MWSS welcomes grant of franchises to Maynilad, Manila Water

MANILA, Philippines — The Metropolitan Waterworks and Sewerage System (MWSS) welcomed President Duterte’s signing of laws granting Maynilad Water Services Inc. and Manila Water Co. Inc. each a 25-year franchise.

In a phone interview, MWSS legal services department manager Augustine Vestil Jr. said the MWSS was consulted by both houses of Congress in the process of crafting of and eventually passing their respective versions, emphasizing that the agency also actively participated in the discussions of the provisions.

“We also wish to highlight that we appreciate the fact that the franchise bill (law) requires the franchisees, Manila Water and Maynilad, to ensure that they will meet 100 percent service coverage of water supply and sewerage during the period of the franchise,” Vestil said.

In a disclosure to the Philippine Stock Exchange yesterday, Maynilad’s parent company said that among the highlights of the signed franchise is the completion of its water and sewerage projects to attain 100 percent coverage by 2037, which shall include periodic five-year completion targets.

The same provision was also included in Manila Water’s franchise, which requires the company to submit annual progress reports of its compliance with its targets to the MWSS regulatory office and Congress.

Meanwhile, Vestil also pointed out that the signed franchises also grant the authority to the MWSS to extend the effectivity of its revised concession agreements with the water concessionaires to coincide with the term of the franchise.

Last year, the MWSS signed RCAs with Maynilad and Manila Water, which are set to expire in 2037.

In contrast, the franchises, which were signed on Dec. 10, 2021, will have a term of 25 years or until 2046.

“The benefit of this is that the MWSS will be able to continue the regulating the process of determination the tariff, every rate rebasing period,” Vestil said.

Moreover, the franchise granted to Maynilad and Manila Water also states that the RCA shall act as the certificate of public convenience and necessity of companies for the operation of its waterworks and sewerage system in their respective franchise areas.

In addition, Maynilad’s franchise also requires the company to publicly list at least 30 percent of its outstanding capital stock within five years from the grant of the franchise, and prohibits it from passing on corporate income tax to customers.

“It also provides that in the event the waterworks and sewerage system assets of MWSS pertaining to the franchise area are privatized by law, Maynilad shall have the right to match the highest compliant bid after a public bidding,”MPIC said in a disclosure.

Another highlight of the franchise is the establishment of tariffs and charges which Maynilad may charge, as the MWSS may allow, after taking into account, among others, “reasonable and prudent capital and recurrent, efficient and prudent costs of providing the service, including a reasonable rate of return on capital, efficiency of the service, incentives for enhancement of efficiency, subject to limitations for public utilities, willingness to pay of consumers, equity considerations, administrative simplicity, the methodology provided under the RCA and requirements under applicable law and jurisprudence”.

The franchise granted to Maynilad covers the west zone service area of Metro Manila and the province of Cavite, while Manila Water’s franchise agreement covers the east zone service area of Metro Manila and the Province of Rizal.

Maynilad is the largest private water concessionaire in the Philippines, serving over 1.4 million customers. It maintains and operates 6,831 kilometers of primary, secondary and tertiary pipelines.

It serves the west zone or the areas of Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, Malabon, and certain portions of Manila, Quezon City, Makati and Cavite.

In contrast, Manila Water serves the east zone, which encompasses parts of Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, most parts of Quezon City, portions of Manila as well as several towns in Rizal.