Manila Water accelerates expansion program

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MANILA, Philippines—Ayala-controlled Manila Water Company Inc. is revving up the expansion of its roster of subsidiaries both in the Philippines and abroad in an effort to spread risks through a drive to diversify its portfolio.

Gerardo C. Ablaza Jr., Manila Water president and chief, said in a briefing the drive is focused on possible domestic projects but the company is persisting on pursuing overseas opportunities, particularly within Southeast Asia.

“We are prioritizing our local expansion and setting our sights on markets that each has a population of at least half a million,” Ablaza said. “There are 10 to 15 such areas in the country.”

The Manila Water chief explained that the threshold population size is about half of the group’s main business which is the east zone concession in Metro Manila. In this, Manila Water is serving 922,000 customers as of end-2013.

The company currently has three operating subsidiaries, namely, Boracay Island Water Co. Inc., Clark Water Corp. and Laguna AAA Water Corp.

A fourth one, the majority-owned Cebu Manila Water Development Inc., is set to launch formally its services to consumers this coming June.

Ablaza said Manila Water’s business units—including three in the Philippines and two in Vietnam—are already contributing about P600 million, or about a tenth of the group’s net income of some P5.8 billion, in 2013.

“Over the next four years, we want [such subsidiaries] to be contributing P4 billion or about 40 percent of our group’s projected net income of P9 billion,” he added.

As for overseas expansion, Ablaza said Manila Water intends to spread its presence in Vietnam, where its two bulk water supply companies account for 35 percent of Ho Chi Minh City’s needs.

In his report to stockholders, Ablaza said Manila Water intends to use a third affiliate in Vietnam—Saigon Water Infrastructure Corp.—as a vehicle for developing and operating additional ventures there.

Also, Manila Water is turning to other possible ventures in Indonesia following the failure of its efforts to acquire a water concessionaire in Jakarta.

“We are now looking for opportunities outside Jakarta and are currently exploring a PPP (public-private partnership) project in Sumatra,” the company president said.

He was referring to Bandar Lampung, the capital of Lampung province on the island of Sumatra.

Additionally, Manila Water has signed a memorandum of understanding with the Yangon City Development Council regarding a possible project for the reduction of the city utility’s non-revenue water.

“[Overall], there are certainly positive developments in the area of new business,” Ablaza said.

Manila Water’s concession for the supply of water to Metro Manila’s east zone has been hailed as the most successful in the country’s history.

From a record high of 63 percent when it took over in 1997, the level of so-called “non-revenue water” lost through leaks, illegal connections and defective meters, has now been reduced to a record low of 11 percent—a level that is significantly better than the international standard for water losses of about 20 to 25 percent.

The improvement in efficiency has allowed Manila Water to supply water areas as far south as Taguig City of even elevated portions of the metropolis like Antipolo City to the east.

At present, the water for Metro Manila’s 14 million residents is sourced from the Angat watershed.