Suspension of water rate hike looms
The government may soon suspend the water rate increase for West Zone concessionaire Maynilad Water Services Inc. after the company decided to dispute the recent decision of the Metropolitan Waterworks and Sewerage System (MWSS) on the mandatory rate rebasing.
MWSS chief regulator Patrick Ty said it received last week a dispute notice from Maynilad questioning its decision on the approved rate rebasing released last month.
“There will be an arbitration. In relation to this, we are studying the possibility of temporarily suspending the effectivity of the water rate increase for Maynilad pending the arbitration proceedings,” Ty said in a briefing on Thursday.
“We will exhaust all legal remedies available in order to settle this and we will fight for the interest of the consumers,” Ty said.
Maynilad, for its part, said it had no choice but to file a dispute notice as it is technically the only way to preserve their right to recover income taxes.
“If we don’t file, we might be construed to have waived our claim on the recovery of income taxes, a right that was affirmed with finality in the first arbitration case. In all other respects, we intend to maintain our amicable relationship with MWSS, including abiding with our business plan and approved tariff schedule,” Maynilad president and CEO Ramoncito Fernandez said.
Ty said Maynilad and East Zone concessionaire Manila Water Services Inc. both maintain from the beginning that corporate income tax should be recoverable and, thus, be charged to the public.
“MWSS-RO’s position is that you cannot pass on the income tax to the public because it is not included in the business tax and only the business tax is recoverable. Our position remains the same,” Ty said.
Last Sept. 13, the MWSS Board of Trustees approved the P0.90 per cubic meter increase for the rate rebasing which took effect last Oct. 1.
The P0.90 increase is a portion of the total P5.73 per cu.m. increase to be staggered in the next four years as part of the mandatory five-year rate rebasing for the concessionaires.
Based on the concession agreement, a rate rebasing determines the level of rates for water and sewerage services that permits both concessionaires to recover over the life of the concession period its operating, capital maintenance and investment expenditures.
To recall, a similar arbitration also happened in 2013 when the determined rates approved by the MWSS Board were not implemented imme- diately.
The chief regulator said the MWSS Board is set to meet next Thursday to decide whether or not it would proceed with the suspension of the rate increase.
The suspension of rate increase will likely affect the business plan of Maynilad over the next five years which is focused on better sewer coverage.
“That is a possibility and that is one of the factors that we need to study. We are mindful of that fact and the possible consequences,” Ty said.
“We are studying our options as of now. What is just for all our stakeholders, most importantly our customers, is the implementation of our business plans,” Fernandez countered.
Meanwhile, Ty said Manila Water has not filed any dispute against MWSS, but a similar undertaking would happen should the Ayala-led water company decide to go into arbitration.
“If Maynilad filed an arbitration case, there is a possibility that Manila Water would also be looking at doing the same,” Ty said.
Maynilad is the largest private water concessionaire in the country in terms of customer base. It serves the areas of Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, Malabon, and certain portions of Manila, Quezon City, Makati and Cavite.