Philippines' Duterte orders prosecution of utilities over 'onerous' contracts

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Philippines' Duterte orders prosecution of utilities over 'onerous' contracts

FILE PHOTO: ASEAN leaders attend a plenary session at a regional summit in Bangkok

MANILA (Reuters) - President Rodrigo Duterte on Wednesday ordered the filing of criminal charges against the Philippines' two biggest water utilities and demanded new deals to replace contracts "onerous and disadvantageous" for ratepayers, his spokesman said.

The firebrand Philippines leader acted after utility firms Manila Water Co Inc and Maynilad Water Services Inc have won arbitration cases in Singapore against the government.

"A review of the agreements with Manila Water and Maynilad reveals that they are contrary to public policy and public interest, the same being onerous and disadvantageous to the people," presidential spokesman Salvador Panelo said.

He said Duterte had ordered the filing of criminal, civil and administrative charges against everyone involved in the utility contracts, including the billionaire company owners and public officials for alleged economic sabotage.

Duterte had tasked agencies to draft new utility contracts acceptable to the government, he added in a statement.

In April, Duterte ordered a review of all government contracts with companies and other countries to ensure they were fair to ordinary Filipinos.

Shares in Manila Water dropped 4.8% on Wednesday while Maynilad stockholders Metro Pacific Investments Corp and DMCI Holdings Inc fell 10.7% and 3.9% respectively. Japan's Marubeni Corp owns a minority stake in Maynilad.

The Permanent Court of Arbitration in Singapore this month ordered the Philippine government to pay Manila Water 7.4 billion pesos ($145 million) to recoup foregone revenues from rate increases that were rejected by regulators. Maynilad won a separate arbitration last year.

The two firms argued that the rate hikes were necessary to improve utility service coverage and water pressure in homes.

"The arbitration award issued in our favour is for acts in breach of the procedure committed by officials of the previous administration, not the Duterte administration," Manila Water said in a statement, adding that it was willing to cooperate with Duterte's government. Manila Water serves seven million customers through a concession valid until 2037.

Maynilad, which caters to 9 million customers, was not immediately available for comment.

Filipinos are drawn to Duterte's no-nonsense, man-of-the-people style. But his centrepiece policy - a war on drugs - has caused international alarm over what U.N. experts have called a "staggering" number of illegal killings by police, who say they shot thousands of drug suspects only in self-defence.


(Reporting by Neil Jerome Morales; Editing by Mark Heinrich)