West zone concessionaire Maynilad Water Services Inc. said Tuesday a three-man arbitral tribunal unanimously upheld the company’s claim against the government and ordered the state to pay P3.42 billion for delayed tariff increases from March 11, 2015 to August 31, 2016.
Maynilad said in a statement the tribunal, in a decision dated July 24, upheld the validity of its claim against the undertaking letter issued by Finance Department to compensate the company for the delayed implementation of tariffs for the rebasing period 2013 to 2017.
The undertaking letter provides that the government will indemnify Maynilad for any losses due to a delay attributable to the state or any government-owned agency in implementing any increase in standard rates, beyond the date of its implementation in accordance with the concession agreement signed on Feb. 21, 1997.
The tribunal ordered the government to reimburse Maynilad the amount of P3,424,690,000, without prejudice to any rights that Maynilad may have to seek recourse against Metropolitan Waterworks and Sewerage System for losses incurred.
Maynilad president and chief executive Ramoncito Fernandez said the amount would not be shouldered by consumers.
“But we are now in the middle of starting with a rate rebasing discussions with MWSS [Metropolitan Waterworks and Sewerage System]. The discussion is for 2018 to 2022 but because of the partial award, we don’t know yet. We have to coordinate with the government”•both DoF and MWSS on how to implement,” said Fernandez.
Maynilad said it would coordinate and cooperate with the government in finding the most efficient way to implement the judgment.
The arbitral court also ruled that Maynilad was entitled to recover from the Republic its losses from Sept. 1, 2016 onwards. Maynilad said that in case a disagreement on the amount of losses arose, the company might revert to the tribunal for further determination.
Manila Water, the east zone concessionaire, filed an arbitration before the International Chamber of Commerce in September 2013. Maynilad filed its own arbitration case the following month.
The International Chamber of Commerce’s appeals panel in December 2014 ruled in favor of Maynilad to implement a higher tariff, including passing the income tax burden to consumers. The panel has yet to issue a separate ruling on the case filed by Manila Water.
The panel upheld Maynilad’s alternative rate rebasing adjustment, which would lead to an increase of P3.06 per cubic meter on the basic water charge of P31.28 per cubic meter. MWSS opposed the rate adjustment and instead ordered a tariff reduction by P1.46 per cubic meter.
Maynilad filed another arbitration case before the international arbitration court in Singapore against the government in 2014 for its alleged refusal to implement a tariff increase.
Fernandez said decision of the tribunal affirmed the the trust and confidence that Maynilad placed in the concession agreement and in its integrity, which was responsible for the significantly improved water and wastewater services in its concession area.