Manila Water forced to propose a cheaper water supply project

Published September 28, 2018, 12:00 AM

by manilabulletin_admin

By Madelaine B. Miraflor

The plan of Manila Water Company, Inc. to build another water treatment plant in Laguna Lake didn’t pass through the Board of Trustees of Metropolitan Waterworks and Sewerage System (MWSS), forcing the Ayala-led firm to propose a cheaper water solutions project as part of its medium-term plan.

MWC logo (Photo courtesy of www.manilawater.com/)
MWC logo (Photo courtesy of www.manilawater.com/)

On Thursday, the MWSS Board of Trustees already approved the recommendation of MWSS-Regulatory Office (MWSS-RO) on Manila Water’s proposed water rates under rate rebasing, which is a review of the water utilities’ past performance and projection of their future cash flows.

Done every five years, the review is supposed to set the water rates at a level that would allow both Manila Water and Maynilad Water Services, Inc. recover their expenditures and earn a rate of return.

As part of the rate rebasing review, these concessionaires are also required to submit their short-term, medium-term, and long-term plans to secure their water supply as well as achieve 100 percent coverage in terms of sewage treatment system.

While the MWSS Board already allowed Manila Water to implement a staggered four-year rate hike, the company’s rate adjustment for 2022 has not been formally set.

This, as the company’s medium-term plan is still “subject to further studies” since its proposed P15-billion Laguna Lake East Bay project has already been ruled out, MWSS Chief Regulator Patrick Ty said.

MWSS Administrator Reynaldo Velasco earlier raised concerns on the cost of the project, saying that it will be too expensive to build.

When sought for comment, Manila Water Chief Operating Officer Geodino Carpio is still convinced that the Laguna Lake East Bay project, which could treat 250 million liters of water per day (mld), remains to be “a viable option for future demand and will continue to be an option”.

Nevertheless, he said the company was already able to propose another option.

“MWSS agreed to look into another mid-term option,” Carpio said. “But I cannot disclose as of the moment the details because the new option entails further negotiations”.

Carpio said MWSS is now evaluating the feasibility of the new project, adding that this will no longer be in Laguna Lake.

In the proposal it earlier submitted to MWSS, Manila Water said it plans to boost its capacity to 725 mld by 2022 for an investment worth P37.44 billion. Then it will spend another P116 billion in 2023 to 2037 for additional 222 mld.

Manila Water also targets to increase its sewerage coverage by 39 percent by 2021, 65 percent by 2026, 90 percent by 2031, and 99 percent by 2036.

To be implemented in tranches over the next four years, the increase in Manila Water rates under the current rate rebasing would play around P6.22 to P6.55 per cubic meter (cu.m). By next month, Manila Water can already charge its customers additional P1.46/cu.m in their monthly billing.

By January 2020, it will be allowed to increase its rates by P2/cu.m, and another P2/cu.m by 2021. By 2022, depending on the medium-term water sources project that the company will be allowed to pursue, the Ayala-led firm could charge its customers an increase of P0.76/cu.m up to P1.04/cu.m.

For Manila Water customers who consume 10 cu.m a month, the new rates would translate to an increase of P5.68 in the monthly billing, while those consuming 15 cu.m and 25 cu.m monthly will see an increase of P9.13 and P19.13, respectively.

Aside from rate rebasing, Manila Water will also implement a lower Foreign Currency Differential Adjustment (FCDA) adjustment of P0.02/cu.m for the fourth quarter of the year.

 
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