Manila Water to hike rate, Maynilad to cut charges

Photo by INQUIRER.net’s Noy Morcoso

MANILA, Philippines – Customers of Manila Water Co., Inc. will have to pay slightly higher water rates toward yearend as a result of loan payments in Japanese yen, which has strengthened against the peso. On the other hand, Maynilad Water Services Inc. is exposed more to the US dollar, which weakened against the peso, and is passing on gains to customers through slightly lower monthly bills.

Ayala-led Manila Water has announced that the foreign currency differential adjustment (FCDA) will slightly raise water rates by P0.08 per cubic meter in its area.

Manila Water customers using 20 cubic meters per month would pay P1 more per month than their present rate. The average consumption, which is 30 cubic meters per month, will result in a P2 increase from the present monthly bill.

This is because of the depreciation of the peso versus the Japanese yen (P0.5253 to P0.5302) during the third quarter. During this period, more than half of the company’s loan payments were made in yen, which appreciated against the peso.

“Effective 15 days after publication, water rates for Manila Water customers will have an upward adjustment of P0.08 per cubic meter due to the Foreign Currency Differential Adjustment or FCDA. This adjustment is based on the exchange rates of $1:P41.91 and JPY1:P0.5302. The FCDA component of the water bill will be adjusted from 3.19 percent to 3.49 percent of the basic charge,” Manila Water said in a disclosure to the Philippine Stock Exchange on Friday.

The adjustment takes effect starting October 7 but the impact will be felt in the November bills, Manila Water said.

Sought for comment on the effect of foreign currency movements on its own operations, Maynilad said it had more dollar exposure in the third quarter. As such, the FCDA component of its water rates moved differently.

Maynilad said the all-in average tariff adjustment on its water rates is -0.09 centavos. Lifeline customers or those consuming 10 cubic meters of water and below per month will enjoy a 0.22 centavo reduction in their monthly water bill.

The average consumption across water networks is 30 cubic meters per month. Households at this level of usage will enjoy a P1.66 reduction on their monthly water bill, Maynilad said.

Maynilad said its FCDA for the fourth quarter of 2012 is -0.19 percent of the average basic charge of P32.92 per cubic meter or -P0.06 per cubic meter.

The FCDA is a pass-through tariff mechanism that accounts for foreign exchange losses or gains arising from the payment of foreign-denominated concession fees to the government as well as loans for service expansion and improvement.

Maynilad and Manila Water both review the FCDA on a quarterly basis and the impact is felt in the three-month period that follows.

The FCDA goes down whenever the peso strengthens against whatever foreign currencies to which Manila Water and Maynilad are exposed. The FCDA rate goes up whenever the peso depreciates against these currencies.

The two water service providers have said the FCDA does not affect their projected net income.

The Manila Water concession area includes some parts of Quezon City and Makati, Taguig, Pateros, Marikina, Pasig, San Juan, Mandaluyong, the southeasterns parts of Manila, and Rizal province.

The Maynilad concession area includes the cities of Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan river, West Avenue, EDSA, Congressional, Mindanao Avenue, the northern part starting from the districts of Holy Spirit, and Batasan Hills), Makati (west of South Super Highway), Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas, and Malabon—all in Metro Manila — and the municipalities of Bacoor, Imus, Kawit, Noveleta and Rosario in Cavite province.