Water utilities to adjust rates on forex dev’ts

MANILA, Philippines—Manila Water Company Inc. customers will have to pay slightly higher water rates toward the end of the year as a result of loan payments in Japanese yen, which has strengthened against the peso.

Also, Maynilad Water Services Inc. is more exposed to the US dollar, which has weakened against the peso, and may pass on the gains to customers through slightly lower monthly bills.

Ayala-led Manila Water said that because of the foreign currency differential adjustment (FCDA), water rates will go up by P0.08 per cubic meter in its area. Manila Water customers consuming 20 cubic meters per month will have to pay P1 more than their present rate. The average consumption, which is 30 cubic meter per month, will result in a P2 increase from the present monthly bill.

This is because of the depreciation of the peso against the Japanese yen during the third quarter. The adjustment will take effect on October 7.

Sought for comment on the effect of foreign currency movements on its operations, Maynilad said it had more dollar exposure in the third quarter. As such, the FCDA component of its water rates moved differently.

Maynilad said the all-in average tariff adjustment on its water rates is -0.09 centavos. Lifeline customers, or those consuming 10 cubic meters of water and below a month, will enjoy a 0.22 centavo reduction in their monthly water bill.

The average consumption across water networks is 30 cubic meters per month. Households at this level of usage will enjoy a P1.66 reduction on their monthly water bill, Maynilad said.

The FCDA is a pass-through tariff mechanism that accounts for foreign exchange losses or gains arising from the payment of foreign-denominated concession fees to the government as well as loans for service expansion and improvement.