Manila Water, MWSS amend effectivity date of RCA

MANILA, Philippines — Manila Water Co. Inc. has signed another amendment to the revised concession agreement (RCA), which further delays the period for the start of the effectivity date of the agreement.

In a disclosure to the Philippine Stock Exchange yesterday, Manila Water said the company and the Metropolitan Waterworks and Sewerage System (MWSS) signed a third amendment of the RCA to further extend up to Feb. 16, 2022 the period for the start of the effectivity of the RCA.

“This is to allow the parties more time to fulfill the remaining conditions to the effectivity of the RCA.

In November, Manila Water and the MWSS signed a second amendment to the RCA, which pushed back the effectivity date to Dec. 18, 2021.

Similarly in September, Manila Water and the MWSS signed an amendment of the RCA, which revised the effectivity date from “not to exceed six months from signing of the RCA to “no later than Nov. 18, 2021.”

Among the salient features of Manila Water’s RCA are the removal of the foreign currency differential adjustment (FCDA). It also includes the lowering of the inflation factor to two-thirds of the Consumer Price Index adjustment and imposed 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, where the rates for the provision of water and wastewater services will be set at a level that will allow the concessionaires to recover, over the term of the concession, expenditures efficiently and prudently incurred and to earn a reasonable rate of return.

The RCA also replaces the market-driven appropriate discount rate with a 12 percent fixed nominal discount rate.

It also removes the non-interference clause of the government in the rate-setting process, as well as limits the country’s financial guarantees to cover only those loans and contracts that are existing as of the signing of the RCA.

Manila Water serves the east zone, which encompasses parts of Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, most parts of Quezon City, portions of Manila, as well as several towns in Rizal.