Maynilad contract extension OK’d

Maynilad Water Services, Inc. has received regulatory approval of its contract extension, allowing the utility to spread out planned rate hikes for its west zone concession area. The Metropolitan Waterworks and Sewerage System (MWSS) last Thursday gave its final approval to a 15-year term extension. It had granted provisional approval last September pending clearance from the Department of Finance (DoF). "Yes, it was already approved, last month," Maynilad President Rogelio L. Singson said in a telephone interview, referring to the DoF affirmation. With the approval, Maynilad’s contract has been extended to 2037 from 2022. Consequently, water rate increases up to 2012 will be reduced by three-quarters due to the extended recovery period. Maynilad was allowed to implement an increase of P10.78 per cubic meter for 2009 to 2012 under a rate rebasing adjustment approved by the MWSS in 2009, a year after the company exited corporate rehabilitation. The firm, in justifying its petition for the contract extension, said it would bring down the 2009-2012 rate increase by about 75%, to P2.67 per cubic meter or P0.89 annually. "The term extension is definitely a win-win for both the company and its stakeholders because it will enable us to take full advantage of long-term strategies for better water supply reliability and continued expansion in our unserved and under-served areas," Mr. Singson said in a statement. "It will also allow us to address critical environmental issues through intensified sewerage and sanitation services for our customers." The utility said the extension would allow it to increase investments . From P206 billion, Maynilad said it now planned to spend P564 billion "to accelerate and expand its service improvement projects in its concession area." "The additional 15 years of operation will also provide Maynilad with a longer investment recovery period, thus trimming future water rate increases for its customers." DMCI Holdings, Inc. owns 44.59% of Maynilad while Metro Pacific Investments Corp. holds 55.41%. The two firms bought the utility when it was re-privatized by the government in 2007. The original owners, the Lopezes, had returned the franchise to the government two years earlier. Maynilad’s customer base cover over six million customers. It serves the cities of Manila (all but portions of San Andres & Sta. Ana), Quezon (west of San Juan River, West Avenue, EDSA, Congressional, Mindanao Avenue, the northern part starting from the districts of Holy Spirit & Batasan Hills), Makati (west of the South Super Hi-way), Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, and Malabon, all in Metro Manila; and Cavite City and the towns of Bacoor, Imus, Kawit, Noveleta and Rosario in Cavite Province. - BusinessWorld