Manila Water gets P16-b Japanese loan

Manila Water Company Inc., a unit of conglomerate Ayala Corp., secured a 40-billion yen (P15.7 billion), seven year-term loan from three Japanese banks to finance the construction of sewerage treatment plants and rehabilitation of sewer lines.

Manila Water said in a statement it obtained the loan from The Bank of Tokyo-Mitsubishi UFJ Ltd., Mizuho Bank Ltd. and Sumitomo Mitsui Banking Corp.

Manila Water said the loan was the single largest capital raising activity of Manila Water following the approval of the company’s rate rebasing business plan in April this year. 

The loan is also the longest-tenured non-guaranteed yen facility extended by Japanese banks to a Philippine corporation.

“This transaction signifies the strong support by the banking industry to the company,” Manila Water said.

The company said it would use proceeds of the term loan facility to partly finance capital expenditures, including the construction of treatment plants and rehabilitation of sewer lines.

Manila Water said the loan would also facilitate the development of new water sources and the rehabilitation of water treatment plants and distribution networks to ensure reliability during natural disasters.

“These projects will enable the company to continuously provide the highest quality of water and used water services to its customers in the East Zone concession area,” Manila Water said.

Manila Water serves 6.3 million customers in parts of Quezon City and Manila, Marikina, Pasig, San Juan, Mandaluyong, Pateros, Makati, Taguig and Rizal province.

Manila Water along with west zone concessionaire Maynilad Water Services Inc. in April demanded compensation from the government, after regulator Metropolitan Waterworks and Sewerage System ordered rate adjustments based on two different results of arbitration.

Manila Water demanded P79 billion in compensation from the government while Maynilad Water said it would not implement the MWSS order on tariff adjustments.

Manila Water filed a notice of claim with the national government through the Finance Department, seeking compensation for financial losses arising from a recent appeals panel decision.

Manila Water asked the government to indemnify losses estimated to be over P79 billion from 2015 to 2037.

An arbitration panel of the International Chamber of Commerce earlier ordered Manila Water to reduce its tariff by 11 percent and decided that corporate income tax should be excluded from the cash flows used for the determination of tariffs. This was a result of its finding that the company is a public utility.

Manila Water was ordered to reduce the P25.07 per cubic meter average basic charge by 11.05 percent. The reduction translates into P2.77 per cubic meter over a three-year period starting 2015.

The appeals panel upheld the position of the state-run Metropolitan Waterworks and Sewerage System that Manila Water was a public utility.

Manila Water, however, said during the MWSS privatization in 1997, the government represented that MWSS would remain as the public utility and that under the concession agreement, Manila Water would only be an agent and contractor of MWSS.

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