The Metropolitan Waterworks and Sewerage System-Regulatory Office (MWSS-RO) is reviewing the guidelines in implementing foreign currency differential adjustment (FCDA) under the amended revised concession agreement (RCA) with Maynilad and Manila Water.
MWSS-RO sees the earliest possible approval for the guideline is by October.
Patrick Ty, MWSS-RO chief regulator, said the FCDA, once approved, will again be implemented every quarter.
FCDA is a tariff mechanism that allows water concessionaires to recover losses or give back gains arising from fluctuations in foreign exchange rates that also serves as a corrective mechanism to avoid under recoveries or over recoveries. Its implementation was temporarily halted when the government and water concessionaires signed an amended RCA in May last year, pending the creation of new guidelines.
Ty said FCDA is part of the RCA as amended.
“This can result in rollback or increase in water bills. In case of Japanese yen, it significantly depreciated against Philippine peso and it will cause a rollback,” Ty said, in a public consultation yesterday.
Ty said the proposed guidelines will be submitted to the MWSS Board of Trustees for approval.
When the RCA was amended, FCDA was reinstated but only with respect to MWSS loans serviced by the company and principal payments for drawn and undrawn amounts of foreign currency denominated loans existing as of June 29, 2022.
The amended RCA also introduced a modified FCDA for loans contracted after June 29, 2022 that may only be availed when there is an extraordinary inflation or extraordinary deflation of the Philippine peso for more than 20 percent change in the base exchange rate but the recoverable amount will be capped.
