May 11, 2015

MWSS to introduce new regulatory guidelines

Businessworld today reported that the Metropolitan Waterworks and Sewerage System (MWSS) will introduce clearer guidelines to ensure more effective implementation of concession agreements with the two water concessionaires. A technical working group (TWG) composed of representatives of both MWSS and water concessionaires Manila Water Co (MWC) and Maynilad Water Services (Maynilad) are reportedly in discussions to come up with guidelines to institutionalize an annual audit of the operations of the two water concessionaires.

The MWSS clarified that the new mechanism (billed as Concession Accounting and Auditing Guidelines or CAAG) is not meant to introduce tougher rules but to ensure more effective implementation of concession agreements to avert further disputes in the future. The annual audits will determine whether or not the concessionaires carried out their services obligations for the year, as well as identify the costs that can be recovered.

Apart from the CAAG, the MWSS is also working on other guidelines that will institutionalize regulatory functions, including the determination of the appropriate discount rate (ADR).

Our take: We view this move as a positive step in ensuring a more transparent, accountable and efficient regulatory process. Through these guideless, the sector should be exposed to less subjective evaluations that are often subject to disputes. – WealthSec