Manila Water files Notice of Arbitration

Manila Water has filed a Notice of Arbitration with the Permanent Court of Arbitration in Singapore after the National Government through the Department of Finance has not honored the Notice of Claim filed by Manila Water on April 23, 2015.

Through this Notice of Claim to the Republic of the Philippines via the Department of Finance, Manila Water called upon the government’s Letter of Undertaking to reimburse its losses in operating revenues arising from a significant diminution in the rate of return committed in its concession contract. These losses are expected to be reimbursed as they are actualized for each remaining year of Manila Water’s Concession, and which are at this point estimated to amount to Php79 billion for the entire period of 2015 up to 2037.

In the Letter of Undertaking, the Republic, through the DOF, undertook to indemnify Manila Water, against any loss caused by any action on the part of the MWSS resulting in the reduction of the standard rates “below the level that would otherwise be applicable in accordance with the Concession Agreement,” thereby denying Manila Water a rate of return “allowed from time to time to operators of long term infrastructure concession agreements in other countries having a credit standing similar to the Philippines” pursuant to Section 9.4 of the Concession Agreement.

Even if Manila Water continues to pursue its claim, it started to implement the new rates set by MWSS in June 2015 which incorporates a reduction of Php1.66 per cubic meter in the basic charge.