Maynilad sees tariff row settled within this year

Maynilad Water Services Inc. expects a resolution of its tariff increase dispute with regulator Metropolitan Waterworks and Sewerage System (MWSS)—now subject of a new round of arbitration— by the second half of this year at the earliest.

Maynilad has nonetheless earmarked a P13.6-billion budget for water and wastewater infrastructure projects this year, higher than the P8-billion capital expenditure last year. The bulk of the 2016 capital spending or P7.6 billion will be to expand water infrastructure and reduce system leakages while the rest will fund wastewater management projects in central Manila, Cavite, Quezon City and Valenzuela.

“Notwithstanding this struggle to receive its due, Maynilad remains committed to providing clean and safe water to its customers,” Maynilad’s parent company Metro Pacific Investments Corp. said in a regulatory filing.

Maynilad received in end-2014 a favorable award in the arbitration of its 2013-2017 water tariff but the MWSS did not act on it. Maynilad sought compensation for losses arising from the delayed implementation of the new tariff, which was likewise ignored, prompting Maynilad to file on March 27, 2015, a new arbitration case against the government.

“We expect that (second arbitration) to be settled not earlier than the second half of this year,” MPIC president Jose Ma. Lim said in a recent press briefing.

In the meantime, Lim noted that MPIC enjoyed a 10-percent increase in 2015 earnings contribution from Maynilad amounting to P4.82 billion. The utility’s consolidated billed volume rose by 4 percent last year to 493.9 million cubic meters due to improved collection performance and lower overhead cost.

Total revenues for 2015 grew by 4 percent to P19.1 billion due to the higher billed volume and an inflationary increase in tariff on July 1, 2015. Cost controls combined with increased volumes lifted core net income by 10 percent to P9.7 billion. In contrast, reported net income was up 15 percent to P9.5 billion from P8.3 billion in 2014 when it was held back by one-time separation expenses as a result of a redundancy program.

This year, Maynilad’s water volume is projected to rise by 3-4 percent subject to the El Niño dry spell phenomenon.

Maynilad’s non-revenue water (NRW), or the portion of total water volume lost to system leakages, theft or metering inaccuracies, fell to 29.3 percent at the end of 2015 from 32.9 percent in 2014 as the billed volume grew faster than the marginal increase in water supply. This was the first time that Maynilad has breached the 30-percent NRW mark.

The group anticipates that NRW will continue to decline, albeit “more gradually” than before. Eight years ago when MPIC first invested in Maynilad, NRW was at 68 percent and millions of customers had inadequate water supply. Since the start of 2015, Maynilad has repaired 27,435 pipe leaks across its concession area, making possible the recovery of 57.7 million liters a day (MLD) of water for the use of its customers.

Maynilad installed 113 kilometers of water pipes last year, expanding its distribution line to 7,571 kilometers. Three new wastewater treatment plants became operational in 2015, bringing Maynilad’s total number of wastewater treatment plants to 19, treating up to 541,000 cubic meters a day of sewage “for the sake of public health,” MPIC said.