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Bloomberg
Philippine authorities looked to soothe investor fears as uncertainty over the capital’s water service contracts triggered a stock rout of more than $2 billion.
The government is “not thinking about†replacing Manila Water Co and Maynilad Water Services Inc as water concessionaires even as it seeks to renegotiate terms of their contracts, Justice Secretary Menardo Guevarra told reporters. The government plans to cut guarantees and increase oversight, Metropolitan Waterworks and Sewerage System chief regulator Patrick Ty said.
If talks fail, the government will need a court order to cancel the extension of contracts to 2037 from 2022, the Justice chief said. “Only then will we open the field to other competitors,†he said in Manila.
Manila Water, which sank as much as 46%, pared losses to 36% after Guevarra’s comments. The decline was still the steepest on record and brought shares to their lowest since 2005. DMCI Holdings Inc, a shareholder of Maynilad, closed 3% lower after dropping as much as 8%. Metro Pacific Investments Corp, which also owns Maynilad, rose 5%.
The uncertainty has wiped out more than $2.4 billion from the market value of the water utilities and their parents.