rsakai presentation
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8/6/2019 RSakai Presentation
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1. Concession Framework
2. Concession Agreement Framework
3. MWSS Service Area4. The Concessionaires
5. Regulatory Framework
6. MWSS Regulatory Office
7. Performance-Based Evaluation
8. Tariff Setting
9. Efficiency Gains
10. Improving Operational Efficiencies: Best Regulatory
Practices
11. Regulatory Challenges
12. Open Forum
Presentation Outline
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Before Aug. 1, 1997 Sinc e Aug. 1, 1997
MWSSCharter
MWSSCharter
PUBLIC PUBLIC
ConcessionAgreement
ReimbursementCost + ADR
Servic eObligations
MWSS MWSS
Concession Framework
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Concession Agreement Framework
Asset Management Obligations
“operate,
maintain
and
renew”
Meet Service Obligations
“provision of water supply &
sewerage services”
Expenditures prudently and
efficiently incurred
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MWSS
Service Area
EAST ZONE
WEST ZONE
West Zone East Zone
Land Area
(sq. km)540 1,400
Service Area 17 Cities /
Municipalities
23 Cities /
Municipalities
Total (2007)
Population
8 M 6 M
Population
Served:
1997 =
2007 =
4.3 M
5.60 M
2.00 M
5.40 M
Water
Production
2,400 MLD 1,600 MLD
House
Service
Connection
(2007
Approx.
700,000 Approx
610,000
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The Concessionaires
EAST ZONE: 1997
• Ayala (Philippines)• United Utilities (UK)
• Bechtel (USA)
• Mitshubishi (Japan)
WEST ZONE: 1997
• Benpres Holdings (Philippines)
• Lyonnaise des Eaux (France)
2006
•Ayala (Phil)
•United
Utilities
(UK)•Mitsubishi (Japan)
•BPI Capital
•IFC
•MWCI Employees/Public
2006 (Bidding of
MWSS rights &
obligations)
• MWSS = 84%
• ONDEO = 16%
2007 ‐ present
DMCI and MPIC
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Regulation
Protect consumersfrom high prices &
poor services
Regulatory Framework
To balance the interest of stakeholders
Provide incentives
to firms to invest,be efficient & earn
profit
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Created by virtue of the Concessionaire Agreement (CA)
MWSS Regulatory Office (MWSS RO)
Functions Details
Monitoring Compliance to water and waste water quality
standards
Population Coverage
Asset Management
NRW
Collection Efficiency
Operational Cost
Customer Service Standards
Determining CPI, EPA, Rate Rebasing, FCDA
Early Termination Amount Assessment of Penalties
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Performance Based Evaluation
Service Obligations
Key Performance
Indicators (KPIs)
• Water Service (6)
• Sewer/Sanitation (3)
• Customer Service (5)
Business Efficiency
Measures (BEMs)
• Income (2)
• OPEX (3)
• CAPEX (3)
• NRW (1)
Tariff
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Tariff Setting
Inflation Annual Adjustment for inflation
Extraordinary Price
Adjustments
Annual adjustment for events
beyond control
Rate Rebasing Every five years with full review
of business plan
Foreign Currency
Differential Adjustment
Quarterly review & adjustment,
covers eligible loans in foreign
currency
Formula-driven adjustments
RAL (%) = “C” (%) ± “E” (%) + “R” (%)
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Efficiency Gains
DescriptionPre Privatization
POST PRIVATIZATION
2007
1997 MWCI MWSI Combined
Service Population 11.80M 5.70M 8.20M 13.90M
Population Served 6.30M 5.40M 5.60M 11.00M
Water Sources Angat (97%)
+ deepwells (3%)
Angat (97%)
+ deepwells (3%)
Angat (97%)
+ deepwell (3%)
Angat (97%)
+ deepwells (3%)
Treatment Plants 3 2 2 4
House Service Connections 0.76M 0.61M 0.70M 1.31M
Water Distributed 3,000mld 1,600mld 2,400mld 4,000mld
Water Availability 67% 94% 85% 89%
Non-Revenue Water 61% 30% 65% 51%
Staff/1000 Connection 9.8 1.5 2.2 3.7
Concessionaire’s Performance
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PAWS Survey
(Transparency, Accountability, Result-oriented)
Efficiency Gains
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0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
MWSI 7.21 7.21 8.23 8.63 14.27 19.9219.92 19.9230.19 32.5132.99 31.69
MWCI 4.02 4.02 4.37 4.55 6.32 9.37 13.88 14.0118.64 19.8420.68 24.48
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
All–in Water Tariff at Php per cubic meter
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Improving Operational Efficiencies:
Best Regulatory Practices
1. Solid Public‐Private‐LGU‐NGO Partnerships
2. Strengthening the accountability of Concessionaires
• Business Plan
• Aligning the investment plan with the interests of MWSS and
consumers
• Levels of service = tariff
3. Establishment of KPIs(14) and BEMs (9)
• Reward and Penalty (e.g. NRW, OPEX)
4. Establishment of CAPEX Monitoring Manual
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5. Flexibility in amending the Concession Agreement (e.g.
FOREX losses/gains, water connection charges, rationalization of
sewer/sanitation charges)
6. Conduct of Public Assessment for Water Services
(PAWS)
7. Creation of Project Management Committee (PMC)8. Staggering of rates
9. Transparency in the regulatory process
10. Avoidance in micro‐managing the Concessionaires
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1. Sustaining the gains of privatization
2. Scaling up sewerage/sanitation investments
3. Developing new water sources
Regulatory Challenges
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Thank You
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