Manila Water, MWSS set effective date of RCA

MANILA, Philippines — East Zone concessionaire Manila Water Co. Inc. has signed another amendment to the revised concession agreement (RCA), which sets the effective date of the agreement.

In a disclosure to the Philippine Stock Exchange yesterday, Manila Water said the company and the Metropolitan Waterworks and Sewerage System (MWSS) signed a sixth amendment to the RCA which sets the effective date of the agreement to no later than June 30.

“The only pending condition to the effectivity is the submission by the government of the Undertaking Letter of the Republic,” Manila Water said.

In March, Manila Water and the MWSS signed an amendment to the RCA to extend the effective date to the date of receipt by the water concessionaire of the signed undertaking letter from the republic.

The parties also previously signed an amendment to the effective date of the RCA in February to extend it until March 18 to give more time for the remaining condition precedent to the effectivity of the RCA.

In December, Manila Water and the MWSS signed a third amendment to the RCA, which pushed back the effectivity date to Feb. 16 to allow the parties more time to fulfill the remaining conditions to the effectivity of the RCA.

Similarly in November, Manila Water and the MWSS signed a second amendment to the RCA, which pushed back the effectivity date to Dec. 18, 2021.

The two parties also signed an amendment of the RCA in September, which revised the effectivity date from “not to exceed six months from signing of the RCA to “no later than Nov. 18, 2021.”

Among the salient features of Manila Water’s RCA are the removal of the foreign currency differential adjustment (FCDA). It also includes the lowering of the inflation factor to two-thirds of the Consumer Price Index adjustment and imposed rate caps for water and sewerage services to 1.3x and 1.5x, respectively, of the previous standard rate.

In addition, the RCA retains the rate rebasing mechanism, where the rates for the provision of water and wastewater services will be set at a level that will allow the concessionaires to recover, over the term of the concession, expenditures efficiently and prudently incurred and to earn a reasonable rate of return

The RCA also replaces the market-driven appropriate discount rate with a 12 percent fixed nominal discount rate.

It also removes the non-interference clause of the government in the rate-setting process, as well as limits the country’s financial guarantees to cover only those loans and contracts that are existing as of the signing of the RCA.

Manila Water serves the East Zone, which encompasses parts of Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, most parts of Quezon City, portions of Manila, as well as several towns in Rizal.