last year, President Duterte ordered the review of Manila Water Co. Inc. and Maynilad Water Services Inc.’s agreements, coming up with a conclusion that some of the terms were “onerous.”
The Metropolitan Waterworks and Sewerage System revoked a board resolution extending the water concessionaires’ contracts — covering 2022 to 2037 — following President Duterte’s directive. But the regulator maintained that the 25-year deal ending 2022 were “valid and subsisting contracts.”
Recently, President Duterte offered new contracts, telling Manila Water and Maynilad to accept the terms or the government will take over provision of water services instead.
The Department of Justice, however, clarified that the new agreements will still be subject to discussion, giving both water firms opportunity to comment on the terms.
Sebastian is optimistic that the government and the water concessionaires will be able to meet halfway with their franchise agreements.
“We believe that a resolution will be achieved, that will be both beneficial to the country, to its people, as well as investors,” he added.
The ongoing issue has weighed on the shares of Manila Water — dropping to as low as P6 last month, or a third of its usual trading level — and its parent firm Ayala Corp. due to uncertainties. DMCI Holdings Inc., which has stake in Maynilad, also saw its stocks be affected by the water firm’s dispute with President Duterte.
Philstocks Financial Inc. research head Justino Calaycay said earlier that the case between the President and water concessionaires could also fuel further uncertainties as this might pave the way for the review of other agreements as well.
“It is bigger than the water concession problem. It shows how sacred contracts are that the private entities entered into with the government,” he explained.