Metro Manila water concessionaires may now again subject the composition and decisions of the Metropolitan Waterworks and Sewerage System-Regulatory Office (MWSS-RO) to arbitration following the signing last Wednesday the amendments on their revised concession agreements (RCAs).
In separate statements, Maynilad Water Services Inc. and Manila Water Co. Inc. said even if the signing was only made this week, the revisions take effect retroactive to June 29, 2022.
Maynilad explained through a disclosure by Metro Pacific Investments Corp. at the Philippine Stock Exchange the amendments are intended, in part, to align some of the RCA provisions with revised implementing rules and regulations of the Build Operate Transfer Law, consistent with the government’s efforts to reinvigorate public-private partnerships.
Maynilad said among the amendments are the adjustment in the consumer price index (CPI) factor from 2/3 to 3/4 of the percentage change in the CPI for the Philippines as well as the reinstatement of the foreign currency differential adjustment (FCDA) but only with respect to MWSS loans that are being and will be serviced by Maynilad and principal payments for drawn and undrawn amounts of Maynilad’s foreign currency denominated loans existing as of June 29, 2022.
The company said another amendment is an introduction of a modified FCDA for Maynilad loans contracted after June 29, 2022, is also allowed but may be availed only when there is an extraordinary inflation or deflation of the Philippine peso for more than 20 percent change in the base exchange rate but the recoverable amount will be capped.
Maynilad also noted amendments to exclude certain events from what may not be considered as material adverse government action such as the amendment of existing rules, regulations and other issuances resulting from acts of the legislative and judicial branches of government and delay or inaction by the MWSS-Regulatory Office (MWSS-RO) on applications relating to rate adjustments filed by concessionaires.
The amended RCA also re-allowed the composition and decisions of the MWSS-RO from what may be subject to arbitration.
All the said amendments also apply to Manila Water’s RCA.
Last year, the MWSS said the RCA is “advantageous” to both the national government and the public while also making water service business “commercially and economically viable to the investors and concessionaires.”
The RCAs between the concessionaires were pursued after former President Rodrigo Duterte called for the review of the contracts.
