Maynilad expects net profit to grow to P5B this year

Maynilad Water Services Inc. (Maynilad) aims to increase its earnings by about a third this year as it raised its capital expenditures (capex) budget to further improve efficiency and connect more customers to its network.

The company said it expected to post an income of about P6 billion this year with a capex of P10 billion, Maynilad president and CEO Ricky Vargas told reporters on the sidelines of the groundbreaking ceremony for the firm’s pipe-laying project in BF Resort in Las Piñas.

In 2010, Vargas said Maynilad posted P4.5 billion in net income and spent P6.5 billion in capex.

That was a 33.33-percent increase in income and an almost 54-percent increase in capex. Vargas said that over time, income was expected to overtake spending as target efficiencies were achieved.

As to whether Maynilad needed to raise rates in order to recover its investments, Vargas said it was too early to say as the company was set to undergo a rate rebasing process in 2012. He added that the business model for water service providers was to recover their investments over time.

In the meantime, Vargas said Maynilad hoped to lower its non-revenue water to 46 percent in 2011 from about 48 percent in 2010.

Meanwhile, in BF Resort, Maynilad would spend about P50 million to lay pipes and connect residents 24/7 with enough pressure to bring water to the third floor of a house, officials said. The project will be completed before the end of this year.

The project will benefit 10,000 residents who currently get their water from deep wells (which pose threats to the environment and to health) or from expensive water deliveries that charge an average of P30 a drum. That could cost as much as P1,800 a month for a household, according to Maynilad.

Maynilad is a concessionaire of the state-run Metropolitan Waterworks and Sewerage System for the West Zone of the greater Manila area (Metro Manila and surrounding provinces).

Maynilad’s concession area is composed of the cities of Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan River, West Avenue, Edsa, Congressional and Mindanao Avenues, the northern part starting from the districts of the Holy Spirit and Batasan Hills), Makati (west of South Super Hi-way), Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon, all in Metro Manila; Cavite City and the towns of Bacoor, Imus, Kawit, Noveleta and Rosario, all in Cavite province.