The appreciation of the peso reduces water rates until the second quarter of 2021

The continued appreciation of the Philippine peso relative to the US dollar may continue to lower water rates in Metro Manila until the first quarter of 2021.

This is due to the Foreign Currency Differential Adjustment (FCDA) fee mechanism that Maynilad Water Services, Inc. and Manila Water Company, Inc. are supposed to implement every quarter, said Patrick Ty, Head of Regulation for the Metropolitan Water System and Sewerage (MWSS).

The FCDA is a rate mechanism reviewed quarterly that allows Concessionaires to recover losses or return gains derived from fluctuations in exchange rates, since payments are made for loans denominated in foreign currency that are used to finance the expansion and improvement of water and sewerage. services.

It is a corrective mechanism formulated by MWSS-Regulatory Office (RO) to avoid insufficient or excessive recovery caused by forex movements.

“[As far as the FCDA is concerned] there could be another pullback until the first quarter of next year due to the continued appreciation of the peso, “Ty said at a virtual press conference yesterday.

Right now, the Philippine peso remains one of the most stable currencies in Asia as the COVID-19 pandemic continues to wreak havoc on the global economy.

For his part, the Governor of Bangko Sentral ng Pilipinas (BSP), Benjamin E. Diokno, said he expects the peso to remain stable amid the public health crisis.

Also yesterday, Ty announced that Manila Water and Maynilad will implement small adjustments to their respective FCDA in the fourth quarter of the year, which will result in a setback. Manila Water was allowed to implement a FCDA of 1.17 percent of its Average Base Charge of P28.52 per cubic meter (/ cu.m) or P0.33 / cu.m. This is a downward adjustment of P0.15 / m3 compared to the company’s third quarter FCDA.

Ty said the impact of this adjustment on Manila Water customers consuming 10 cubic meters or less, except for lifeline customers who are exempt from FCDA quarterly charges, will be a reversal from P0.78 in the Monthly billing.

Those who consume 20 cubic meters per month and 30 cubic meters per month, on the other hand, will see a P1.73 and P3.52 drop in their water bills, respectively.

Meanwhile, Maynilad will implement a FCDA of negative 0.26 percent of its 2019 Average Base Charge of P36.24 / m3 or negative of P0.09 / m3.

Ty said this will slightly reduce the monthly bills of Maynilad customers who consume 10 cubic meters or less at P0.06, while those who consume 20 cubic meters per month and 30 cubic meters per month will pay less at P0.24 and P0 .50, respectively.

For the third quarter of this year, MWSS-RO recommended maintaining the prevailing second quarter FCDA. Therefore, Maynilad and Manila Water did not implement any adjustments to their respective water rates from July to September.

For next year, it is still uncertain whether Maynilad and Manila Water will finally implement their pending adjustments in water rates under the five-year rate adjustment, which is a review of the past performance of the water companies and the projection of their flows. cash futures.

Conducted every five years, the review is supposed to set the water rates at a level that will allow Maynilad and Manila Water to recoup their expenses and obtain a rate of return.

Such a voluntary postponement of this particular water rate adjustment came as Maynilad and Manila Water became the subject of the ire of President Rodrigo Duterte, as well as their supposedly onerous contracts with the MWSS last year.