Manila Water Company Inc. has agreed to impose a moratorium on increasing its rates until 2023 under a new concession agreement it forged with the government.
The Department of Justice (DOJ), which drafted the new accord, said Manila Water agreed to hold off rate hikes until December 31, 2022.
“So their next possible adjustment for water rates will happen only in 2023,” Justice Secretary Menardo I. Guevarra said in an online press briefing on Monday.
Under the new accord, Manila Water is prohibited from passing on corporate income taxes to consumers. Tariff adjustment for inflation has been reduced to two-thirds of the impact of the consumer price index, from 100 percent in the previous contract.
Manila Water and the government also agreed to scrap the Foreign Currency Differential Adjustment, the national government’s performance undertaking for the future debt of the company, and the non-interference clause.
“The national government may enter the picture, may put its foot down and intervene [on matters related to Manila Water] if necessary without fear of getting penalized or getting sued for such intervention,” Guevarra said.
Additional regulations
The new agreement recognized Manila Water as a public utility which will allow the government to make the company more accountable through additional regulations.
These include requiring all debt and expenditure of Manila Water to be reviewed and approved by the appropriate regulatory office; all fully recovered assets from the company to be immediately transferred to the government to prevent double payment at the end of contract; and limiting Material Government Adverse Action (MAGA) for things only within the control of the National Government.
Presidential Spokesperson Harry Roque said the government’s new concession agreement with Manila Water was modeled after the New Clark City Joint Venture Agreement of the Bases Conversion and Development Authority (BCDA).
Guevarra said the government and Maynilad Water Services Inc. will soon start discussions on a new concession agreement.
President Duterte sought the review of the government’s concession agreement with the companies after a Permanent Court of Arbitration (PCA) in Singapore awarded Manila Water and Maynilad P7.4 billion and P3.4 billion, respectively, for unenforced water rate hikes.
Duterte refused to comply with the ruling and instead threatened to file economic sabotage cases against the two companies, prompting them to renegotiate their concession agreement with the government.
Guevarra said Manila Water has effectively waived the PCA award under the new concession deal.
Image credits: Business Mirror file photo
Read full article on BusinessMirror
