Water firms face audit, rebuke

The agency will engage a third-party auditor to look into the annual reports of west zone concessionaire Maynilad and east zone contractor Manila Water to ensure that no insertions will be made in their books.

Penalties imposed on water concessionaires Maynilad Water Services Inc. and Manila Water Co. Inc. based on a Supreme Court (SC) ruling can’t be shouldered by consumers, the state-owned Metropolitan Waterworks and Sewerage System (MWSS) said even as it vowed to conduct a yearly audit on the financial records of both firms.

MWSS chief regulator Patrick Ty said in a news briefing the agency will engage a third-party auditor to look into the annual reports of west zone concessionaire Maynilad and east zone contractor Manila Water to ensure that no insertions will be made in their books.

Manila Water had warned of an exponential 780 percent increase in water rates, or as much as P26.70 per cubic meter, and a worsening of the road congestion in Metro Manila with the Supreme Court decision if it does not reverse its ruling to slap the two firms a P921 million fine.

“The fines and penalties cannot be passed on to the public,” Ty said, citing Article 1 of the concession agreement, which states that fines and penalties faced by the companies cannot be shouldered by the public.

“Only prudent and efficient expenses can be charged. It has to be studied first before it can be charged, so it’s not automatic,” he added.

However, retracting its earlier statement, Manila Water said the 780 percent increase referred to the increase in the cost to build wastewater facilities to comply with the High Court’s decision subject of its motion for reconsideration.

“We never stated that it will be an impending increase nor did we make any statement about passing on to consumers,” Manila Water said.

“We are complying with the SC mandamus to complete our wastewater programs by 2037,” it added.

Ty said any adjustments in water rates will only be reviewed in the next rate rebasing in 2022, with any possible adjustment implementable as early as 1 January 2023.

On 7 August, the SC assessed Manila Water and Maynilad along with MWSS a total of P2 billion in penalties for their failure to provide wastewater treatment facilities and connect sewerage lines in all establishments, including households, to a system within five years after the Clean Water Act (CWA) took effect in 2004.

In particular, Maynilad and MWSS were asked to pay a total of P921.46 million, and the same amount was imposed versus Manila Water and MWSS. The fine is to be paid within 15 days from the time the decision becomes final.

MWSS and the concessionaires will be liable for the initial amount of P322,102 per day, subject to a further 10 percent increase every two years pursuant to Section 28 of the CWA until full compliance with the mandate of Section 8. A 6 percent interest will be imposed on the total amount of the fines should there be a delay in its payment.

The decision also enjoins all water supply and sewerage facilities and concessionaires in Metro Manila and other highly urbanized cities to comply strictly with Section 8 of the CWA.