For Manila Water, growth prospects lie outside Metro
With its 2013 rate rebasing exercise for Metro Manila still unresolved, Manila Water Co. will shift its growth focus outside its main franchise area toward emerging city centers and even projects abroad, company officials said.
Manila Water president Gerardo C. Ablaza, Jr. said during the company’s stockholders meeting that the concessionaire’s future growth strategy would hinge on new products and services, as well as new franchise areas outside Metro Manila.
Operations in Laguna are booming, Ablaza said, while those in Clark, Boracay, Pampanga and Cebu are also seen to grow. Outside the Philippines, Vietnam is seen as a rapidly expanding area, while Myanmar and Indonesia also present growth opportunities.
The concessionaire’s business in Manila may be under arbitration, “but we’ve made significant gains outside, CFO Luis Juan B. Oreta told reporters. “While capex [capital expenditure] has been muted in the East Zone, it has been very robust outside Manila.”
Without an approved business plan for Manila’s East Zone, Manila Water’s capex in 2014 stood at only P4.1 billion. For 2015, it anticipates capex of about P5 billion, which is below the company’s normal investment rate of P7.7 billion.
The arbitration process started in September 2013 when the Metropolitan Waterworks and Sewerage System (MWSS) decided to cut Manila Water’s basic water charge by P7.24 per cubic meter. The concessionaire originally proposed an increase of P5.83 per cubic meter to its basic water charge of P24.57 per cubic meter over the five-year period covered by the rate rebasing review.
The dispute froze Manila Water’s business plan covering the years 2013 to 2017, and water tariffs are on status quo pending the resolution of the case.
Ablaza said final resolution of the Appeals Panel on its rate dispute with the Metropolitan Waterworks and Sewerage System (MWSS) might come out sometime in the second quarter.
If the rebasing exercise were to be resolved this year, Manila Water would ramp up its capital spending to more than P10 billion starting 2016.
In a regulatory filing earlier, Manila Water said net income increased by 1 percent to P5.81 billion, from P5.75 billion a year earlier. Revenues climbed 3 percent to P16.36 billion, from P15.93 billion, despite a 12-percent jump in total billed volume to 671.2 million from 599.4 million.
Manila Water, a unit of the Ayala group, primarily serves the East Zone of Metro Manila, which includes parts of Quezon City, Makati, Taguig, Pateros, Marikina, Pasig, San Juan, Mandaluyong, southeastern Manila and Rizal province.
