Water bill may again price in currency adjustment
The proposed rules in implementing foreign currency differential adjustment (FCDA) under the amended revised concession agreement (RCA) with Maynilad and Manila Water are now up for review, regulators said Tuesday.
The FCDA is a rate-setting mechanism that allows Manila Water and Maynilad to recover losses or give back gains following movements in the value of the peso against foreign currencies. The water providers have to settle foreign currency-dominated loans that are used to finance expansion and enhancement involving their water and sewerage services.
Patrick Ty, Metropolitan Waterworks and Sewerage System-Regulatory Office (MWSS-RO) chief regulator, said the proposed guidelines were now being finalized as the agency had held a public consultation to solicit comments from consumers.
The official said the rules were still subject to approval by the MWSS Board of Trustees, but he expected the FCDA to return to water bills and be implemented anew every quarter.
Ty noted that low-income lifeline customers would be exempted from the FCDA. Concessionaires will also not be allowed to implement FCDA twice for the same amount in MWSS loans.
“This can result in rollback or increase in water bills. In case of the Japanese yen, it significantly depreciated against the Philippine peso and it will cause a rollback,” Ty said.
“We will ensure that these guidelines will be geared towards further protecting and safeguarding the welfare and interests of the public by ensuring that there will be no over or under collections,” he said during the virtual conference.
The implementation of the FCDA component was suspended after the water concessionaires and the Duterte administration had signed the RCA in November 2021. This was when the local currency was losing ground against the dollar.
An amendment to the deal happened in 2023. The FCDA was reinstated covering only MWSS loans serviced by Maynilad, principal payments and undrawn amounts of Maynilad’s foreign currency-denominated loans existing as of June 29, 2022.
The amended deal likewise introduced a modified FCDA for Maynilad loans agreed after June 29, 2022, but it can only be tapped during “extraordinary” fluctuations in the Philippine peso. The amount that can be recovered is also capped. – with a report by Czashaine Abella
