MANILA, Philippines - The Department of Finance has approved the 15-year extension of the Ayala-led Manila Water Co. Inc.’s concession agreement with Metropolitan Waterworks and Sewerage System (MWSS).

Manila Water told the Philippine Stock Exchange that the DOF approval “confirms the government’s guarantee of its contractual obligation relative to the extension.”

“[Manila Water] has officially received the signed copy and corresponding documents to this effect, and shall now proceed to complete its own contractual obligations,” the company said in a disclosure.

“In view thereof, since all the contingent conditions have been fulfilled and all legal requirements completed, the concession agreement is now in full force and effect,” it added.

The 15-year extension meant that the concession agreement of Manila Water would end on 2037, from the original expiration of 2022, as stated under the previous agreement.

During public consultations in March, the publicly listed unit of the Ayala group said the extension would allow the company to trim scheduled water rate increases between 2010 and 2012 to P1 a cubic meter a year. There will be no rate increase this year.

Manila Water said it was supposed to raise water rates by more than P2 a year from 2009 to 2012 under the existing contract that ends in 2022.

According to the water utility, a longer recovery period is expected to enable Manila Water to increase its investment by 140 percent to P450 billion until 2037, from the originally approved budget of P187 billion until 2022.

Manila Water president Rene Almendras had said that, aside from allowing lower water rate adjustments while ensuring investment recovery, the extension of the water utility’s concession to 2037 would also result in more jobs created and more income for the government.

Almendras earlier said the company’s investments have so far created 17,000 jobs a year and this figure would increase to 21,000 jobs because of the bigger investments to be made.

Similarly, government revenue is seen to reach P158 billion over an extended period until 2037, compared with P62 billion in taxes and concession fees to be paid should the company’s concession end in 2022.

Manila Water currently services about five million customers in the east zone of Metro Manila, which comprises Makati, Pasig, Mandaluyong, Marikina, most parts of Quezon City, some parts of Manila, San Juan, Taguig and Pateros. It also covers cities and municipalities in the Rizal province.