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Pay us P3.44B, Maynilad asks gov’t

Rappler.com

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Pay us P3.44B, Maynilad asks gov’t
The claims will continue to rise as long as the MWSS refuses to implement the rate hike, Maynilad says

MANILA, Philippines – West zone water concessionaire Maynilad Water Services Incorporated is seeking government compensation of P3.44 billion ($77.56 million) for revenue losses it claims to have incurred from January 1, 2013 to February 28 this year.

The losses are due to the postponement by the Metropolitan Waterworks and Sewerage System (MWSS) of the implementation of the basic water charge hike following arbitration proceedings, Maynilad said.

The MWSS postponed the awarded base water rate hike until the arbitration process for both metro water concessionaires (including Ayala-led Manila Water Company Incorporated) are completed.

This also puts on hold talks between the water regulator and Maynilad for the proposed 3-year implementation of a 9.8% increase in its 2013 average basic water charge of P31.28 ($0.71) per cubic meter. This translates to an average increase of P3.06 ($0.069) per cubic meter in its basic charge.

The amount of the claims will continue to rise as long as the MWSS declines to implement the rate hike, Maynilad said in a statement March 10.

“Under the sovereign undertaking, the national government undertook to compensate Maynilad if its rates adjustments are delayed by MWSS,” it added.

Maynilad also stressed that like Manila Water, it is independent and has its own concession agreements, and the latter’s arbitration proceedings should not impact Maynilad and its proposed rate adjustment.

The company has formally communicated this with the Department of Finance (DOF).

Recovering losses

MWSS has said that Maynilad would not be incurring losses because it is allowed to recover its investments for the remainder of the concession agreement, through succeeding rate rebasing that would be conducted in the years 2017, 2022, 2027, and 2032.

“There is no lost revenue, in effect. That is the model under the Concession Agreement and we are faithfully observing it,” said MWSS chief regulator Joel Yu.

Yu added that the government has already submitted its position to DOF on Maynilad’s claim for a sovereign guarantee, stressing that the provisions of the concession agreement on the matter are quite clear. “The requirements for Maynilad to make a valid claim are not present,” Yu said.

But Maynilad said that the postponement of the implementation of the rate hike threatens its operations.

“Each day that we are unable to collect the proper rates, our service to the public is affected and ultimately this will impact our revenues. In the end, it threatens our viability as well as our and MWSS’s ability to provide the services the consumers need and deserve,” the company said.

In July 2013, the MWSS passed a resolution stating that metro water concessionaires cannot pass on corporate income tax to consumers.

In September 2013, the MWSS denied the petition of Maynilad and Manila Water to raise water rates in accordance with its 5-year rate rebasing scheme.

This prompted Maynilad and Manila Water to seek arbitration as provided for in their concession agreement.

On December 29, 2014 the International Chamber of Commerce then upheld the alternative rate rebasing adjustment of Maynilad allowing it to raise its basic water charge by P3.06 (0.069) per cubic meter.

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.

Maynilad is co-owned by Pangilinan-led Metro Pacific Investments Corporation (MPIC) and Consunji-controlled DMCI-Holdings Incorporated.

Ayala-led Manila Water, meanwhile, services the Metro Manila east zone concession area that covers parts of Quezon City and Makati, the southeastern parts of Mandaluyong, Manila, Marikina, Pasig, Pateros, San Juan, Taguig, and Rizal province. – Rappler.com

US$1 = P44.35

Water meter image
from Shutterstock

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