Manila Water to acquire control of Indonesian utility

Manila Water Company Inc., a unit of the Ayala group, will further expand its presence in Asia, starting with its acquisition of a majority stake in Jakarta’s water supply concessionaire.

In a disclosure to the Philippine Stock Exchange, Manila Water said it had signed a share purchase agreement with Indonesia’s Suez Environment to acquire the latter’s 51-percent equity in PT PAM Lyonnaise Jaya (Palyja).

Palyja has been operating the water supply concession contract of Western Jakarta since 1997 under a 25-year deal with the government-owned PAM Jaya.

“Palyja has a total water supply of more than 700 million liters per day, and 5,300 kilometers of pipe network,” Manila Water said.

But the Philippine company noted that the acquisition is subject to “certain government and regulatory approvals” in Indonesia.

There are also “other conditions precedent” that must be fulfilled, it added.

Manila Water has been expanding both here and abroad.

In July, Manila Water announced it would acquire a 47.35-percent stake in Vietnam’s Kenh Dong Water Supply Joint Stock Co., which has a bulk water supply contract with Saigon Water Corp. (Sawaco). Kenh Dong Water Supply will also open a water treatment plant later this year.

The acquisition allowed Manila Water to widen its presence in Vietnam, which the Ayala group has identified as one of the high growth areas for infrastructure investments.

Sawaco is a state-owned company that manages Ho Chi Minh City’s water supply.

In December 2011, Manila Water bought a 49-percent stake in Thu Duc Water BOO, another Vietnamese company with a bulk water supply agreement with Sawaco.

Thu Duc’s bulk water supply contract with Sawaco is for a minimum billed volume of 300 mld.

In 2008, Manila Water entered into a five-year performance-based leakage reduction contract with Sawaco. Manila Water also signed an agreement with Vietnam’s REE Corp. and Mitsubishi Corp. to develop water, wastewater and other environmental projects in Vietnam.

Manila Water is also exploring opportunities in India. In February 2011, Manila Water revealed that it would submit to the Bangalore Water Supply and Sewerage Board an “unaccounted for water reduction and operation and management” project.