Consumer groups see arbitration between MWSS

Metropolitan Waterworks and Sewerage System (MWSS). Photo from https://www.mwss.gov.ph

MANILA, Philippines—Consumer advocates are bracing for arbitration proceedings between the Metropolitan Waterworks and Sewerage System and its two concessionaires as regulators are expected to announce rate reductions next week.

An MWSS source confirmed reports that regulators would go for rate cuts, countering proposals from Manila Water Co. Inc. and Maynilad Water Services Inc. for rate hikes

Manila Water is proposing an increase in basic rates of P5.83 per cubic meter while Maynilad is pushing for P8.58.

The source did not give details, but the MWSS Regulatory Office said there was no decision yet on the proposals and that “there might be something next week.”

“We continue to hope that the MWSS will deny the proposed hikes and that a lowering of rates will take effect immediately,” said Renato M. Reyes Jr., secretary general of the Bagong Alyansang Makabayan (Bayan).

Bayan is part of the Water for the People’s Network, which is opposing the continuing privatization of water utilities.

“If news reports are true that rates will go down, then this would be a victory for consumers,” Reyes said in an interview.

“However, it is very likely that the water firms will resort to international arbitration as this is stated in the concession agreement,” he added. “This may pre-empt any rate reduction and, worse, the arbitration cost will also be passed on to consumers.”

Reyes said the MWSS and Aquino administration must oppose these options that the concessionaires have been provided with in the agreement.

“If arbitration does take place, consumers will have another reason to seek the scrapping of the unjust concession agreement,” he said.

Reyes noted that the MWSS RO resolution adopted last June, which disallowed corporate income tax as a pass-on charge, has become sufficient basis to reduce even current water tariffs.

The resolution, which takes its cue from an opinion issued by the Office of the Government Corporate Counsel issued last June 4, clarifies that income taxes are not included in the term ‘Philippine business taxes’ nor are they considered as operating expenses that could be recovered from the MWSS’ consumers base as stated in the concession agreement.

However, this MWSS RO resolution still awaits action from the MWSS board of trustees.

“It remains to be seen if Aquino himself will take the side of the regulators in case water rates will go down,” Reyes said.

“Aquino has been so far silent on the issue,” he added. “The President’s actions may play a big factor in determining water rates if there’s a deadlock.”