Manila Water fine won’t be passed on to consumers

MANILA, Philippines — It’s time to “move forward,” so Manila Water Co. Inc. will pay the fine of P1.1 billion slapped on it by regulators rather than contest it in arbitration, according to Fernando Zobel de Ayala, chairman of the Ayala-led east zone water concessionaire.

“It is best we pay the fine. It will not be passed on to consumers, it will be absorbed by the company,” Zobel said during the annual stockholders’ meeting of Ayala Corp.

He said going into arbitration is complicated.

“It is more important to accept it and move forward. These arbitration cases are complicated and take so long,” he said.

Industry sources have noted that Manila Water can contest the imposition of fine by the Metropolitan Waterworks and Sewerage System (MWSS) because the concession agreement has no provision that allows for penalties if the problem is lack of water source from the government.

“Remember, the concession agreement of the water utilities is for distribution of water but what if there is no water to be distributed?” said the industry sources.

The MWSS Board has sanctioned Manila Water with a total of P1.134 billion comprising a fine of P534.05 million and additional P600 million for development of new water supply source – in connection with the water shortage that occurred last March in its serviced areas.

This was jointly announced early this week by MWSS chairman Franklin Demonteverde and administrator Reynaldo Velasco as the MWSS Board unanimously approved the recommendation of MWSS Regulatory Office on the imposition of appropriate penalties on Manila Water relative to its failure to comply with Article 10.4 of the concession agreement, which states that the concessionaire should provide 24/7 water supply to its consumers.

MWSS said the penalties are aside from Manila Water’s self-imposed penalty amounting to P500 million that provided financial relief to its customers affected by the water shortage.

The water crisis that proved costly to Manila Water highlighted the lack of strategic preparedness, notably on the realistic allocation of water supply to Manila Water, the development of new water supply sources and the much awaited improvement of the Angat-Ipo-La Mesa tunnel and conveyance system.