Manila Water files for arbitration over rate cut

MANILA, Philippines – Ayala-owned Manila Water Co. Inc. has filed a case for arbitration against Metropolitan Waterworks and Sewerage System (MWSS), challenging the reduction in charges ordered by the regulator.

Manila Water, which serves the east zone of Metro Manila, filed Tuesday, September 24 a dispute notice before the Paris-based International Chamber of Commerce (ICC), nearly two weeks after MWSS ordered the company and another concessionaire, Maynilad Water Services Inc., to cut their charges over a 5-year period.

"Manila Water has decided to go into arbitration after MWSS cut away significant programs for building and maintaining water and wastewater systems in the east zone, which will severely compromise and impair the former’s ability to fulfill its service obligations to its customers," the company said in a statement.

The concession agreements (CA) between MWSS and the water concessionaires provide for arbitration to resolve disputes, controversies or claims arising out of or relating to the CA or the interpretation of any arrangements that cannot be resolved through negotiation among the parties.

The arbitration panel, also called the appeals panel, shall be appointed and will conduct proceedings in accordance with the rules of the United Nations Commission on International Trade Law.

For the case filed by Manila Water, the panel will be composed of 3 members: one appointed by the company, another appointed by MWSS, and a third member, the chairman, appointed by the president of the ICC.

Until the panel arrives at a final decision on the tariff determination, existing water rates shall remain in effect, said Manila Water.

New rates

MWSS said Manila Water's basic rate of P24.57 per cubic meter (cu.m.) should go down by 24.97% or P7.24/cu.m. in the next 5 years, while Maynilad's rate of P30.28 per cu.m. should decrease by 4.82% or P1.46 over the same period.

This was the first time since 1997 that MWSS reduced the rates.

The regulator said the reduction was due to substantial disallowances with regard to expenditures cited by the firms. – Rappler.com