Concession Agreement Between Mwss And Maynilad

As such, Salamat said, the government, through the MWSS, is giving the two private water concessionaires the opportunity to renegotiate and agree on the new terms of the concession contract. The concession contract between two equal parties, Metropolitan Waterworks and Sewerage System (MWSS) and Manila Water, provides the structure and framework within which a private government partner was able to clean up and develop the water and wastewater supply in the eastern area of Metro Manila. Concessions would be granted to pre-qualified bidders who submit the lowest tariff, i.e. a tendering procedure. The Philippine government expected the efficiency gains to be large enough for water tariffs to fall, based on the experience of the Buenos Aires concession in 1993, despite the need to finance huge investments and pay off old debts. The reduction of tariffs was important for political acceptance and the government adopted a provision that tariffs in offers should not be higher than the tariffs of the time. [13]:42-44 Four pre-qualified bidders submitted eight bids, each of which was offered for both concessions. Each bidder was a joint venture between an international company and a local company. If the same company made the lowest bid for both concessions, the second lowest bidder would win the contract for the other area. On 23 January 1997, the financial tenders were opened and a tenderer submitted an extremely low tender of only 26 and 29% of the tariffs in East and West Manila. The evaluators asked the company if the offer was serious, which was confirmed by Manila Water, led by the Philippine group Ayala. Manila Water was the only company to offer a lower offer than that of West Manila.

The Ayala Group owned considerable properties in East Manila and perhaps wanted to be sure to win the Eastern concession. Three other companies submitted bids ranging from 50 to 60 percent of the preprivatization rates with slightly lower rates for West Manila compared to East Manila, reflecting their assumption that West Manila was more profitable to operate when 90 percent of the old debts had been attributed to it. [13]:95-98.133 As of 2012, Manila Water operates 36 mostly small wastewater treatment plants, with a total capacity of 0.135 million cubic meters per day. . . .