MWSS grants contract extension for Maynilad

(Updated 5:18 PM) A government agency has approved Maynilad Water Services Inc.’s (MWSI) contract extension, giving the company one more step to hurdle before it can finally serve its area for an additional 15 years. Maynilad’s concession extension was granted by the Metropolitan Waterworks and Sewerage System’s (MWSS) Board of Trustees during a special meeting held last Friday, August 28, sources familiar with the matter told GMANews.TV. The 15-year extension requires endorsement of the Department of Finance (DOF), which has yet to act on a similar petition filed by Manila Water Co. Inc. (MWCI), Metro Manila’s east zone water distributor. Maynilad’s contract is set to end on 2022, a quarter of a century after it secured the right to supply and distribute water in Metro Manila’s west zone, an area covering the City of Manila, some parts of Quezon City, among others. In the meantime, Mark Isaiah David, Maynilad’s external communications head, told GMANews.TV that the company’s application is still being discussed by MWSS officials. GMANews.TV has requested clarification regarding this matter from MWSS administrator Diosdado Allado but he has yet to reply as of posting time. If the extension is approved, Maynilad will nearly triple capital spending, ensure water supply availability, help clean up Manila Bay, and delay a rate hike, documents from the MWSS said. Instead of P206 billion, the company will be spending P563 billion until 2037, the MWSS said in a document, citing Maynilad’s commitments. Its capital outlay will help the company meet its targets of providing round the clock water service to its customers by 2026. All current customers will enjoy 24-hour water availability by the end of 2012, the same document said. Moreover, for two years starting 2010, customers of Maynilad will be allowed to enjoy a lower tariff of 89 centavos, said the same document dated August 26, 2009. Consumers will also be shielded from costs arising from higher inflation and a stronger dollar from 2013 to 2027, it added. By 2036, Maynilad expects to serve 11.7 million customers. The company is currently controlled by a consortium of two listed companies – Metro Pacific Investments Corp. (MPIC) and DMCI Holdings Inc. The MWSS’ approval will bring “added value" to shares of MPIC and DMCI, AB Capital Securities’ Maria Arlysa E. Narciso told GMANews.TV. Although the announcement gives “better prospects" to both companies, “it is possible that [the announcement] could be more beneficial to DMCI than MPIC," Narciso said. Share prices of Metro Pacific fell ten centavos to P5.80 during Monday’s trading at the Philippine Stock Exchange (PSE). During the same trading day, stock prices of DMCI Holdings hit P8.60, lower than the previous session’s P8.90. In April, the MWSS also approved Ayala-led Manila Water’s application to serve Metro Manila’s east zone for an additional 15 years. But an official opposed MWSS’s decision, saying a contract extension will be disadvantageous to the government. See story here. - Robert JA Basilio Jr., GMANews.TV