MANILA Water Corp. has filed a Notice of Claim with the national government through the Department of Finance (DOF) seeking compensation for financial losses arising from the recent Appeals Panel decision upholding the position of the Metropolitan Waterworks and Sewerage System (MWSS) to declare it (Manila Water) as a public utility, thus adversely affecting its rate of return.
With the privatization of MWSS in 1997, the national government said MWSS would remain as a public utility and that under the concession agreement (CA), Manila Water would be an agent and contractor of MWSS. Under this contractual arrangement, the CA assured Manila Water of a rate of return comparable to similar infrastructure concessions. These contractual provisions were guaranteed by the national government, as primary obligor, by way of its letter undertaking executed in line with the CA.
However, the recent decision upholding the position of MWSS changes the fundamental character and rate of return of Manila Water. The resulting rate of return from this change is deemed inconsistent with the original intent of the CA.
Gerardo C. Ablaza Jr., president and CEO of Manila Water, said: “The position of MWSS, as upheld by the Appeals Panel, diverges from the original intent of the CA and the representations of the national government in 1997. We now claim against this primary obligation of the national government to account for the impairment caused by this change.”
In its Notice of Claim to the DOF, Manila Water is calling on the letter undertaking to indemnify losses estimated to be over P79 billion from 2015 to 2037.
“While we are pursuing our claim on the national government, we are committed to implementing the new rates set by MWSS,” Ablaza continued.
Manila Water will implement a reduction of 11.05 percent on the average basic charge of P25.07 per cubic
meter, equivalent to a decrease of P2.77 per cubic meter. The new rates will be implemented in the following manner: negative P0.66 per cubic meter in 2015, negative P0.55 per cubic meter in 2016 and negative P0.55 per cubic meter in 2017.
Separately, a CPI adjustment of 4.19 percent will also be made to the basic water charge in 2015 equivalent to P1.08 per cubic meter. Annual CPI adjustments will continue to be made consistent with the CA.
Connecting Nlex and Slex
THERE are two separate projects to link the North Luzon Expressway (Nlex) and the South Luzon Expressway (Slex), or the Nlex-Slex Connector Road.
One is the unsolicited proposal of Metro Pacific Tollway Corp. (MPTC) to build a 13.4-kilometer roadway between the two expressways. The other is now being built by San Miguel Corp. (SMC) through its consortium with Citra Metro Manila Tollways Corp. (Citra).
The SMC-Citra project covers the Skyway Stage 3 of the Slex, while MPTC’s portion involves the construction of the four-lane elevated expressway, originally via the PNR tracks, with three exits to connect Nlex with Slex.
MPTC’s connector road, or Segment 10.2, is an 8-km mainline road from C-3 Road in Caloocan City to the Polytechnic University of the Philippines in Manila’s Santa Mesa district. It will also have a 2.6-km Port Area spur road from C-2 Road to R10 in Tondo, Manila.
This will be linked to MPTC’s Harbor Link project, which is a 2.4-km road connecting Nlex to the MacArthur Highway and a 5.65-km road connecting Mindanao Avenue in Quezon City to the Manila North Harbor.
MPTC’s road project was conditionally approved by the government two years ago. President Aquino gave the go-signal to the project in January 2013, but nothing has actually moved up to now because Mr. Aquino’s subordinates kept changing the rules.
Everything was all set for a Swiss Challenge at the onset, but the project took a back seat after policy-makers said it would be easier and faster for MPTC to build its version of the connector road under a joint venture (JV) with the Philippine National Construction Corp.
When all preparatory work for a JV had been wrapped up, there suddenly was a change of heart and the government said it would be best, after all, to pursue MPTC’s unsolicited proposal via the Swiss Challenge.
Under the Swiss Challenge, any of the interested parties other than the original proponent can win the project by making a better offer than the firm that had made the unsolicited proposal. However, the original proponent still gets to keep the project once it matches the best offer from among the rest of the bidders.
Given the latest delay, MNTC will have to revise the alignment of its proposed connector road to give way to the P171-billion North-South rail project, which was approved by the National Economic and Development Authority Board only recently.
This design revision and the delayed schedule of the Swiss Challenge will jack up the cost of the project by 30 percent to P14 billion from the original estimate of P11 billion, according to MNTC President Rodrigo Franco, and allow MPTC to complete it by late 2017 or early 2018 at the soonest.
The Nlex-Slex Connector Road will improve transport logistics as a result of the more efficient movement of cargo, roll-on/roll-off vessels and passengers in and out of the ports located in Manila, and reduce travel time from Nlex-Slex to only 15 to 20 minutes.
Investors would start flocking to the country when the projects are completed because it would enhance connectivity between our international airports and seaports, including the Subic freeport by way of the Nlex-Subic-Clark-Tarlac Expressway route, the Batangas Port via Slex, and the Clark International Airport to the Ninoy Aquino International Airport.
This will, in turn, improve linkages between the key growth areas of Metro Manila, Central Luzon, North Luzon and the Clark-Subic corridor.
According to studies, the Nlex-Slex Connector Road would decongest Edsa, Circumferential Road 5 (C-5) and other roads in Metro Manila’s inner cities because these choked arteries would be freed of heavy vehicles traveling to and from the Port Area.
A travel-efficiency analysis showed that the value of time saved ranged from 69 percent to 71 percent, and savings from vehicle operating costs from 17 percent to 32 percent.
In terms of environmental impact, the MPTC project will reduce air pollution and fuel consumption, in support of the government’s climate-change agenda.
The MPTC project will not lead to massive relocations because it will use the PNR corridor as its alignment compared to an elevated infrastructure using the median of major roads. Moreover, this project will not exacerbate urban blight because areas traversed by the PNR line are mostly backyards.
E-mail: ernhil@yahoo.com.