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Water concessionaires seek to raise rates to fund P183-B capex

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PHILSTAR

By Victor V. Saulon, Sub-editor

METRO MANILA’S two private water concessionaires plan to spend a combined P183.531 billion starting this year through 2022 for projects that will allow them to meet the requirements of their concession agreement, including service continuity and water security.

Manila Water Co., Inc. plans to spend P89.661 billion for the five-year period, while Maynilad Water Services, Inc. has earmarked P93.87 billion.

To fund the massive capital expenditure, Ayala-led Manila Water is seeking to raise water rates in the east zone concession by P8.30 per cubic meter (cu.m.), while Maynilad is looking to increase rates by P9.69 per cu.m. in the west zone concession.

On Aug. 1, the Metropolitan Waterworks and Sewerage System-Regulatory Office (MWSS-RO) posted the separate business plans of the two companies for the fifth regulatory period covering 2018 to 2022.

Included in the plans are the projected spending for the sixth regulatory period through 2037 when their concession agreement with the government ends. All business plans are pending approval by the MWSS regulatory office.

“We expect to release the indicative tariff during the next public consultations, which will be held at the end of the month or early September,” said MWSS Chief Regulator Patrick Lester N. Ty.

The major points that “will have the most effect on the tariff” are the capital expenditure projects of the concessionaires, Mr. Ty said in a text message.

In its business plan, Maynilad said with its opening cash position at negative P88.65 billion and provided that the government pays in full the company’s foregone revenues by Dec. 1, 2017, it computed a rebasing adjustment of P9.69 per cu.m. or 29.63% over the 2017 average basic charge of P32.70 per cu.m.

Had the MWSS and the regulatory office implemented the final award according to its terms, Maynilad said the average basic rate as of 2017 would have been P35.89 per cu.m., thus the adjustment for the fifth rebasing period would have been only P6.50 per cu.m. or an increase of only 18.11%.

For its part, Manila Water said that for it to accomplish its service obligation under its business plan, the company is proposing a rate convergence adjustment of 33.14% of the basic average tariff of P25.05 or P8.30 per cu.m.

With that rate, the Ayala-led company said residential customers consuming an average of 10 cu.m. per month will have a monthly water bill of P175, or roughly 1% of the average monthly household income.

Average residential customers consuming 30 cu.m. will have a monthly bill of P787 or an increase of P195 per month, the company said. It added that low-income customers will still enjoy 40% discount on their basic water charge, thus tempering the rate increase to only about P25 per month.

Manila Water said the proposed rate convergence adjustment for the 2018 rate rebasing period is driven largely by five factors, among which is the inclusion in the concession fee payments of the debt service for the New Centennial Water Source-Kaliwa Dam Project.

“Manila Water remains open to discussion with the MWSS-RO to review the existing tariff structure,” the company said.

Maynilad also included the Kaliwa dam project in its computation, saying that of the P30.384 billion concession fees for 2018 to 2037, up to 47% relates to proposed new water source. The company said the dam was initially among the projects to be funded by the concession fees, but the MWSS had informed the concessionaires that the national government would instead fund it, thus it was taken out from the business plan in 2012.

“But in 2016, the Concessionaires were informed by the MWSS that the national government would no longer fund the Kaliwa Dam Project and the same should therefore be reinstated in the Company’s 2018 Business Plan as among the projects to be funded by the Concession Fees,” Maynilad said.

In its 2018-2022 business plan, Manila Water placed its capital expenditure for service security at P10.085 billion, water security at P24.704 billion, service accessibility at P17.431 billion, and environmental sustainability at P37.441 billion.

The company placed its capital expenditure for 2023-2037 at P132.526 billion.

For Maynilad, spending for the five years to 2022 is broken down as 28% for water sources and treatment, 16% for operations support, 20% for non-revenue water management and service expansion, 33% for wastewater, and 3% for customer service and information. It has earmarked P242.157 billion for 2023-2037.