Maynilad wins appeal to increase water rates

MANILA, Philippines - An international appeals panel handling the arbitration proceedings between Maynilad Water Services and the Metropolitan Waterworks and Sewerage System (MWSS) has ruled in favor of an increase in the base water rate.

Maynilad’s major shareholder Metro Pacific Investments Corp., led by businessman Manny Pangilinan, said the panel of the International Chamber of Commerce (ICC) has upheld its alternative rate rebasing adjustment, which would result in a 9.8-percent increase in the 2013 average basic water charge of P31.28 per cubic meter, inclusive of the P1 currency exchange rate adjustment that the MWSS incorporated into the basic charge.

This translates to an average increase of P3.06 per cubic meter in its basic charge.

The decision, dated Dec. 29, 2014, was disclosed to the local bourse yesterday.

“This decision confirms that the concession agreement works and restores investor confidence in public-private partnership program of the government,” said Maynilad president Ricky Vargas. “This also ensures the continued implementation of Maynilad’s capital expenditure projects that are intended to benefit further our customers.”

Metro Pacific said Maynilad is willing to implement the increase on a staggered basis to mitigate the impact of the award on its customers in the west zone of Metro Manila, subject to approval of the MWSS.

In 2013, the MWSS rejected the applications of metro water concessionaires Maynilad and Manila Water Co. Inc. for increased base charges.

Instead of increasing water rates, the MWSS approved reductions in base water rates, which were supposed to be implemented in tranches in the next five years beginning 2014.

MWSS acting chief regulator Emmanuel Caparas earlier said the board had decided to approve downward adjustment in water rates as the two firms were unable to justify the need for higher rates based on their business and investment plans for the next five years.

As provided for in their concession agreements with the MWSS, the water concessionaires have filed dispute notices before Paris-based ICC.

The concession agreement between MWSS and the concessionaires provides for arbitration to resolve disagreements that cannot be resolved through consultation or negotiation.

The arbitration panel was composed of representatives from a concessionaire, MWSS and the ICC that sat as appeals chairman.

Maynilad services the west zone of Metro Manila covering Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan River, West Ave.), EDSA, Congressional, Mindanao Ave., northern part from the districts of the Holy Spirit and Batasan Hills, Makati (west of South Super Highway), Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon, cities of Cavite like Bacoor and Imus and towns of Kawit, Noveleta and Rosario.