MANILA, Philippines — The Metropolitan Waterworks and Sewerage System (MWSS) has assured the public that water rates will not increase after the latest amendments to the revised concession agreements (RCAs) of its water concessionaires, which increased the inflation factor and brought back the foreign currency differential adjustment.
Last Wednesday, Manila Water Co. Inc. and Maynilad Water Services Inc. signed amendments in their respective RCAs with the MWSS.
The amended RCAs, which are retroactive to June 29, 2022, feature higher inflation factor from two-thirds to three-fourths of the Consumer Price Index (CPI) adjustment; reinstated the Foreign Currency Differential Adjustment (FCDA) but only for MWSS loans and introduces a modified FCDA mechanism in cases of “extraordinary” movement of the Philippine peso.
In an interview with reporters yesterday, MWSS administrator Leonor Cleofas gave assurance that there will be no water rate increase following the amendments to the RCA. “It will not cause a water tariff increase,” she said.
The slight increase in the CPI adjustment will allow the two concessionaires to somehow recover cost adjustments amid high inflation.
“The increase in the CPI adjustment is negligible. It is not fixed; it is not an absolute number that will be given to the concessionaires,” Cleofas said.
The MWSS administrator cited the Angat Water Transmission Improvement Project Tunnel 5 (AWTIP No. 5 Project), whose cost of P3.172 billion will be equally shouldered by Manila Water and Maynilad.
“Like this project, they are the ones who are funding it, so we should give them CPI adjustment. You have seen that the cost of our fuel, other goods, materials is very variable,” Cleofas said.
“One of the amendments in the RCA was the removal of FCDA on prospective loans that will be incurred by the concessionaires. But the existing loans of MWSS were not given heads on the variability of the FCDA,” she said.
“But the FCDA was reinstated, only for MWSS loans. The loans of the two concessionaires, especially prospective loans, will not be covered by the FCDA,” she added.
She said these changes were done by the Water Review Committee led by the Departments of Justice and of Finance, and the Offices of the Solicitor General, Government Corporate Counsel and the Executive Secretary.
Tunnel in a related development, the MWSS broke ground yesterday for the new P3-billion tunnel in Norzagaray, Bulacan AWTIP No. 5 Project. The tunnel will provide greater flexibility in delivering raw water to concessionaires Maynilad and Manila Water in Metro Manila and nearby provinces.
Cleofas, who led the groundbreaking ceremony, said the project will allow better water flow to the treatment plants of its three concessionaires – Luzon Clean Water Development Corp. in Bulacan, Manyilad’s La Mesa Water Treatment Plant 1 and 2 and Manila Water’s Balara Water Treatment Plant 1 and 2 and East La Mesa Water Treatment Plant. When completed in September 2024, the tunnel will have the capacity to carry 19 cubic meters per second, servicing the same number of customers while preventing water interruptions in the future, she added. Maynilad president and CEO Ramoncito Fernandez, who attended the event, said the project is essential to the existing water infrastructure and is part of the water security and reliability program of the MWSS.
For his part, Manila Water president and CEO Jose Victor Emmanuel de Dios said the project, which is a generational piece of infrastructure, will increase the reliability of water supply to Metro Manila and nearby areas. MWSS also launched the tunnel boring machine (TBM) yesterday, which was specifically built for the AWTIP No. 5 Project.
TBM Victoria will bore 4.30 diameter to a 6.4-kilometer stretch from the tunnel outlet in Barangay Bigte to the intake structure in Ipo Dam, Norzagaray, Bulacan.
Fernandez said Maynilad’s share in the project cost will be a combination of internally generated cash and financing.
“It’s kind of huge in magnitude so we will complement funding with debt. No final [amount yet] but it definitely will require additional debt coming from the market,” he said.