PARIS, Feb. 7, 2003 -- Maynilad, the water and sewage concession holder serving Manila since 1997, has decided to terminate its contract with MWSS (Metropolitan Waterworks and Sewerage System).
Maynilad is jointly owned by SUEZ (23.35%)* and its partner Benpres. This decision is in accordance with the termination notice of December 9 and for lack of agreement with MWSS at the end of the 60 day period.
During the past five years, thanks to Maynilad's technical support, the quality of Manila's water service has greatly improved. The coverage ratio improved from 62% to 84%; water production increased 30%; and, by the end of 2001, 150,000 new connections had been installed, extending service to 560,000 residents of low-income neighborhoods.
MWSS, the Manila concession-granting authority, refused to apply contractual clauses previously agreed following the Asian crisis permitting Maynilad to continue to provide quality service under economically viable conditions.
As provided under its terms, and after a number of formal notices to MWSS, Maynilad has decided to terminate the contract as of February 7, 2003. At the same time, in accordance with contract provisions, Maynilad intends to claim its right to damages as a result of the termination and will refer the matter to a court of arbitration to fix compensation.
On January 9, 2003, SUEZ announced an action plan for 2003-2004 by which the Group intends to reduce its exposure to risks in emerging countries and to become more demanding with regard to its partners' upholding their contractual obligations.
The impact of the Argentine crisis was entirely provided** for in SUEZ's accounts for 2002. The same holds for the termination of the Manila, Atlanta, and Djakarta contracts
* SUEZ holds a direct 20% interest in Maynilad, with another 3.35% held indirectly through LAWL, likewise a 20% Maynilad shareholder. SUEZ owns 16.75% of LAWL. The remaining 60% of Maynilad is owned by Benpres.
** Book a EUR 500 million charge Group' share in consolidated accounts as of June 30, 2002. Together with the charge recorded December 31, 2001, this equates to eliminating SUEZ's foreign exchange risk on debt and writing off its net consolidated equity
This release is also available on Internet: http://www.suez.com
