Manila Water’s Jakarta bid goes down the drain

Manila Water Co. Inc. (MWC) on Wednesday confirmed that its subsidiary’s plan to take over water service concessionaire PT PAM Lyonnaise Jaya (Palyja) in Indonesia would no longer push through.

In a disclosure to the Philippine Stock Exchange, MWC said that the government contract partner of Palyja—Perusahaan Daerah Air Minum Jakarta Raya (PAM Jaya)—“did not approve the transfer” of a 51-percent stake in Palyja.

This development effectively negated the share purchase agreement MWC signed with the French-controlled Suez Environment in October 2012.

The agreement was subject to two closing conditions, one of which was a prior approval of the deal by multilateral lender Asian Development Bank.

Another condition was that the Jakarta local government must provide a written consent or confirmation that it would not object to the transfer of the Suez shares.

MWC’s subsidiary, Manila Water South Asia Holdings, was supposed to absorb the Suez equity.

Last month, Indonesian media reported that Jakarta Governor Joko Widodo would set up a city-owned company to buy out Suez and prevent the company from selling its stake to MWC, a unit of the Ayala group.

When asked about the reports, MWC president Gerardo Ablaza Jr. at the time said the company was still in talks with local government officials in Jakarta.

The remaining 49-percent stake in Palyja, which has been managing the water concession west of Jakarta since 1998, is owned by PT Astratel Nusantara, a unit of automotive giant PT Astra International.

Based on an earlier MWC disclosure, Palyja can supply more than 700 million liters of water a day, and has a pipe network that spans 5,300 kilometers.

MWC of the Ayala group recently made inroads in Vietnam, and is looking at other prospects across the region.