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Maynilad Water Concession Agreement

In 1995, the “Water Crisis Act”, which was the legal framework for a public-private partnership, was adopted in the form of concession contracts. [19] The Manila watershed was divided into two zones to facilitate performance comparisons (“benchmarking”) based on the Paris model, which was then served by two private water companies. There was a debate about the decision to share the service space because it was complicated, including staff, assets and customer database. According to one of the government`s top negotiators, Mark Dumol, he has brought benefits and caused “enormous complications.” [13]45-49 Rates charged to many poor people remained higher than for individuals living in detached houses. Owner associations and community groups, including those living in slums, are calculated with the highest rate of bulk water supply, about three times the lowest blocking rate. [52] In this context, a clear and consistent set of guidelines is made available to the dealer to enable him to assume his responsibilities. The dealership can assume the huge investments and market risks necessary to carry out its projects to improve services and develop the network over a long project horizon. The setting of the pricing framework is formula-based and thus gives predictability to expectations that allow the dealer to secure the support and financing of its operations. Private companies can obtain a return on total capital per financial offer, which is referred to in their contract as “weighted average cost of capital” or “reasonable market-based discount rate.” Manila Water`s yield was only 5.2%. On that basis, it presented a very low tariff which allowed it to obtain the concession. In 2001, Manila Water managed to increase its yield to 9.3 per cent after international arbitration. Maynilad`s offer had a more realistic return of 10.4 per cent in its offer from the start.

[8] Return on equity was higher than return on investment. In the case of Manila Water, the return on equity has been 18 to 20 per cent since the fourth year of operation. [7] In 2012, Manila Water operated 36 mostly small wastewater treatment plants with a total capacity of 0.135 million cubic metres per day.

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