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Philippine Utility Companies Headed to Arbitration

Wednesday, September, 18, 2013


Manila Water Company Inc. and Maynilad Water Service Inc., two water utility companies in Manila, Philippines, might be headed for arbitration over denied rate hikes by the city’s regulatory body, Metropolitan Waterworks and Sewerage System.  Both water utility companies have until October 13th to decide if they will submit to arbitration. 


Rates for the utility concessionaires are set by the Metropolitan Waterworks and Sewerage System and according to Section 7.1 of the contractual agreement signed by all parties, any dispute related to rates must be submitted to arbitration.  The amount of time the concessionaires have to file a dispute with an arbitrator is 31 days from the date they receive the rate decision. 


If the two utility companies do file for arbitration, it would be the third time they have done so.  According to a statement written by a spokesperson for Manila Water, the company has chosen to settle the dispute through arbitration in order to continue giving customers a secure water supply and to discuss “the need for government to preserve the momentum and gains achieved by the most successful public-private partnership for the last 16 years.” Also at issue, according to the utility company, is “the need for the country to protect the sanctity of business covenants” created between the government and the private sector. 


Metropolitan Waterworks and Sewerage System’s decision, which was announced last week, would mean a rate reduction of Php 1.48 per cubic meter per year for the next five years for Manila Water.  For Maynilad, it would mean a rate reduction of Php 0.29 per cubic meter per year for the next five years. Both rate reductions would go into effect on October 1st