Maynilad jacks up 5-year capex budget to P70B

Maynilad Water Services Inc., the water supplier in the west zone of Metro Manila, is hiking its five-year capital spending by about 40 percent to P70 billion following a shift in certain assumptions over the funding for expensive but crucial sewage services.

David Nicol, chief financial officer of Maynilad’s controlling stockholder Metro Pacific Investments Corp. (MPIC), said the water concessionaire was planning to finance its own sewage and wastewater spending program instead of relying on long-term official development assistance (ODA) loans.

Nicol said in October last year that tapping ODAs carried significant foreign exchange risks.

The change in the financing structure and its potentially large impact on water rates remains under review by regulator Metropolitan Waterworks and Sewerage System, he said.

“The expectation was that the government will get ODA financing and spread it over 30 years. Instead, we will bring this into the concession life. We have the support from the banks to provide the debt,” Nicol told reporters at the sidelines of MPIC’s annual stockholders’ meeting on Friday.

“But we have to get the agreement of the regulator. If you are going to spend that much more capex for the coverage, which is desperately needed, it will inevitably put pressure on the tariff,” he added.

Maynilad, whose other major stockholders are Consunji-led DMCI Holdings Inc. and Japan’s Marubeni Corp., is seeking to ramp up its sewage coverage from 8 percent to 32 percent in five years. The plan is to have full coverage by the end of its concession period in 2037, he said.

Maynilad’s five-year spending plan also involves increasing customer connections within its concession area.

The company serves 8.2 million customers, or about 85 percent of the people living in the west zone, including Caloocan, Las Piñas, Malabon, Manila,  Navotas, Pasay, Parañaque, Valenzuela and portions of Quezon City and  Makati City. The concession area also includes parts of Cavite province.

Nicol said the company was hopeful the regulator could finalize a decision on the tariff adjustment and other aspects of Maynilad’s business plan by July.

Maynilad, which booked a 15-percent increase in revenue to P15.88 billion last year, has also been expanding outside its west zone concession area.

The company fully acquired last year PhilHydro, the bulk water supplier in central Luzon. It also has a 39-percent stake in a company that will supply water to Metro Cebu’s Water District and a minority stake in Subic Water.

The company, together with MPIC parent First Pacific Co. Ltd. of Hong Kong, is also seeking water management concessions in other Asean (Association of Southeast Asian Nations) countries, its annual report showed.

The company said new projects were likely to have a “marginal” impact on its bottom line and the main objective was for it to gain experience operating outside Metro Manila.