The Lopez-owned company, led by its president Rafael Alunan, is currently pressing the Metropolitan Waterworks and Sewerage System (MWSS) to approve a currency exchange rate adjustment (CERA).
The CERA, which will allow the cash-strapped Maynilad to recover losses from foreign exchange fluctuations, is an automatic mechanism already enjoyed by other utilities.
According to Maynilad Corporate Affairs Manager, Jess Matubis, the MWSS has already approved the petition for their inclusion in the CERA mechanism "in principle, but they still have matters to discuss."
Matubis said that once the CERA is implemented, the water rates in the West Zone of Metro Manila would definitely skyrocket. But he was quick to add that the increase will still be a lot cheaper than other water districts.
"If the MWSS approves our petition, we will have to double or even triple the current water rates. If not, then I’m sad to say we will have to shut down our water service," Matubis said in an interview.
Maynilad, which also had to cancel future development projects because of lack of funds, assumed 90 percent of the foreign obligation accumulated by the MWSS as part of the privatization agreement.
The amount, equivalent to $800 million, was assumed when the private concessionaire tookover half of MWSS’ service area on August 1997, a time when the exchange rate was P26 to $1.
Manila Water took over the other half of the service area, but it only had to assume 10 percent of the state-owned corporation’s foreign obligations.
Matubis said that Benpress Holdings Corp. and Suez Lyonnaise, which are partners in the forming of Maynilad, has already spent $150 million without making any financial benefits.
"If the ones who are paying the bills find it too tough to continue, then we have no choice but to stop our water operations. So I hope they decide on the matter as soon as possible," Matubis said.
Even the $350 million loan, which Maynilad is seeking from foreign banks, could even be scrapped because of market, political, and regulatory risks.
"We badly need the CERA mechanism. It may mean that water rates will have to significantly increase, but it’s either that or close shop," Matubis added.