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Invoking the CA to contest water firms as a public utility or insist on passing on onerous charges make the demand to terminate the agreement more urgent

Water advocates urge government and policymakers to immediately terminate the concession agreement (CA) with Maynilad and Manila Water. This call was reiterated after the two water giants contested the regulators’ order to reduce their rates, saying that the ruling goes against the CA.

The Metropolitan Waterworks and Sewerage System (MWSS) yesterday asked the two concessionaires to submit a schedule of rate reductions after it prohibited both firms from passing on their corporate income taxes to consumers.

The MWSS rejected the concessionaires’ petition to increase base rates in 2013 after it was exposed that both firms were passing on onerous charges in the water bill such as corporate income taxes, advertising, donations, etc. Maynilad and Manila Water brought their cases for arbitration before an international panel. The arbitration panel ruled favorably on Maynilad’s petition while Manila Water was ordered to reduce its rates.

Both Maynilad and Manila Water are invoking the CA to raise their opposition on the MWSS ruling against passing on corporate taxes. Maynilad plans to oppose the MWSS decision in another arbitration due to violations in the CA and the recent arbitration decision. Manila Water, meanwhile, said the ruling contradicts the nature of the water firms as a contractor which the CA stipulates. The arbitration panel’s findings on Manila Water stated that the water firm is a “public utility”.

According to advocacy group Water for the People Network (WPN), a reduction of rates is justified and long overdue. Invoking the CA to contest water firms as a public utility or insist on passing on onerous charges make the demand to terminate the agreement more urgent.

The WPN added that government has all the capacity and can deliver water services in Metro Manila. Government has the funds, technical competence, and skilled manpower and other resources to operate and maintain the water utility. The group added that the reversal of MWSS privatization is a step towards protecting consumers against onerous charges, relying on commercial arbitration to resolve dispute issues, under-servicing, etc and uphold consumer welfare over profit-oriented water firms. (end)

MWSS decision welcome but conflicting arbitration decisions problematic

IBON News | 21 April 2015 | The conflicting results on the same appeal further reveals the folly of MWSS privatization and highlights the importance of government control over water services to protect consumers

Water advocates welcomed Metropolitan Waterworks and Sewerage System’s (MWSS) call to Manila Water to reduce its rates but stressed that the conflicting Maynilad arbitral decision exposes the unreliability of commercial arbitration in upholding consumer welfare.

Manila Water was asked to lower its basic charge following a decision of an international arbitration panel blocking the water giant from passing on income taxes to consumers, and declaring it a public utility. However this contradicts the arbitral decision on Maynilad which upheld the water giant’s petition to increase its basic charge.

Maynilad has demanded a Php3.44-billion compensation from government for not implementing the arbitration decision. Last month, the company filed another arbitration case against government’s non-compliance with its demand.

According to Water for the People Network, the conflicting results on the same appeal further reveals the folly of MWSS privatization and highlights the importance of government control over water services to protect consumers. At the same time, the group urged water regulators to work on ensuring a favorable decision for consumers under Maynilad .

The MWSS privatization mandates arbitration as a mechanism to resolve issues between government and the concessionaires. The two water companies sought international arbitration when the MWSS disapproved their petition for a rate increase in 2013 and disallowed the companies’ pass-on charges to consumers including corporate expenses that were unrelated to the delivery of water services.

The results of the last rate rebasing have shown that the rollback in water rates is justified and should have been implemented long ago. Rate reduction is also long overdue while many consumers especially in urban poor communities still have to contend with insufficient supply and unreasonable water rates.

According to the WPN, the pro-business character of the concession agreement is further revealed as private firms continue to impose onerous terms or appeal decisions on practices that are already found anti-consumer. The group reiterated that water privatization goes against putting public interest in the delivery of water services, and thus must be reversed. (end)

IBON Networks | Water for the PeopIe Network | 5 March 2015 | While the arbitral decision on Manila Water is welcome, the MWSS privatization still remains problematic

Advocacy group Water for the People Network (WPN) calls on the water regulatory office to ensure that consumers’ welfare is upheld after the two different rulings made by their respective arbitration panels on the water firms’ petitions for rate increases.

The decision of the arbitration panel on the petition of the Manila Water yesterday disallowed the firm from passing on to consumers the costs of its corporate income tax, as well as declared the firm as a public utility. The ruling contradicts the arbitral decision released in January upholding Maynilad’s petition to increase its basic charge.

According to the WPN, regulators of the Metropolitan Waterworks and Sewerage System (MWSS) should clarify the next steps given the contradicting arbitral rulings. While the decision of the Manila Water’s arbitration panel is welcome, the WPN reiterates the MWSS privatization still remains problematic with consumers’ welfare dependent on commercial arbitration decisions that may even conflict. Moreover, MWSS privatization and its provisions under the concession agreements allow the private water concessionaires to challenge and reverse regulatory decisions.

The advocacy group added that the regulators should ensure a favorable pro-consumer decision amid these contradicting rulings, especially because it would be unfair to Maynilad consumers in particular if the water firm asserts the arbitral ruling on its petition. Already, the Maynilad has demanded that government pay the company Php208 million in monthly “losses” due to the delay in the implementation of the arbitration decision.

According to WPN, the MWSS’s appeal to the arbitration tribunal on the Maynilad ruling is strengthened with the release of the arbitral decision on Manila Water’s petition. To recall, Maynilad and Manila Water filed respective arbitration cases in the International Chamber of Commerce (ICC) to contest the MWSS decision denying their petitions for rate increase. After the ICC upheld the petition of Maynilad the MWSS deferred from implementing an increase until the ICC has likewise reached a decision on the case of Manila Water.

The MWSS in August 2013 denied the petitions of both Maynilad and Manila Water for a hike in its basic charge after water advocates revealed that the two water firms were, among others, unjustly charging expenses unrelated to the delivery of water service such as corporate income tax, donations, advertising, rest and recreation, the cost of future projects, etc.

The WPN reiterates the importance of government control over water services to protect consumers from predicaments like different arbitral rulings on the same petition. The reversal of the MWSS privatization and effective government control over water services will ensure that consumer welfare is consistently upheld over private corporate interests. (end)

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