MWSS, MWC talks on final stretch

Regulators on Friday clarified that the arbitration with Manila Water Company Inc. was “nearing its conclusion,” insisting on waiting for a decision before acting on Maynilad Water Services Inc.’s move for a tariff hike.

“(B)oth arbitrations involve identical issues—whether or not the concessionaires are public utilities, and whether or not they may pass on their corporate income tax to the consumers,” said Joel C. Yu, chief regulator at the Metropolitan Waterworks and Sewerage System.

Maynilad has repeatedly slammed the MWSS for sitting on its motion, noting that an appeals panel with the International Chamber of Commerce had issued a decision at the start of the year.

The concessionaire claims it was incurring P208 million in opportunity losses for every month that it could not implement the rate hike.

In January, Maynilad’s major stockholders announced that arbiters had decided in its favor, awarding an average increase of P3.06 per cubic meter on top of the current basic rate of P31.28 cubic meters.

The increase is supposed to cover the five-year period that started in January 2013.

On Friday, Yu said in a statement that the 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,” he said. “There is no lost revenue, in effect. That is the model under the concession agreement and we are faithfully observing it.”

As for having to wait for a decision on Manila Water, Yu said Maynilad’s new rate rested on the panel’s finding that Maynilad was not a public utility and that its income tax cannot be recovered from its customers.

“On the other hand, a contrary finding in the other arbitration case will lead to the opposite result,” Yu said. “Simultaneously enforcing these contradictory rulings will immediately give rise to an absurd scenario.”

He said such scenario involves Maynilad bearing the burden of the company’s income tax, while Manila Water consumers are relieved of a similar burden altogether.

“No responsible regulatory agency of government can or should allow that,” Yu added.