October 12, 2019
THE Metropolitan Waterworks and Sewerage System (MWSS) has debunked Manila Water Co. Inc.’s claim of an “exponential” water rate hike if the Supreme Court ruling upholding the almost P2-billion penalties slapped on water concessionaires for violating the Clean Water Act is implemented.
The MWSS Regulatory Office (MWSS RO) made the pronouncement on Friday even though the Ayala-led utility has already retracted its previous statement that a 780-percent increase in water rates — or as much as P26.70 per cubic meter–is possible if the high court will not reverse its order.
According to Ty, the two water companies — Manila Water and Maynilad Water Services Inc. — cannot make their customers shoulder any financial penalties slapped on them.
They are prohibited from doing so under Article 1 of the Concession Agreement, which states: “Expenditures means pre-operating and operating expenditures, capital maintenance and investments expenditures, concession fees and Philippine business taxes of the concessionaire (including the concessionaire’s portion of any such items incurred by the joint venture), excluding penalties, interest charges on late payments, financing costs, bad debt provisions and depreciation provisions.”
Earlier, Manila Water recalled its statement and said it would comply with the Supreme Court ruling and complete its wastewater programs by 2037.
“We never stated that it will be an impending increase nor did we make any statement about passing [it] on to consumers,” the listed firm said in a statement on Friday.
“In light of the recent reports on the increase in water rates by 780 percent, we would like to clarify that the 780-percent increase included in the pleading in our motion for reconsideration to the Supreme Court is what it would have cost to build wastewater facilities to comply with the Supreme Court decision subject of our motion for reconsideration,” it added.
Ty said the MWSS RO would commission a third-party entity to audit the financial books of the two concessionaires “to ensure they will not be able to insert it (fines and penalties) in any form.”
The regulatory financial audit, originally done every five years, is included in the concession agreement, but the MWSS RO intends to conduct the audit annually.
Any project that both firms are proposing will have to wait for the agency’s go -signal in the next rate rebasing, the process of adjusting water rates every five years to determine rates for water and sewerage services of Manila
Water and Maynilad based on the performance, expenses, earnings, unrecovered investments and service improvement plans of both water providers.
The next rate rebasing is scheduled in 2022.
The Supreme Court had found the MWSS, Manila Water and Maynilad guilty of violating Section 8 of Republic Act 9275 or the Philippine Clean Water Act of 2004.
The MWSS and the two water firms were found “jointly and severally liable” and ordered to pay a penalty amounting to P921,464,184.
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