Extension of water concessions to benefit public
By Sheldeen Joy Talavera, Reporter
EXTENDING the revised concession agreements (RCAs) with Manila Water Co., Inc. and Maynilad Water Services, Inc. could benefit their customers because it would let them recover their investment for a longer period, according to the Metropolitan Waterworks and Sewerage System (MWSS).
“The benefit to consumers is that Maynilad and Manila Water are able to stretch their recovery longer, leading to lower rates,” Patrick Lester N. Ty, chief regulator at the MWSS Regulatory Office, said in a Viber message. “They don’t need to recover all their expenses by 2037 but by 2047.”
Manila Water and Maynilad separate told BusinessWorld the MWSS Board of Trustees had approved the term extension of their revised contracts last year. These were endorsed to the Department of Finance last month.
Both companies are seeking the extension of their contracts by 10 years until 2047, to coincide with their 25-year legislative franchises.
Republic Act (RA) No. 11601, which took effect on Jan. 25, 2022, gave Manila Water a 25-year legislative franchise. Meanwhile, RA 11600 gave Maynilad its 25-year legislative franchise, which took effect on Jan. 22, 2022.
Patrick James B. Dizon, manager of the MWSS water and sewerage management, said the revised concession agreement was first signed in March 2021 for Manila Water and in May 2021 for Maynilad, while the franchise law was approved in December 2021.
“So we need to align the effectivity date of the RCA to the franchise law,” he said in a Viber message.
Juan Paolo E. Colet, managing director at China Bank Capital Corp., said the extension would be a “win-win” for both the concessionaires and their clients.
“Manila Water and Maynilad can plan for and execute long-term capital expenditures to expand and improve their services with the assurance that they have a sufficient period to recoup their investments and generate a reasonable return,” he said in a Viber message.
Terry L. Ridon, a public investment analyst and convenor of think tank InfraWatch PH, said any extensions to the agreements “should include provisions recognizing government’s regulatory powers, particularly to ensure the least cost to consumers.”
He said this is “to ensure that any and all rate increases are intimately tied to future development plans within the concession area.”
Manila Water and Maynilad applied for the extension of their RCAs in the fourth quarter of 2023, committing to invest and spend to enhance water and wastewater services to their customers.
Manila Water serves the east zone network of Metro Manila, covering parts of Marikina, Pasig, Makati, Taguig, Pateros, Mandaluyong, San Juan, portions of Quezon City and Manila and several towns in Rizal province.
Maynilad serves the cities of Manila, except San Andres and Sta. Ana. It also operates in Quezon City, Makati, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, and Malabon. It also supplies the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario, all in Cavite province.
Metro Pacific Investments Corp., which has a majority stake in Maynilad, is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls.