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Friday, March 29, 2024

Manila Water goes to arbitration court

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Manila Water Company Inc. said Thursday it filed a notice of arbitration with the Permanent Court of Arbitration in Singapore after the government ignored the notice of claim filed by the water concessionaire in April 2015.

“Through this notice of claim to the Republic of the Philippines via the Department of Finance, Manila Water called upon the government’s letter of undertaking to reimburse its losses in operating revenues arising from a significant diminution in the rate of return committed in its concession contract,” Manila Water said in a statement. 

“These losses are expected to be reimbursed as they are actualized for each remaining year of Manila Water’s concession, and which are at this point estimated to amount to P79 billion for the entire period of 2015 up to 2037,” Manila Water said.

The appeals panel handling the arbitration case of Manila Water and Metropolitan Waterworks and Sewerage System earlier ordered a tariff reduction in the east zone which is served by the company.

The appeals panel ordered the company to reduce the P25.07 per cubic meter average basic charge by 11.05 percent. The decrease is equivalent to P2.77 per cubic meter.

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Manila Water said the rate rebasing adjustment would be negative P1.66 per cubic meter this year, negative P0.55 per cubic meter in 2016 and negative P0.55 per cubic meter in 2017.

Annual CPI adjustments will also be implemented consistent with the company’s concession agreement with MWSS.

The arbitration case arose from the decision of the MWSS to reduce the current basic charge of Manila Water by 29.47 percent or an average of P7.24 per cubic meter for the 2013 to 2017 rate rebasing period.

Manila Water said in a letter of undertaking the government through the Finance Department undertook to indemnify Manila Water, against any loss caused by any action on the part of the MWSS resulting in the reduction of the standard rates “below the level that would otherwise be applicable in accordance with the concession agreement.

The company said it was denied a rate of return, which was “allowed from time to time to operators of long-term infrastructure concession agreements in other countries, having a credit standing similar to the Philippines” pursuant to section 9.4 of the concession agreement.  

“Even if Manila Water continues to pursue its claim, it started to implement the new rates set by MWSS in June 2015 which incorporates a reduction of P1.66 per cubic meter in the basic charge,” Manila Water said. 

Data from Manila Water showed that for customers consuming 10 cubic meters per month, the new rates would be P134 from P138. 

Those who consume 20 cubic meters monthly will pay P296, down from P304 while those who consume 30 cubic meters will pay P603, instead of P618.

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