Maynilad starts preparing for the next rate rebasing period

Published April 22, 2021, 4:30 PM

by Madelaine B. Miraflor

Even without a new concession agreement (CA) with Metropolitan Waterworks and Sewerage System (MWSS), Maynilad Water Services Inc. already began preparing for its five-year plan under the next rate rebasing period.

In a virtual briefing on Thursday, Maynilad President and Chief Executive Officer Ramoncito Fernandez told reporters that “formal communications” between the company and the government regarding the former’s new CA are still ongoing. 

Despite this, he said the company already “started drafting our five-year plan”, which will dictate the company’s investments from 2023 onwards and their corresponding water tariff rate increases.

“It requires a lot of planning and data and checking the actual results of what we are doing,” he further said.

The current rate rebasing period, which is an audit of the water utilities’ past performance and projection of their future cash flows, will end in 2022, but concessionaires like Maynilad and Manila Water Company, Inc. will have only until March of next year to submit their proposals on investments and tariff rate increases.

Done every five years, rate rebasing is supposed to set the water rates at a level that would allow both Maynilad and Manila Water to recover and earn a rate of return from the investments they spent for their respective water projects.

Unfortunately, Maynilad and Manila Water were only able to charge the first tranche of their supposed four-year staggered water rate increase under the current rate rebasing period.

In 2020, both companies didn’t adjust their water rates higher as the government began reviewing their respective CAs with MWSS.

Then this year, both companies decided to defer it again as a relief measure to their respective customers amid the COVID-19 pandemic.

MWSS Chief Regulator Patrick Ty earlier said that it would be ideal for both concessionaires to already have their respective amended CAs before the next rate rebasing period because this will help them finalize their investment plans moving forward.

So far, however, the government was only able to release the CA between Manila Water and MWSS. 

In drafting its next five-year plan, Maynilad will have to take into consideration the growing population in Metro Manila, which has been increasing by nearly 2 percent every year, and further delays in the construction of major water sources like Kaliwa Dam.

Home to 14 million people, Metro Manila is one of the most densely populated areas in the Philippines.
Right now, the metropolis is largely dependent on Angat Dam, getting 90 percent of its water needs from the 53-year old facility.

Ronald Padua, vice president for water supply operations divisions at Maynilad, said with its current capacity, the company has already been maximizing its daily water supply to fulfill its customers’ demand. This leaves no room for a reserve.

For his part, Maynilad Chief Operating Officer Randy Estrellado said if the construction of Kaliwa Dam, which will provide 300 mld each to Maynilad and Manila Water, will be delayed further, Maynilad will finally consider building a fourth water treatment plant in Laguna de Bay. 

Maynilad is currently serving 1.45 million connections or a population of 9.74 million.

Right now, Maynilad is already building its third water treatment plant in Laguna de Bay which is set to produce 150 mld of potable water.

Once completed in the last quarter of 2022, the facility will bring Maynilad’s total yield from Laguna Lake to 450 MLD.

Maynilad began tapping water from Laguna Lake in 2010 as an alternative raw water source so it can reduce its dependence on Angat Dam.

The construction of the fourth plant would be the company’s major contingency measure if the Kaliwa Dam won’t happen in the next two years.

“Our agreement with MWSS is if we feel that Kaliwa Dam is being delayed, we will not sit down [and just wait]. We will proactively promote another water source,” Fernandez said in an earlier interview.  

“It is a huge risk to rely on just Angat Dam as major source of raw water for Metro Manila,” he also said.