Maynilad may file 2nd arbitration case vs. MWSS

MANILA, Philippines - Maynilad Water Services Inc. (MWSI) may file an arbitration case against the Metropolitan Waterworks and Sewerage System (MWSS), which will be its second in nearly five years. The company may seek legal relief in an international arbitration court in Singapore for the government's rejection of its plan to hike rates. Maynilad, owned by a venture between Metro Pacific Investment Corp. and D. M. Consunji Holdings Inc., may cite a "contract breach" in its concession agreement with the MWSS, company president Rogelio Singson said. The company"“will try to get to the process of arbitration," Maynilad president Rogelio Singson told reporters in a press briefing Thursday afternoon. If it decides to push through with the plan, the case will be Maynilad’s second such arbitration proceeding, a process that will involve numerous consultants – which charge dollar-based fees – on both sides. "Whether the government wins the contract dispute or not, fees will eventually be paid for by the government – through the MWSS – and water consumers," a source familiar with the matter said. Arbitration will cost the government more than $50 million, the same source said, citing its expenses in Maynilad’s first arbitration proceeding. In December 2004, Maynilad – then controlled by the Lopez Group – sought arbitration court approval to terminate its water distribution contract with the MWSS. In doing so, it asked for a $303 million refund, the total amount of its investments since it was granted a water concession in 1997. Maynilad intended to end its distribution contract after the MWSS rejected its proposal to hike fees owing to increased foreign exchange costs. Next: Maynilad to serve fewer customers, areas with rate hike rejection Maynilad to serve fewer customers, areas with rate hike rejection Disallowing the rate hike – as indicated by an MWSS board decision made Thursday – may prompt Maynilad to cut its investments in equipment, thereby reducing its ability to bring water to more areas and customers. As a result, some three million of Maynilad’s total nine million customers may be unable to enjoy access to piped-in water, Singson said. He added that the MWSS failed to issue a formal written notice to two Metro Manila water concessionaires that the tariff adjustments will not be granted. Earlier, MWSS administrator Diosdado Jose Allado said that the rate hike requested by both Maynilad and publicly-listed Manila Water Co. Inc. were “not authorized." In December, Maynilad announced plans to increase charges by P10.96 per cubic meter of water. Similarly, at around the same time, Manila Water sought approval to impose higher rates of P6.90 per cubic meter of water. Based on its plans, Maynilad intends to serve nine million customers this year, which in turn will be funded by the rate hike among others. It plans to raise rates by P1.13 per cubic meter for its low-income customers and P4.71 per cubic meter for its middle to high-income clients which compose 64 percent of its area. For its part, Ayala-led Manila Water "will wait for the official announcement from the MWSS." - GMANews.TV