Water firm serves notice on concession

Maynilad Water Services Inc. (MWSI) served a force majeure notice on Metropolitan Waterworks and Sewerage System (MWSS) yesterday which suspends payment of the concession fee as provided for under a concession agreement.

The notice served is part of MWSI’s option to bring the problem before an arbitration panel of the International Chamber of Commerce.

MWSI president Rafael Alunan III said the decision to bring this up for arbitration is in line with Maynilad’s desire to negotiate a viable solution to the long running problem in a forum that is both fair and international as provided for in the concession agreement.

Under the agreement, MWSS and MWSI will consult each other and take all reasonable steps to minimize either party’s losses resulting from each event of force majeure cited.

The MWSS board had earlier informed Maynilad that it approved its request in principle but has delayed official action.

In its notice to MWSS, Maynilad also cited among others, the prolonged drought of El Niño from July 1997 to November 1998 which had a serious negative impact on the economics of the concession.

Maynilad also cited as a force majeure factor, the failure of MWSS to complete or to support the completion of vital concession fee projects on time, such as the Umiray Angat Transbasin Project, the Manila south Water Distribution Project and the Angat Water Supply Optimization Project.

MWSS also failed to initiate the critical 300 million liters per day (MLD) water supply project in Laguna de Bay. These delays, which Maynilad could do nothing about, also have serious financial impact on the concession.

Alunan is confident that the issues will be resolved in a manner that is responsive to the requirements of public service.

He has assured the public that the service of the force majeure notice is just designed to protect the rights of Maynilad so that it can carry out its mandate.