MANILA (Mabuhay) – Consumers may relax for now as the Metropolitan Waterworks and Sewerage System (MWSS) intends to wait for an international arbitration panel to first rule on the case of Manila Water Company Inc. before allowing Maynilad Water Services Inc. to raise its water tariff.
The regulator expects the international arbitration panel to come up with a decision on the case filed by Manila Water against MWSS in three weeks.
The MWSS-Regulatory Office wants to make sure the tariff adjustments for both water concessionaires will be consistent, chief regulator Joel Yu told reporters in a media briefing in Quezon City on Monday.
“We find it more prudent to wait for the conclusion with Manila Water before making any tariff adjustments because we don’t want any inconsistencies in the way we conduct our regulatory mandate,” he said.
Among the “inconsistencies” the regulator is cautious includes the way to handle or treat corporate income tax of both concessionaires.
“It cannot happen that one concessionaire can be allowed to recover their income tax, and the other cannot… There should be consistency in the application,” Yu said.
But Maynilad CFO Randolph Estrellado said the company is “extremely disappointed” with MWSS for refusing to implement the decision by the arbitration court, which the Appeals Panel said is final, executory, and binding to both parties.
“They are certainly sending a bad signal to investors about the stability and enforceability of contracts in public-private partnerships in the Philippines,” he said.
“We are now reviewing our options, including calling on government’s undertaking to ensure that MWSS complies with its obligations under the concession agreement,” Estrellado added.
In 2013, the MWSS denied the respective requests of Maynilad and Manila Water to impose a higher water tariff under the five-year rate rebasing scheme. Instead, the regulator lowered the water rates for both companies.
This drove the concessionaires to file separate dispute notices before the International Chamber of Commerce (ICC) in September 2013 and October 2013, respectively, to challenge the rate reduction imposed by MWSS.
In December 2014, the International Appeals Panel ruled in favor of Maynilad to implement a higher tariff adjustment that includes passing the income tax burden to consumers.
The arbitration panel has yet to reach a decision on the tariff rates of Manila Water.
MWSS hopes the International Appeals Panel will announce a ruling on dispute notice filed by the Ayala-led utility in three weeks, Yu said.
Maynilad has asked MWSS for a staggered implementation of the new water tariff over the three years to 2017, which the regulator has studied, he added.
“We went through that process… There are no major findings against that, but we don’t want to make any pronouncements regarding that tariff adjustment yet,” he said.
“Titignan natin kung ano ‘yung decision [ng arbitration panel]. Pag-aaralan natin kung paano ma-i-implement ‘yung adjustments sa taripa, making sure na lahat nung principles for regulation are consistent for both Maynilad and Manila Water,” he noted.
‘Settle the differences’
In the event the arbitration panel decides against a Manila Water rate increase, the chief regulator said MWSS will have to find a “remedy [that] should settle the differences.”
“There should be a remedy that should be presented to ensure consistency,” he said, noting that going to courts could be a possibility.
The process is not a farce to delay the water rate increase but to implement properly the concession agreements and to make sure it will be beneficial to the public, MWSS board of trustee Emmanuel Caparas said in the same briefing.
“Bilang regulator, it is our responsibility to make sure… we implement the concession agreement… that it promotes success, development… that there will be more confidence in these agreements,” he said.
“Ang hahabulin naming scenario is the least painful for the public,” said Caparas, who was then the chief regulator when MWSS denied the petition of both water utilities.
Maynilad serves the West Zone of Metro Manila, including the Cities of Manila (all except portions of San Andres and Sta. Ana), Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, Malabon and parts of Quezon City and Makati.
It also serves Cavite City, Bacoor City, Imus, Kawit, Noveleta, and Rosario in Cavite province.
Manila Water primarily serves the East Zone of Metro Manila which includes parts of Quezon City, Makati, Taguig, Pateros, Marikina, Pasig, San Juan, Mandaluyong, the southeast of Manila, and Rizal province. (MNS)