The removal of the Foreign Currency Differential Adjustment (FCDA) under the revised concession deals of Manila Water Company Inc. and Maynilad Water Services Inc. will have varying impacts on their respective customers’ water bills, the Metropolitan Waterworks and Sewerage System Regulatory Office (MWSS-RO) said Thursday.
In a statement, MWSS chief regulator Patrick Ty said the Board of Trustees has recently approved the recommendation of the regulatory office to remove the FCDA from customer bills under Manila Water and to convert the same item in the customer bills under Maynilad into “Transitory Adjustment,” beginning November 18, 2021—the effectivity date of the Revised Concession Agreements (RCAs).
The RCAs provide for the imposition of a tariff freeze until December 31, 2022 and the removal of the FCDA.
The FCDA is a quarterly-reviewed tariff mechanism that allows water concessionaires to recover losses or give back gains arising from fluctuations in foreign exchange rates, as payments are made for foreign currency-denominated loans that are used to fund the expansion and improvement of water and sewerage services.
It is a corrective mechanism formulated by the MWSS RO to avoid under recovery or over recovery caused by foreign exchange movements.
For Manila Water, Ty said the removal of the currently implemented FCDA – equivalent to 0.84% of the 2021 Average Basic Charge of P28.52 per cubic meter or P0.24 per cubic meter – from customers’ bills “will result in the decrease of Standard Rates for water and sewerage services.”
For Maynilad, the removal of the currently implemented FCDA – equivalent to -0.55% of the 2021 Average Basic Charge of P36.24 per cubic meter or -P0.20 per cubic meter – from customers’ bills “will result in the increase of Standard Rates for water and sewage services.”
Ty said that in order to protect customers from such an increase and retain the concessionaire’s current rates, the FCDA will be converted into “Transitory Adjustment” in the customers’ bills from November 18, 2021 to December 31, 2022.
Sought to clarify the varying impacts of FCDA removal on Maynilad and Manila Water customers, Ty said, “That’s because the FCDA is a pass-on mechanism. FCDA can reduce the water bill if there is a gain.”
“So gain or loss is passed on to the public,” he said.
The MWSS chief regulator said the cash flow effect of the FCDA removal will be considered in the calculation of the Opening Cash Position of the Concessionaire in the 5th Rate Rebasing Exercise.
Manila Water provides water and wastewater services to residents of the cities of Makati, Mandaluyong, Pasig, San Juan, Taguig, and Marikina; and Municipality of Pateros. It is also in charge of the southeastern parts of Quezon City, and Sta. Ana and San Andres in the City of Manila.
In the province of Rizal, it services the city of Antipolo, and municipalities of San Mateo, Rodriguez, Cainta, Taytay, Teresa, Angono, Baras, Binangonan, Jalajala, Cardona, Morong, Pilillia, and Tanay.
Maynilad, meanwhile, provides water and wastewater services to residents in most parts of the city of Manila; northern and western parts of Quezon City; western parts of Makati City; and the cities of Caloocan, Pasay, Parañaque, Las Piñas, Valenzuela, Muntinlupa, Navotas, and Malabon in Metro Manila.
It also serves the municipalities of Kawit, Noveleta, and Rosario, as well as the cities of Bacoor, Cavite, and Imus in the province of Cavite.—LDF, GMA News
MWSS: FCDA removal to lower Manila Water bills, hike Maynilad rates
Source: News Panda Philippines
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