Maynilad hits MWSS refusal to approve rate hike

Maynilad Water Services Inc. on Monday blasted regulators for their “continuing refusal” to give the green light on the company’s tariff increase as recommended by an arbitration panel.

The company laments having to suffer “substantial damages” because of the Metropolitan Waterworks and Sewerage Systems (MWSS) inaction. Earlier, Maynilad had said it was losing P208 million a month.

“The decision was rendered by an arbitration panel that MWSS helped constitute pursuant to a dispute resolution process that MWSS itself designed and imposed on Maynilad as part of the concession agreement,” Maynilad president Ricky Vargas said in a statement.

“Maynilad is completely puzzled and dismayed by MWSS Administrator Gerry Esquivel’s and Chief Regulator Joel Yu’s sudden about-face and refusal to keep their word and to honor the decision of the arbitration panel,” Vargas said.

Maynilad in early 2013 submitted to the MWSS-Regulatory Office a business plan for the five years until 2017, which requires an increase in the company’s basic charges by P8.58 a cubic meter.

In response, the MWSS-RO issued memorandums ordering Maynilad to cut rates by P1.46 a cubic meter for the five years until 2017 or 49 centavos a year.

Last January, Maynilad’s major stockholders announced that an appeals panel with the International Chamber of Commerce had decided in its favor, awarding an average increase of P3.06 a cubic meter on top of the current basic rate of P31.28 a cubic meter.

The other concessionaire, Manila Water Co., went through the same thing—it proposed to raise rates by P5.83 a cubic meter but the MWSS ordered a reduction of P1.48 a cubic meter a year. This prompted the company to go through arbitration.

In February, MWSS’s Yu said the government agency preferred to wait for the decision on Manila Water’s case before making any move on Maynilad’s petition for implementation of the tariff increase.

Yu said the MWSS wanted to see the decision for Manila Water first to ensure consistent implementation of the provisions of the concession agreement.

“But we have nothing to do with that other arbitration and MWSS knew that having two different decisions were a possibility from day one,” Vargas said. “Still they encouraged us to go through with our own arbitration with promises that they would respect and implement the result, whatever it was.”

Vargas said Maynilad was never told that MWSS would not honor an arbiter’s decision if another arbitration proceeding was decided differently.

“If they had told us that, we would never have agreed to go through with our own arbitration with MWSS,” he said. “No sane party agrees to arbitration if the enforcement of the decision depends on the decision in another arbitration.”