Concessionaires face stricter financial audit by MWSS.
By Madelaine B. Miraflor
Metropolitan Waterworks and Sewerage System (MWSS) has decided to subject its concessionaires -- Manila Water Company, Inc. (MWC) and Maynilad Water Services, Inc. (Maynilad) -- to a stricter financial audit, which will now be done every year instead of only once in five years.
And even if he admitted that this would be a bit of a "hassle" for both companies, MWSS Chief Regulator Patrick Ty said Manila Water and Maynilad "have no choice" but to comply.
"During my term, I will be insisting an annual financial audit [on these companies]," Ty said, adding that this will help MWSS-Regulatory Office (RO) "ensure that concessionaires will not overspend and then later on overcharge consumers."
There is really a provision in the separate concession agreements between MWSS and its concessionaires that requires an audit and evaluation of the companies' historical (actual) cash flows.
But this financial audit only happens at the end of each rate rebasing period, which is done every five years.
Rate rebasing is a review of the water utilities' past performance and projection of their future cash flows. Its purpose is to set the water rates at a level that would allow both Maynilad and Manila Water to recover their expenditures and earn a rate of return.
Ty said that MWSS-RO hopes to secure an independent auditor this month through a public bidding so it could conduct an audit starting June.
This, according to him, will help his agency decide right away on what rates will be applied in the next rate rebasing period, which will be decided upon at the end of 2022.
To recall, MWSS-RO was late for about nine months in releasing the rates that will be applied under the fourth rate rebasing period.
"MWSS-RO intends to conduct the detailed regulatory financial audit in a yearly manner not just to expedite Rate Rebasing exercises, but to further institutionalize its regulatory mandate," Ty further said.
Jennifer Rufo, Maynilad's head for stakeholders communications office, said Maynilad doesn't object MWSS-RO's decision to conduct an annual financial audit.
"We are aligned with the MWSS-RO on this new requirement. This is part of our discussions with them on how to make our financial audit easier to implement for both the MWSS-RO and the concessionaires," Rufo said in a text message.
Manila Water was also sought for reaction but is yet to issue a statement on the matter.
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||Business News|
|Date:||Mar 4, 2019|
|Previous Article:||SSS contribution rate slated to increase before June.|
|Next Article:||Rice Tariffication Law slated for implementation this week.|