The firm said in a disclosure that the downward adjustment of the foreign currency differential adjustment (FCDA) from 37 centavos to 9 centavos per cubic meter was confirmed by the MWSS Regulatory Office and will be effective starting April 1, 2006.

"This means an average household in the east zone consuming about 30 cubic meters of water per month will have a reduction of around five pesos in their average monthly water bill," said Manila Water president Antonino Aquino.

He said the improved outlook for the country, which translated into an appreciation of the Philippine currency, is a welcome development for the company and added that the impact is directly felt by their customers through the reduction in monthly water rates.

The FCDA is a mechanism which allows the concessionaires to recover their foreign currency losses due to payments of concession loans and foreign denominated borrowings.

Despite the decline in tariff, Aquino said there will be no negative effect on the company’s net profits for the year since the FCDA is merely a passthrough mechanism to account for changes in foreign exchange rate and thus reflects foreign exchange losses or gains.

Meanwhile, the firm is borrowing up to P1 billion as additional funding for its capital investment program, said Aquino.

"Borrowing in local currency will allow the firm to better manage its foreign currency risk exposure as a way to ease any effect of a future currency fluctuation on customers," he added.(JAL)