IFC extends $30-M loan to Manila Water

The International Finance Corp. (IFC), the private investment arm of the World Bank, has extended a $30-million loan to the Manila Water Co. Inc.

In addition, IFC assisted Manila Water in securing a total of $115 million in various loan packages from a host of international and local financial institutions.

The other sources of funds are the German Investment and Development Co. ($20 million) and a consortium of six local banks which provided a total of $65 million.

Manila Water president Antonino T. Aquino told The STAR that the IFC loan package simply requires the approval of the Bangko Sentral ng Pilipinas (BSP). Aquino expressed optimism that this would not present any problems.

The Manila Water chief executive said he IFC loan is a clear reflection of the company’s ability "to secure funds required for its capital investment program despite challenging market conditions."

He said the decision to extend the loan was based on the efficient and improved service Manila Water has been extending to its customers in the east service concession area of Metro Manila.

Records show that the Ayala-led utility company was able to increase water supply from 70 percent when it wook over to 89 percent as of December last year. It had also increased to 84 percent its area of coverage on a 24-hour basis.

It had likewise made new connections servicing over one million households of which half are classified as low-income and informal settler communities.

"Extending long-term financing appropriate to this utility allows IFC to support the next phases of growth," Declan Duff, IFC director for infrastructure, said in a statement.

Waiting in the wings for future lending are some P1-billion program loans for water-related projects from such multilateral financial institutions as the Asian Development Bank (ADB) and the World Bank.

The bulk of the dollar-denominated loans will be used for Manila Water’s capital expenditure program which has been programmed at P2 billion this year and P2.5 billion next year.

The IFC also has interests in other sectors of Philippine business including private banking, infrastructure, health, information technology, marketing and other financial services.

It reportedly has at its disposal some $745 million for further investments in the Philippines.

Aquino said they have spaced their borrowings judiciously. Future payments of dollar-denominated loans are $10.98 million this year, $10.8 million next year, $10.6 million in 2005, and $130.8 million spread out from 2006 to 2022.

Peso-denominated loans amounting to P164 million are spread out from 2003-2022.