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MWSS told to collect P5.1 billion govt claim from Maynilad

Article (news)

Paige Javier

ABS-CBN News

MANILA – The Commission on Audit has required the Metropolitan Waterworks and Sewerage System central office (MWSS-CO) to provide proof of its efforts to collect government claims worth P5.071 billion from water concessionaire Maynilad.In its annual audit report for 2023, state auditors said the amount includes borrowing costs and penalties due to delayed remittance of concession fees.&quot;As at December 31,2023, there was no evidence of efforts made by the MWSS CO to pursue the Collection of the P5.071 billion claims from Maynilad for the cost of borrowings and penalties on delayed remittance of concession fees,&quot; COA said.The breakdown of P5.071 billion government claims is as follows: - Cost of Borrowings: P3,952,833,428 - Penalty on Delayed Remittance of Concession Fees: P1,118,315,274The MWSS-CO earlier requested approval to drop the penalty from its books.Maynilad stopped remitting concession fees on March 8,2001 due to financial difficulties, forcing MWSS COO to use its own resources and seek assistance from private lenders.On March 16, 2004, the MWSS-CO signed a Subscription Agreement with BNP Paribas to raise funds to compensate Maynilad&#x27;s unremitted concession fees.The Rehabilitation Court on June 1, 2005 issued an order approving the rehabilitation plan submitted by Maynilad, which included terms and conditions of the (Debt Capital Restructuring Agreement (DCRA).On December 19, 2007, the same Court declared Maynilad had &quot;successfully implemented the DCRA subject to fulfillment of certain conditions.&quot;MWSS-CO then requested payment from Maynilad of the prepayment premium on the BNP Paribas Notes, but the latter declined, citing the 2009 court order.The MWSS CO incurred interest and penalties before retiring the BNP Notes by executing loan agreements with various banks in March 2011.COA said the MWSS-CO&#x27;s inaction contradicts Article 12 of the 1997 Concession Agreement and opinion issued by the Office of the Government Corporate Counsel (OGCC).&quot;In its opinion, dated October 5,2011, the OGCC asserted that the disputed claims of MWSS CO remained valid despite the ruling of the Rehabilitation Court,&quot; it said.The OGCC likewise said the MWSS CO cannot wave its claim for payment of interests and penalties &quot;because the MWSS Board of Trustees is not authorized to do so.&quot;&quot;Furthermore, the OGCC has opined that the failure of Maynilad to fulfill its obligation to pay concession fees within the stipulated period has led to the indemnification of damages, which is deemed a natural and probable consequence of Maynilad&#x27;s delay,&quot; COA added.During the May 29,2024 exit conference, the MWSS CO said &quot;they are diligently and actively pursuing the disputed claims with the Maynilad.&quot;&quot;As of report date, the MWSS CO has not submitted any evidence to establish the actions taken to pursue the claims of the government,&quot; state auditors said.The audit team recommended and the MWSS CO agreed to require the Legal Service Department and Finance Department to coordinate with the OGCC to pursue the claims against Maynilad to recover the costs incurred by MWSS-CO.<div><a href="https://www.abs-cbn.com/news/business/2024/12/12/manila-water-maynilad-rates-to-rise-jan-1-as-mwss-adjusts-tariff-rates-1609" rel="noopener noreferrer" target="_blank">Manila Water, Maynilad rates to rise Jan. 1 as MWSS adjusts tariff rates</a></div>Maynilad said it has yet to receive any new communication with the MWSS about the audit report. &quot;We will await official communication from MWSS on this matter and will provide our comments at the appropriate time,&quot; it said.

The Commission on Audit is asking the MWSS central office to provide proof of its efforts to collect government claims worth P5.071 billion from Maynilad.

The Commission on Audit is asking the MWSS central office to provide proof of its efforts to collect government claims worth P5.071 billion from Maynilad.

COA to MWSS: Collect P5.1 billion govt claim from Maynilad

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COA to MWSS: Collect P5.1 billion govt claim from Maynilad

Paige Javier,

ABS-CBN News

Published January 08, 2025 03:06 PM PHT

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Updated January 09, 2025 11:40 AM PHT

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