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Maynilad Water Disputes Tariff-Cut Order at Chamber of Commerce

Oct. 4 (Bloomberg) -- Maynilad Water Services Inc., the Manila water utility with the most customers, disputed a regulatory order to reduce prices, saying rates should instead be raised.

Maynilad filed a dispute notice with the International Chamber of Commerce, parent company Metro Pacific Investments Corp. said today in a filing. The notice starts the arbitration process with the Metropolitan Waterworks & Sewerage System.

The Philippine water regulator instructed Maynilad and Manila Water Co. to reduce their tariffs on Sept. 12, dismissing requests from both utilities to increase rates. The order followed a pledge by lawmakers to investigate allegations that the water companies had passed 15 billion pesos ($348 million) of income-tax expenses and other costs on to consumers.

A three-member panel will conduct arbitration proceedings in accordance with United Nations trading rules, Maynilad said today. The utility and the regulator will each appoint one member to the panel, whose leader will be appointed by the chairman of the chamber of commerce, it said.

The regulator on Sept. 12 told Maynilad to cut rates by 4.8 percent over the next five years. It ordered Manila Water, a unit of Ayala Corp., to reduce tariffs by 29 percent.

“Unless otherwise ordered by the Appeals Panel, the current water rates will continue to apply pending the final decision,” Maynilad said today in a separate statement.

Both utilities have said raising tariffs would help fund as much as 1.1 trillion pesos in investments until 2037. Manila Water filed a similar dispute notice to the International Chamber of Commerce on Sept. 24.

To contact the reporter on this story: Norman P. Aquino in Manila at naquino1@bloomberg.net

To contact the editor responsible for this story: Randall Hackley at rhackley@bloomberg.net

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