MANILA, Philippines — West-zone concessionaire Maynilad Water Services Inc. said it is required to exert all efforts to list on the stock exchange within five years, as part of the conditions under the revised concession agreement (RCA).
In a disclosure to the Philippine Stock Exchange, Maynilad’s parent company Metro Pacific Investments Corp. (MPIC) confirmed a news report quoting Maynilad president and chief executive officer Ramoncito Fernandez on the listing of the company within five years from the signing of the RCA on May 18.
“We confirm that under the RCA, Maynilad is obligated to exert all efforts to list within five years from the effective date, subject to the requirements of the Securities and Exchange Commission,” MPIC said.
“We also confirm that under the RCA, Maynilad shall not be considered in breach of the RCA if it is unable to list within the prescribed period,” it said.
Apart from the company going public, other provisions in Maynilad’s RCA that are not present in the RCA of east-zone concessionaire Manila Water Co. Inc. include entering a concession loan from the Japan International Cooperation Agency worth about P4 billion and the ability of the company to tailor its business plan on what was agreed upon in 2018.
Maynilad signed the RCA with the Metropolitan Waterworks and Sewerage System on May 18, which confirms the continuation of its concession period until July 31, 2037.
Among the provisions similar to the RCA of Manila Water, which was signed a month earlier, include the imposition of a tariff freeze until Dec. 31, 2022.
It also removes the corporate income tax from Maynilad’s recoverable expenditures, as well as the foreign currency differential adjustment.
The RCA also lowers the inflation factor to two-thirds of the Consumer Price Index adjustment and imposes rate caps for water and sewerage services to 1.3x and 1.5x, respectively of the previous standard rate.
In addition, the RCA retains the rate rebasing mechanism, subject to the above-mentioned rate caps, where the rates for the provision of water and wastewater services will be set at a level that will allow Maynilad to recover, over the term of the concession, expenditures efficiently and prudently incurred, and to earn a reasonable rate of return.