AN OFFICIAL from listed Manila Water Co., Inc. said on Friday its revised concession agreement (CA) with the government is an important milestone for the firm, adding the contract took more than a year to negotiate.

“This important milestone is a culmination of several months of hard work and discussion with several key government agencies to arrive at what we see as a new working template for public-private partnership,” Manila Water Chairman Fernando Zobel de Ayala said during the company’s annual stockholders’ meeting held virtually.

He said that the CA, which took more than a year to negotiate, marked a “very important new chapter” for the company.

Under the revised agreement, Manila Water will no longer be allowed to charge its customers for corporate income tax and implement foreign currency differential adjustments. The agreement is patterned after the economic provisions of the New Clark City Joint Venture Agreement.

During the stockholders’ meeting, Manila Water President and Chief Executive Officer Jose Rene Gregory D. Almendras said that the agreement will allow the company to “focus on the urgent need to ensure sustainable water supply and wastewater services to the East Zone of Metro Manila.”

He added that the revised concession agreement also “imposed caps on increases in wastewater and water tariffs, while removing the main issue of taxes.”

In a previous disclosure, Manila Water said the revised CA lowers the “inflation factor to two-thirds of the consumer price index adjustment, and imposes caps on increases in standard rates for water and wastewater.”

“Instead of a market-driven appropriate discount rate, Manila Water shall now be limited to a 12% fixed nominal discount rate,” the firm said in a regulatory filing on April 5.

Manila Water also said the rate-rebasing mechanism under the original agreement is retained. “Thus, the rates for water and sewerage services provided by Manila Water shall be set at a level that will permit it to recover over the term of the concession expenditures efficiently and prudently incurred and to earn a reasonable rate of return,” it explained.

The revised CA also includes a tariff freeze until Dec. 31, 2022 in line with the government’s program of assisting the disadvantaged sector and contributing to economic recovery.

Manila Water, a subsidiary of Ayala Corp., is the exclusive provider of water and used water services to over six million people in the Manila Water Concession, particularly in the East Zone of Metro Manila and Rizal Province.

Shares in Manila Water rose by 0.69% or 10 centavos to close at P14.50 apiece on Friday. — Angelica Y. Yang with a report from Revin Mikhael D. Ochave