Manila Water, Maynilad: We're not public utility companies

MANILA, Philippines – Concessionaires Manila Water and Maynilad Water Services reiterated that they are not public utility companies, despite delivering water to households in Metro Manila and nearby areas.

In a House hearing on Tuesday, December 10, Manila Water president Rene Almendras said the company is a mere agent of the Metropolitan Waterworks and Sewerage System (MWSS).

"At the time of bidding, we accepted that we are agents of MWSS," Almendras said.

Maynilad president Ramoncito Fernandez echoed Almendras' claim.

Why is this important? Bagong Henerasyon Representative Bernadette Herrera Dy pointed out that since the companies are not considered public utilities, they do not go under the scrutiny of the Commission on Audit. Manila Water and Maynilad are instead audited by third-party auditors.

"Are they afraid that the state auditors will see something there?" Dy asked in Filipino.

The question of whether the two companies are considered public utilities dates all the way back to 2004, two years after the Supreme Court issued a ruling that prevented the Manila Electric Company (Meralco) from passing on income taxes via electricity rates. The Court ruled that Meralco cannot do so since it is a public utility company and ordered it to refund some P28 billion to customers.

The MWSS Regulatory Board tried to apply the same ruling in 2004. However, the MWSS Board of Trustees did not support this position and instead reiterated a clause in the concession agreement.

Almendras and Fernandez cited this clause in the concession agreement, showing that the water companies are mere agents: 

On the terms and subject to the conditions set forth herein, MWSS hereby grants to the Concessionaire, as contractor to perform certain functions and as agent for the exercise of rights and powers under the Charter, the sole right to manage, operate, repair, decommission and refurbish the Facilities in the Service Area, including the right to bill and collect water and sewerage services supplied in the Service Area (the "Concession"). The Concessionaire shall perform its functions and exercise its rights under this Agreement directly or, in respect of functions and rights delegated to the Joint Venture. The rights and benefits of the Concessionaire under this Agreement shall be deemed to apply with equal force to the Joint Venture to the extent that the Joint Venture is performing functions delegated to it under this Agreement.

Dy revived the decade-old issue, as she wanted more detailed reporting on how the companies adjusted rates.

She questioned why the companies charged customers in advance for projects that have yet to be constructed or even those that have been scrapped.

Dy also urged the MWSS to treat the companies as public utilities, and scrap the decision back in 2004.

"We are doing that and in fact we did not let the concessionaires collect corporate income tax," MWSS Chief Regulator Patrick Ty said. –

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.