The revised concession agreement between the administration and Manila Water Company, Inc. provides for a one-year tariff rate freeze and disallows the concessionaire from charging its corporate tax to consumers.
These provisions are among the salient features of the agreement which the Metropolitan Waterworks and Sewerage System billed as a testament to President Rodrigo Duterte’s resolve to protect the interest of the Filipino consumers and the national government.
MWSS Board Chairman and Acting Administrator Reynaldo Velasco made the statement following the signing by the government and Manila Water of the revised concession agreement.
The MWSS chief also lauded the collective efforts of the government panel involving several top officials from the Office of the Executive Secretary, the Department of Finance, Department of Justice, Office of the Solicitor General, and Office of the Government Corporate Counsel, among others that collectively pursued over several months the completion of the new concession agreement.
Velasco signed the contract for MWSS in his capacity as Board Chairman and Acting Administrator.
“The contract is both advantageous to the Government, a big win for the Filipino people and the consuming public and that it is commercially and economically viable to the investors and the concessionaire,” he said.
The new agreement is modeled after the New Clark City joint venture agreement of the Bases Conversion and Development Authority (BCDA) which was developed with the assistance and advise of the Asian Development Bank (ADB).
Among the provisions of the new deal to protect the interest of government are the removal of government non-interference clauses and the removal of provisions that duly compromise medium and long term government liabilities.
To protect the interest of the consumer, the following are provided for: corporate income tax cannot be charged to the consumer; tariff freeze until 31 December 2022; tariff adjustment for inflation will be two-thirds of the consumer price index unlike the previous contract which had a 100 percent inflationary impact; and removal of the foreign currency differential adjustment that will result in much lower tariff increases and protect the consumer from possible tariff spikes because of foreign exchange movements.
In its disclosure, Manila Water said the tariff freeze until end of December 2022 is aligned with the government’s program to assist the disadvantaged sector and to contribute to the recovery of the economy post COVID-19.