Group calls on MWSS to ensure consumer welfare amid contradicting arbitration rulings

March 5, 2015

by superadmin

While the arbitral decision on Manila Water is welcome, the MWSS privatization still remains problematic

Advocacy group Water for the People Network (WPN) calls on the water regulatory office to ensure that consumers’ welfare is upheld after the two different rulings made by their respective arbitration panels on the water firms’ petitions for rate increases.

The decision of the arbitration panel on the petition of the Manila Water yesterday disallowed the firm from passing on to consumers the costs of its corporate income tax, as well as declared the firm as a public utility. The ruling contradicts the arbitral decision released in January upholding Maynilad’s petition to increase its basic charge.

According to the WPN, regulators of the Metropolitan Waterworks and Sewerage System (MWSS) should clarify the next steps given the contradicting arbitral rulings. While the decision of the Manila Water’s arbitration panel is welcome, the WPN reiterates the MWSS privatization still remains problematic with consumers’ welfare dependent on commercial arbitration decisions that may even conflict. Moreover, MWSS privatization and its provisions under the concession agreements allow the private water concessionaires to challenge and reverse regulatory decisions.

The advocacy group added that the regulators should ensure a favorable pro-consumer decision amid these contradicting rulings, especially because it would be unfair to Maynilad consumers in particular if the water firm asserts the arbitral ruling on its petition. Already, the Maynilad has demanded that government pay the company Php208 million in monthly “losses” due to the delay in the implementation of the arbitration decision.

According to WPN, the MWSS’s appeal to the arbitration tribunal on the Maynilad ruling is strengthened with the release of the arbitral decision on Manila Water’s petition. To recall, Maynilad and Manila Water filed respective arbitration cases in the International Chamber of Commerce (ICC) to contest the MWSS decision denying their petitions for rate increase. After the ICC upheld the petition of Maynilad the MWSS deferred from implementing an increase until the ICC has likewise reached a decision on the case of Manila Water.

The MWSS in August 2013 denied the petitions of both Maynilad and Manila Water for a hike in its basic charge after water advocates revealed that the two water firms were, among others, unjustly charging expenses unrelated to the delivery of water service such as corporate income tax, donations, advertising, rest and recreation, the cost of future projects, etc.

The WPN reiterates the importance of government control over water services to protect consumers from predicaments like different arbitral rulings on the same petition. The reversal of the MWSS privatization and effective government control over water services will ensure that consumer welfare is consistently upheld over private corporate interests. (end)

The WATER FOR THE PEOPLE NETWORK (WPN) is a broad national network in the Philippines that campaigns for people’s control over waterservices and resources. It has more than 100 member organizations from all over the country. Research group IBON is one of the convenors of WPN.