MANILA (UPDATE) – A typical household in the greater Metro Manila and parts of Cavite consuming 20 cubic meters of water per month will soon be charged an additional P33.69 in their monthly bill after Maynilad Water Services Inc. won its appeal on rebasing adjustment.
Households consuming 10 cubic meters per month, on the other hand, will see an increase of P4.19 in their monthly bill while those consuming 30 cubic meters will be charged an additional P79.89 per month.
Randolph Estrellado, Maynilad’s chief finance officer, said the increase in the basic charge translates to an average of P3.06/cu.m., about 65 percent of which will be used to recover income tax.
Estrellado added that the increase will also cover unfinished projects including sewerage coverage expansions and improvement of water services in households from the current 7 pounds per square inch (psi) to 16 psi.
He explained that under the concession agreement between government and the private concessionaires, a rebasing adjustment is held every five years, the most recent of which was held in 2013.
However, government rejected both Maynilad and Manila Water's application to increase its base rates to include income tax recovery. The dispute prompted the concessionaires to raise the matter to arbitration before the International Chamber of Commerce (ICC).
“Ang formula ng pag-compute ng tariff, kasama ‘yung karapatan ng concessionaire to recover ‘yung binabayad na income taxes. Dito sa ikahuling rate rebasing, dinesisyonan ng bagong Regulatory Office na isantabi ‘yung mahigit 17 years na practice na isantabi ang income tax sa pag-compute ng tariff at ‘yun ang naging problema namin at inakyat namin ito sa appeals panel para desisyonan,” Estrellado said in a press conference on Tuesday.
Estrellado also explained that although Maynilad earned billions in 2013 without the base increase, it is still in the process of recovering expenditures of about P60 billion until 2037.
“Siyempre ang negosyante, ini-invest niya ‘yung pera niya para may return. So ang usapan dito, magkano ba ang tubo na dapat kitain ng pera na ‘yun. Importante ‘yung computation ng taxes kasi kailangan natin malaman magkano ‘yung net na iuuwi,” he said.
Estrellado said Maynilad’s appeal was filed in October 2013, but the hearings only started in August 2014.
Maynilad received the decision of the appeals panel on Monday, January 5. There has been no ruling for the case of Manila Water.
The hearings were held in the Philippines under the rules of the United Nations Commission on International Trade Law, and were led by a three-man arbitration panel is composed of representatives recommended by the ICC, MWSS and Maynilad.
MWSS chief regulator Joel Yu, meanwhile, said the regulator has yet to receive a copy of the decision.
He added that MWSS stands by its decision to reject both Maynilad and Manila Water's applications to increase base rates.
Estrellado said Maynilad is open to implementing the increase in a staggered basis within the next three years before the next rebasing adjustment in 2018 to lessen the impact on consumers.
However, he noted that the firm will have to discuss the staggered scheme with the Metropolitan Waterworks and Sewerage System (MWSS) Board.
He added that the average increase of P3.06/cu.m. is still pending approval of the MWSS and will be effective 15 days after the decision is published in a major newspaper.
Estrellado said the two-year delay in implementing the increase may affect the 2018 rebasing adjustment, which will determine another possible rate hike or a rollback.
He said the rebasing adjustment in 2018 will also depend on the expenses of Maynilad’s ongoing projects and water consumption of its customers.
Maynilad’s customer base has reached nearly 9 million people as of end 2014, covering the cities of Manila (certain areas), Quezon City (certain areas), Makati (certain areas), Caloocan, Pasay, Paranaque, Las Pinas, Muntinlupa, Valenzuela, Navotas and Malabon; the cities of Cavite, Bacoor and Imus and the towns of Kawit, Noveleta and Rosario in Cavite Province.
Maynilad is managed by DMCI-MPIC Water Company Inc., which is owned and operated by Metro Pacific Investments Corp., DMCI Holdings Inc., and Marubeni Corp.