Maynilad pursues compensation demand | Inquirer Business

Maynilad pursues compensation demand

In a bid to recover losses, water firm takes gov’t to another arbitration case

MAYNILAD Water Services Inc. is going for arbitration again to pursue its demand for compensation from the government on an average revenue losses of P208 million monthly, due mainly to the regulators’ inaction on its rate hike plan.

Metro Pacific Investments Corp., which holds a 52.8-percent interest in Maynilad, on Monday said in a statement that the water firm sent the Department of Finance a notice of arbitration and statement of claim “following the latter’s failure/refusal to pay the amount indicated in the demand letters.’’


MPIC was referring to letters dated Feb. 20 and March 9, which stated that Maynilad was losing revenue “due to the unjustified delay” of state agency Metropolitan Waterworks and Sewerage System to implement the rate hike as recommended by an arbitration panel.

Maynilad previously sought and underwent arbitration with the International Chamber of Commerce. The panel issued a decision on Dec. 29, 2014, awarding Maynilad an average increase of P3.06 per cubic meter—on top of the current basic rate of P31.28 cubic meters—for the five-year rate rebasing period that runs until 2017.


The award was less than the increase of P8.58 per cubic meter that Maynilad proposed to the MWSS Regulatory Office.

“From Jan. 1, 2013 until Feb. 28, 2015, Maynilad’s revenue losses have already reached P3.44 billion, and it continues to incur revenue losses averaging P208 million for every month of additional delay,” MPIC said.

Also, Maynilad is invoking a commitment of the government to indemnify the water concessionaire of any losses caused by a delay on the part of the government related to the implementation of any rate increase, as provided for in the concession agreement.

Earlier this month, Maynilad accused MWSS administrator Gerardo Esquivel, chief regulator Joel Yu and trustee Emmanuel Caparas of trying to “cover up their serious mistakes and gross mismanagement” when MWSS reinterpreted its contract with Maynilad.

In a resolution issued in 2013, the MWSS said Maynilad should not pass on to its customers the cost of its corporate income tax, which the company said was an erroneous interpretation of the concession agreement.

Before that, Yu said Maynilad’s claims of losses cannot be substantiated.

“Assuming there is in fact a shortfall in Maynilad’s recovery of its investments, the same will be addressed by way of a rate adjustment in a future rate rebasing exercise.”

In reaction, Maynilad said Yu’s remark was “plainly fraudulent” and it avoided the issue of MWSS’s duty to comply with and implement the arbitral decision.

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TAGS: arbitration, Business, demand for compensation, Government, Maynilad
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