Scheduled water rate increase deferred

Water consumers will enjoy a New Year respite from scheduled rate hikes as the fate of the two Metro Manila water service concessionaires continue to hang, with Malacañang expected to make “an important announcement” on Jan. 6.Patrick Ty, chief of the Regulatory Office at the Metropolitan Waterworks and Sewerage System, said in an interview that rate adjustments scheduled for Jan. 1 have been deferred.Ty was referring to the latest tranche of yearly rate hikes that are set for the current five-year rate rebasing period that lasts until 2022 as well as the quarterly foreign currency differential adjustments (FCDA) for the first quarter of 2020.

MWSS had approved, for the current five-year rate rebasing period, a hike of P5.73 a cubic meter in the basic charge of Maynilad and a range of P6.22 to P6.50 a cubic meter for Manila Water.The increases were to be implemented in yearly tranches and, for 2020 starting Jan. 1, Maynilad was supposed to raise its basic charge by P1.95 a cubic meter while Manila Water has P2 a cubic meter.

Meanwhile, both the concessions allow for quarterly water rate adjustments to account for fluctuations through the FCDA, considering that both concessionaires are servicing foreign currency-denominated loans that they used to invest in their respective concession areas.“The yearly adjustment is deferred. Up to when is for further discussion,” Ty told the Inquirer.As for the first-quarter FCDA, Ty said their effects on rates would carry over to the next periodic adjustment.

For the most recent FCDA that was implemented in the fourth quarter of 2019, these resulted in increased rates for both Maynilad (2 centavos a cubic meter) and Manila Water (17 centavos a cubic meter).

Before that or last June, MWSS said management changes that were then pending—a new chair and a new administrator were appointed—led to a postponement of the quarterly FCDA, which would have meant rising rates in the third quarter.

In early December 2019, the MWSS called on the two concessionaires for the deferment of rate increases slated for Jan. 1.According to the MWSS Regulatory Office, it initiated talks with Maynilad and Manila Water on a postponement “in light of recent developments.”

Citing allegedly onerous provisions of the concession agreements, Malacañang has threatened to challenge decisions of the Permanent Court of Arbitration in Singapore that sided with Manila Water and Maynilad and directing the government to indemnify the companies a total of about P11 billion.

President Duterte said the government would not pay up, even threatening to rescind the contracts. The Department of Justice said it was looking into drawing up new concession agreements.

The companies are claiming losses for the nonimplementation of rate increases intended for the five-year rebasing period that began during the administration of President Benigno Aquino III. The MWSS is saying the concessionaires should not recover from customers the cost, for instance, of corporate income tax.