Manila Water to cut rates in next 3 years

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Utilities concessionaire Manila Water Co. Inc announced it would be slashing its basic water charge beginning this year in compliance with a ruling of an international arbitration panel dismissing the tariff case that it had filed against Philippine state regulators.

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In 2013, the Metropolitan Waterworks and Sewerage System ordered concessionaires Manila Water and Maynilad to cut its rates by P1.45 per cubic meter.

Manila Water disputed the order before the Singapore-based appeals panel of the International Chamber of Commerce (ICC).

The panel, however, ruled that as a public utility, Manila Water cannot pass on its corporate income tax to consumers.

It also slashed Manila Water’s basic water charge by 11.05 percent or P2.77 per cubic meter.

The rate reduction would be staggered for three years.

In a disclosure before the Philippine Stock Exchange on Tuesday, Manila Water said it has received a copy of the ICC ruling and would comply with the decision by initially reducing its basic charges by P1.66 per cubic meter this year.

The rates would be further reduced by 55 centavos per cubic meter in 2016 and another rate cut would be made in 2017.

Manila Water’s average basic water charge in 2012 was P25.07 per cubic meter.

The rate rebasing adjustment of the basic water charge was less than what MWSS ordered in 2013.

MWSS had wanted basic charges cut by 29.47 percent or P7.24 per cubic meter.

The arbitration panel also provided for an inflation adjustment of 4.19 percent on the basic water charge in 2015, equivalent to P1.08 per cubic meter.

“The appeals panel decided CIT should be excluded from cash flows and used for the determination of tariffs. This was a result of their finding that the company is a public utility,” according to Manila Water.

With the decision, the company said it will study full implications of the appeals panel’s ruling to declare it as a public utility.

“While the arbitration decision resolved specific issues raised by Manila Water, we are deeply concerned about the finding that Manila Water is a public utility,” Manila Water President and CEO Gerardo C. Abaza Jr. said in a statement.

Manila Water services the east zone of Metro Manila that covers the cities of Makati, Mandaluyong, Pasig, San Juan, Taguig and Marikina and the town of Pateros; parts of Manila and Quezon City; and Rizal province.

The Ayala-owned water firm has ongoing projects in Laguna, Pampanga, Boracay (Aklan) and Cebu.

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