Maynilad sues PH govt over water rate cut

MANILA, Philippines (2nd UPDATE) – The government is facing its second arbitration case on the decision of the water regulator to cut rates in the metro.

In a statement on Friday, October 4, Maynilad Water Services Inc (Maynilad) said it has filed a dispute notice before the Singapore-based International Chamber of Commerce (ICC) to challenge the rate cut.

Maynilad is the west zone concessionaire of the privatized water services in the capital, while Manila Water Co. Inc is the east zone concessionaire.

Ayala-led Manila Water sued the Metropolitan Waterworks and Sewerage System (MWSS) also before the ICC last September 24, about two weeks after the regulator cut their charges in the recent rate-rebasing exercise covering the next 5 years.

READ: First time: MWSS cuts water rates

Maynilad, a joint venture between Pangilinan-led Metro Pacific Investments Corp. and Consunji-owned DMCI Holdings Inc, petitioned for a 28.35% rate increase, equivalent to P8.58 per cubic meter in its average basic charge.

Instead, MWSS decided to implement a 4.82% rate cut, equivalent to P1.46 per cubic meter.

The regulator said the reduction was due to substantial disallowances with regard to expenditures cited by the two firms. Maynilad previously called MWSS’ decision “unjustified.”

READ: The price of water: Areas of controversy

READ: MWSS, water firms and taxes: Big trouble, little impact

Maynilad said the planned October implementation of the rate cut will have to be put on hold until the arbitration court decides on the case. 

Arbitration

Arbitration is a costly battle that usually involves hefty legal fees paid to hotshot local and foreign lawyers who will defend their client’s position. The arbitration rules of the ICC are based on the United Nations Commission on International Trade Law.

The two companies are both citing violations to their concession agreement with MWSS in their arbitration cases.

“The Dispute Notice, which is in accordance with the Arbitration Clause of the Concession Agreement, commences the Arbitration Process and is a referral to the Appeals Panel questioning MWSS Board Resolution No. 2013-100-RO dated September 12, 2013,” Maynilad said.

Maynilad said in its statement that the concession agreement was guaranteed by the Philippine government and that “any disagreement, dispute, controversy or claim arising out of, or relating, the agreement, which cannot be resolved through consultation or negotiation between the parties” must be resolved via arbitration.

The appeals panel of the ICC will be composed of 3 members — one each from the complainant and MWSS and the presiding arbitrator who will be appointed by the ICC chairman.

Maynilad spokeswoman Cherum Mojica told reporters the company could not disclose yet who will be representing the company in the arbitration panel.

Maynilad serves the west zone, which includes the cities of Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan River, West Avenue, EDSA, Congressional, Mindanao Avenue, the northern part starting 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. It also serves the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario in Cavite province. 

Manila Water, on the other hand, provides water and wastewater services in the east zone of Metro Manila, which covers Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, and parts of Manila and Quezon City, as well as Rizal province. It also has projects through subsidiaries in Laguna, Pampanga, Boracay and Cebu. – Rappler.com