Tariff increase win at Maynilad excites rival
Published on by Edyta Bednorz, Global Water Intelligence - Brand Marketing Executive in Business
A court has approved tariff increases for the concessionaire. Manila Water investors will be holding their breath.
Maynilad Water Services, the concessionaire serving the West Zone of Manila, has secured an appeals panel decision in favour of its alternative rate rebasing plan, effectively overturning the Filipino regulator's 2013 decision to revise down its permitted tariff. Manila Water, the East Zone concessionaire which is currently waiting for the results of a similar appeal from the International Chamber of Commerce, saw its share price jump 6.5% on the news. Although Maynilad's original business plan called for a 27% increase of PHP8.58/ m3 ($0.19/m3) to the basic water charge, discussions between the company and regulators resulted in a project to develop a new water source being taken out of the business plan and transferred to the PPP Center. Key to the ensuing dispute was whether the concessionaire had the right to pass on the cost of income tax to consumers, an issue which is shared in the Manila Water case. The arbitration result effectively settled that case in Maynilad's favour, and the appeals board approved a PHP3.06/m3 ($0.07/m3) rise, equivalent to 9.8%. Maynilad has offered to spread the rate increase over three years, to 2017. The decision "will definitely ease up the funding requirements that are needed for our capital expenditure projects," a spokesperson for the company told GWI. "The stronger balance sheet will enhance our ability to explore projects outside our concession area." Maynilad is planning to follow Manila Water's footsteps in owning and operating assets elsewhere in Southeast Asia.