Duterte cracks down on 'onerous' deals: Firms under gov't scrutiny

ABS-CBN News

Posted at Jan 22 2020 10:43 AM

President Rodrigo Duterte speaks before local government officials in Batangas on Jan. 20, 2020. The Chief Executive has embarked on a crackdown on government contracts with private firms which he deemed "onerous" and to the public's disadvantage. Valerie Escalera, Presidential Photo

MANILA - After targeting Metro Manila's water concessionaires, President Rodrigo Duterte has expanded his list of private companies with government contracts that will undergo scrutiny.

Duterte earlier this month promised to "correct" all government contracts before he steps down from office in 2022.

The statements have sent stock prices of affected companies tumbling. Manila Water alone lost $2 billion in market value according to Bloomberg data. The Philippine Stock Exchange Index lost 10 percent from its 2019 peak.

Here is a list of companies whose government contracts are currently being reviewed or will be probed according to officials.

MANILA WATER CO

In a speech last December, Duterte blasted the Ayala-led water concessionaire. The President said Manila Water's contract "is really lopsided because if they fail to realize the profit during the lifetime of the contract or at any period, we will shoulder their losses."

Manila Water shares closed at P9.38 on Tuesday, from P18.80 on Dec. 3, when the President publicly criticized the firm.

MAYNILAD WATER SERVICES INC

Government officials are also renegotiating the concession deal of Manila Water rival Maynilad, led by tycoon Manuel Pangilinan.

Duterte was "riled up" over company expenses that "seem to be passable" to consumers, including interest for loans, taxes, payment to arbitrators, and penalties, said DOJ spokesman Markk Perete.

While Maynilad is not a listed firm, its parent company Metro Pacific Investments Corp, has seen its stock price drop to P3.21 as of Jan. 21 from P4.39 on Dec. 3. DMCI, which partly owns Maynilad, also saw its stock fall to P6.26 as of Jan. 21 from its Dec. 3 close of P6.50.

AYALA LAND

Presidential Spokesperson Salvador Panelo last Sunday said the government would also look into the lease contract of Ayala Land Inc (ALI) with the University of the Philippines Diliman over the development of the Technohub commercial complex in Quezon City.

Panelo said he read "on the internet" that ALI was paying only P20 per square meter for 25 years for the 37-hectare property.

The Ayala-owned property firm's stock dropped to P39.50 on Jan. 21 from its Jan. 17 close of P43.55.

CHEVRON PHILIPPINES

The Department of Finance said Tuesday that Chevron has been paying a "minuscule" monthly rent of P0.74 per square meter for a 120-hectare property in Batangas province, compared to the current "fair market value" of P17.90 per square meter.

Instead of paying a "fair market" annual rent of around P257.76 million, Chevron has been paying only P10.66 million since 2010, said the DOF.

Chevron is not listed on the stock exchange.

LIGHT RAIL MANILA

On Jan. 17, Duterte also said he wanted a review of the contract for the operation of the LRT-1 after learning that its operator was controlled by Pangilinan's MPIC and the Ayalas.

The Light Rail Manila Corp is owned by subsidiaries of MPIC and Ayala Corp (AC), and privately-held Macquarie Infrastructure Holdings.

The President did not say what he thought was onerous with the contract of the Ayalas and MPIC, but said: "They have a lot of money. That’s too much."

Ayala Corp has seen its price fall to P715 per share on Jan. 21 from P803 on Jan. 17.