Philippine economy

Maynilad willing to hike rate in tranches

Rappler.com
The company says it is willing to hike the basic charge in equal tranches for a 3-year-period to minimize impact on its customers

MANILA, Philippines – To minimize the impact on its customers, Maynilad Water Services is willing to implement the approved increase in basic charge in equal tranches for a 3-year period.

“Despite the two-year delay in the implementation (of the increase in basic charge), we are willing to stagger (the implementation) in 3 years,” Maynilad chief finance officer Randolph T. Estrellado said in a briefing Tuesday, January 6.

Maynilad recently won the arbitration proceedings against the Metropolitan Waterworks and Sewerage System (MWSS) before the International Chamber of Commerce (ICC).

In a decision dated December 29, ICC ruled in favor of Maynilad’s alternative rate rebasing adjustment that would result in a 9.8% increase in the 2013 average basic water charge of P31.28 ($0.70) per cubic meter, inclusive of the P1 ($0.0222) currency exchange rate adjustment that the MWSS incorporated into the basic charge.

Such translates to an average increase of P3.06 ($0.068) per cubic meter.

The staggered implementation of the increase in the basic charge would still have to be approved by the MWSS board, Estrellado said.

Rate hike to proceed

In the meantime, Maynilad would only be implementing the MWSS-approved increase of P0.38 ($0.0084) per cubic meter in the Foreign Currency Differential Adjustment (FCDA) component of its water billing, a rate hike granted outside of the arbitration proceedings with the ICC.

FCDA is a tariff mechanism (expressed in percentage of the basic charge) allowing concessionaires of the MWSS to cope with foreign exchanges losses or gains arising from payments of foreign currency-denominated borrowings used for expansion and improvement of services.

The MWSS regulatory office ideally reviews the FCDA quarterly.

During the arbitration process, Maynilad opted not to pursue several water sourcing projects but maintained that it would be able to fulfill its obligations within its concession area, Estrellado said.

“We will make sure that in the next 5 years, our service obligations in our concession area would be met,” he said.

To illustrate, if the base rate hike would be implemented in a single tranche, consumers using 10 cubic meters per month would see a daily increase of P0.42 ($0.0093) or P12.60 ($0.28) monthly.

Based on the current FCDA, lifeline consumers would pay P127.17 ($2.83) per month, up from P120.15 ($2.67) monthly, including all the charging components of the water bill.

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 Inc. – Rappler.com



*$1 = P44.97


Water meter image from Shutterstock