Vol. XXII, No. 95 [ BusinessWorld Online ]
Friday, December 5, 2008 | MANILA, PHILIPPINES
A TOP OFFICIAL of Maynilad Water Services, Inc. yesterday warned that it would not be able to supply a third of the nine million people in its concession area and improve service to existing clients if it is barred from hiking rates next year.
But Freedom from Debt Coalition President Walden F. Bello asked the water utility at a hearing yesterday to defer the hike by up to three years in light of a global economic slowdown.
"Maynilad is not a struggling company. This is part of a transnational corporation First Pacific [Holdings, Inc.] which is one of the most profitable companies in Asia," the University of the Philippine professor said.
"How can you in due conscience... [offer] as a Christmas gift a rate hike during an impending economic crisis? [It] is unethical," Mr. Bello said.
Maynilad President Rogelio L. Singson said the increase would allow the company to provide clean and cheaper water to the southern part of its concession zone, where some customers pay as much as P120 per cubic meter for water.
"I hope you do not accuse us of not being socially responsible," he added.
Maynilad, which serves 11 cities in Metro Manila and five municipalities in Cavite, plans to spend P36 billion over five years to improve pipelines and sewerage systems.
By 2011, it hopes to provide 24 hours of water to 96% of its concession from 32%. It also seeks to increase water pressure to 95% of its service area from 45%, as well as improve sewerage and sanitation for almost two-thirds from a third.
The firm said three-quarters of the spending would be funded by revenues. The rest will be financed by borrowings.
Under the proposed rate hike, households consuming 10 cubic meters or 50 drums of water monthly — those the company considers as poor — will see their bill go up by more than a third to P133 next year .
Mr. Singson claimed this only translates to an additional P1.22 daily. "That’s even less expensive than a stick of cigarette," he said.
Meanwhile, those consuming 30 cubic meters or 150 drums monthly will pay P724.60, or 41% higher.
The Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS-RO) will present the proposed rate hike to its board on Dec. 10 and 11. The board will then decide if the hike should be fully enforced once or staggered. The approved rates will be published on Dec. 16 and will take effect on Jan. 1.
The rate hike is in line with the government’s rate rebasing mechanism, which allows water utilities to adjust rates every five years.
Last year, Ayala-led Manila Water was allowed to hike its rates by roughly P12 per cubic meter for all segments starting 2008 to 2012. Maynilad’s average rate hike is roughly P11.
University of the Philippines economist Felipe M. Medalla, who served as a consultant of the MWSS-RO panel that reviewed the Maynilad rate petition, said the new rate should be viewed as a rate cut for would-be subscribers to Maynilad.
"For a newly connected household, even the new rate is a rate decrease when you factor in the increase in quality and safety," Mr. Medalla said.
Estrella P. Zaldivar, deputy administrator for legal affairs of the MWSS-RO, assured stakeholders the regulator had done its job, cutting Maynilad’s proposed spending plan by P22 billion to limit the rate hike. — Don Gil K. Carreon
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