The international arbitration panel conducting the hearings on the rate dispute between Manila Water Co. and the Philippine government has decided to reduce the water concessionaire’s rates.
The company, backed by the Ayala group and the concessionaire for the East Zone of Metro Manila, said the decision decreased its rate by P2.77 per cubic meter, and the adjustment should be carried out starting this year through 2017.
The panel reduced the company’s rate-rebasing adjustment for 2013 to 2017 by 11.05 percent, based on the company’s 2012 average basic water charge of P25.07 per cubic meter.
“While the ruling resolved specific issues raised by Manila Water in the dispute, we are deeply concerned about
the finding of the appeals panel that Manila Water is a public utility,” said Gerardo Ablaza Jr., the company’s president
“This, in our view, fundamentally changes the concession agreement, which characterizes the company as an agent and contractor of MWSS [Metropolitan Waterworks and Sewerage System],” he said.
Ablaza said the company will study the full implications of the ruling and expect the MWSS, the state-owned agency overseeing the operations of its two concessionaires, to also look for ways to resolve what Manila Water called as “regulatory challenge.”
The panel ordered to reduce the company’s rate by P1.66 per cubic meter starting this year, another P0.55 per cubic meter by next year and P0.55 per cubic meter by 2017.
An adjustment for the consumer price index of 4.19 percent will also be made to the basic water charge in 2015, equivalent to P1.08 per cubic meter.
“Annual consumer price index adjustments will continue to be made consistent with the company’s concession agreement with the MWSS,” the company said.
The decision of the International Chamber of Commerce concludes a three-year rate-rebasing process that started in March 2012, when Manila Water submitted its business plan that included an increase in water rates. More than a year later, MWSS decided in September 2013 that the rates should be reduced by 29.47 percent, or an average of P7.24 per cubic meter.
The other concessionaire, Maynilad Water Services Inc., which operates the West Zone, also asked an international panel to intervene.
The two firms sought to hike their base rates every three years as mandated by their concession contracts.
In the decision for Maynilad, which is led by Metro Pacific Investments Corp., the panel ordered an increase in its rates.