International arbiter rules: PH govt must pay Maynilad P3.4B

July 25, 2017 - 7:10 PM
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Water concessionaire Maynilad's logo is seen in Phil. Star file combo image.
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MANILA – The Philippine government must pay Maynillad Water Services Inc. P3.4 billion to cover the losses the water concessionaire suffered for 17 months as a result of the former’s failure to act promptly, per its own undertaking, on a rate rebasing request, an arbitral tribunal in Singapore has ruled.

The failure of government regulator Metropolitan Waterworks Sewerage System (MWSS) to act on the water rate rebasing caused Maynilad losses between March 2015 and August 2016.

The tribunal in Singapore anchored its decision on the letter of undertaking issued by the Philippine government itself, when it awarded one of two concessions to Maynilad. There, the government committed to cover whatever losses the private firm may incur as a result of government’s inordinate delay in adjusting the standard rates of any government agency.

Applied to Maynilad’s case, the government must thus compensate Maynilad for the MWSS’ failure to adjust tariffs for the rebasing period from 2013 to 2017.

Only P3.4 billion of losses between March 2015 and August 2016 was covered by the ruling because this was what Maynilad could document.

No action on tariff bid

The concessionaire’s woes began when MWSS did not act on Maynilad’s request to impose tariff of 9.8% on the basic water charge in 2013.

What should have been an increase of P3.06 per cubic meters of water was not carried out.

Maynilad went to a local tribunal and won, but the MWSS still refused to honor the ruling, prompting the company to seek international arbitration.

Right now, the ruling has yet no impact on consumers, especially since the government has not yet determined how it can pay the P3.4 billion, and whether it will pay Maynilad by way of a tariff adjustment or some other means.

According to Maynilad’s Randy Estrellado,
the period of coverage ended August 2016 because “that was the date we submitted documents to the arbitration hearing.” He said they were open to talking to government on how to proceed insofar as the period beyond September 2016 is concerned.

In finding for Maynilad, the tribunal in Singapore said the national government had an obligation in the letter of undertaking it signed.

He said “normally,” the results of arbitration hearings “are final and binding.” The results “give us confidence to continue to have faith in the concession agreement,” he added.

He recalled that the Philippine government had said earlier it would abide by whatever the Singapore tribunal will rule.