Manila Water to SC: Reverse ruling or people face 780% rate increase

MANILA, Philippines – Manila Water warned of an exponential 780% increase in water rates or as much as P26.70 per cubic meter if the Supreme Court (SC) does not reverse its decision to penalize the company.

What happened? Manila Water and Maynilad Water Services were fined more than P921 million each by the SC for not complying with the Philippine Clean Water Act. The Metropolitan Waterworks and Sewerage System (MWSS) was held jointly liable with the two firms.

An additional P332,102 per day was also ordered to be imposed until the parties settle the fine.

The issue stemmed from a Department of Environment and Natural Resources directive from 2009 which sanctioned the concessionaires for failing to put up sufficient sewerage treatment facilities for their covered areas.

Section 8 of the Philippine Clean Water Act mandates the MWSS and concessionaires to connect the sewage lines of subdivisions, condominiums, and other establishments to a sewerage system.

However, Manila Water insisted that it complied with its sewerage responsibilities and should not be fined.

What's Manila Water's argument? In its motion for reconsideration filed last week, the concessionaire insisted that the law "simply required MWSS, Manila Water, and Maynilad to interconnect the water lines of households, condominiums, subdivisions, among others, to the sewer lines of the concessionaires."

The Ayala-led company said it had interconnected 61,000 out of 63,000 subscribers to its sewer trunk by 2009.

"The rest could not be interconnected because the sewers would be compromised if overloaded. But since then, the company had installed additional sewers and spent billions of pesos more than it had collected for the purpose," Manila Water said.

Moreover, Manila Water argued that the law "did not envision the completion of the whole project, only the interconnection."

The law, it added, also penalizes only the polluters or their positive acts of commission.

What would be the ruling's impact on consumers? Manila Water said the SC also wants to greatly compress the completion of projects, planned to be finished in 40 years, to just 5 years.

This would cost "hundreds of billions of pesos," leading to an exponential increase in water bills and sky-high inflation.

"Worse, traffic is also to be expected since hundreds of kilometers of roads, including EDSA, which are part of Manila Water's East Zone, would have to be dug up all at the same time," Manila Water said.

"The daily loss of P3.5 billion caused by existing traffic congestion could balloon significantly."

How are the financials of Manila Water? Ayala-led Manila Water posted a net income of P2.9 billion in the 1st half of 2019, 18% lower than the same period in 2018 amid the water supply shortage.

In 2018, Manila Water earned P3.55 billion, 10% higher than in 2017.

The fine of P921 million is roughly one-fourth of its net income in 2018. – Rappler.com 

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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