The Manila Water Concession Agreement for 2021: An Overview
The Manila Water Concession Agreement is a contract between the Philippine government, represented by the Metropolitan Waterworks and Sewerage System (MWSS), and Manila Water Company, which allows the latter to operate, manage, and maintain the water supply and sewerage system in the east zone of Metro Manila until 2037.
In March 2019, the two parties have signed a new agreement following the expiration of the previous one in 2019. The new agreement contains several provisions that aim to address the concerns and criticisms raised by consumers and various groups, particularly regarding water rates, service quality, and accountability.
One of the significant changes in the new agreement is the removal of the “onerous” provisions, which previously allowed Manila Water to pass on to consumers the cost of corporate income tax, foreign currency fluctuations, and certain fees and charges. This was one of the main reasons why the Supreme Court ordered in 2019 a rollback of water rates and the refund of billions of pesos to customers.
The new agreement also sets a cap on the annual tariff adjustment, which will be implemented after the expiration of the current rate rebasing period in 2022. The maximum increase allowable is three percent over the next five years, subject to review and approval by MWSS.
Another key provision is the establishment of a performance-based incentive system that links Manila Water`s compliance with service standards and other key performance indicators to its ability to earn additional revenues. This is expected to encourage the company to improve its services and invest in infrastructure and technology upgrades.
Moreover, the agreement requires Manila Water to undertake various programs and projects that will promote environmental sustainability, such as the reduction of non-revenue water and the implementation of an efficient wastewater treatment system. The company is also mandated to submit regular reports on its compliance with these obligations to MWSS.
While the new concession agreement has been welcomed by some groups as a step towards better water governance and consumer protection, others remain skeptical and critical. Some sectors have raised the issue of the continuing lack of transparency and accountability in the water sector, as well as the need for more participation and representation from consumers and affected communities in the decision-making process.
In conclusion, the Manila Water Concession Agreement for 2021 reflects the ongoing efforts to address the challenges and issues facing the water sector in the Philippines. It is hoped that this agreement will serve as a foundation for more reforms and improvements that will benefit both the consumers and the environment.