Boracay closure to push water rates up in the island

Water rates in Boracay will go up even more over the next few years as part of the long-term impact of the island's six-month rehabilitation.

A Boracay Island Water Company, Inc. (BIWC) official said that because the company has to fast-track its upgrading efforts in the island's sewerage system, it might also request for a water rate increase in the next rate rebasing.

BIWC, one of two water and sewage treatment service providers in the island, currently implements one of the highest water rates in the country, but the company claimed that this remains cheaper than two of the world’s competing tourist destinations Maldives and Bali.

BIWC is 80 percent owned by Ayalaled Manila Water Company, Inc. and 20 percent owned by the government through Tourism Infrastructure and Enterprise Zone Authority (TIEZA).

The company holds the exclusive right to operate, manage, and expand water and used water facilities in the island until 2034.

After Boracay Island was shutdown from any tourism activities in April, BIWC also embarked on an "action plan" that is meant to upgrade its facilities as well as expand its capacity to accommodate more customers.

In an interview, BIWC General Manager and chief operating officer Joseph Michael Santos said the upgrade efforts in Boracay right now will affect the company's next rate rebasing, which will happen in 2022.

Done every five years, rate rebasing is a review of the past performance and projection of a water utility's future cash flows. It will set the water rates at a level that would help concessionaires recover their expenditures and earn a rate of return.

It was just in December last year when TIEZA's Regulatory Office approved the new water rates for BIWC as a result of the last rate rebasing.

The higher rate is being implemented in three tranches, with the second tranche happening in December and the last one in January next year.

This means that starting next month, BIWC customers would have to bear additional cost in their monthly billings.

"We just have to clarify that the adjustment of water rates in July is not because of the rehabilitation. It's the result of the last rate rebasing," Santos said.

Last week, it was reported that BIWC may allot bulk of its R2.4-billion capital expenditure (capex) — which was supposed to be rolled out within a five-year timeframe — just for this year alone.