IFC offers to rescue Maynilad

The International Finance Corp. (IFC), the World Bank’s private investment arm, is bent on helping the beleaguered utility firm Maynilad Water Services Inc. (MWSI) get back on its feet through various forms of assistance, including a possible equity infusion.

"The IFC does not have any equity exposure with Maynilad," Vipul Bhagat, IFC country manager for the Philippines said. "But we are very interested to get that concession back on its feet."

While he admitted that the problems besetting the West Zone water concessionaire are "too complicated" for the IFC to be involved in at present, it is prepared to extend loans, quasi-loans, capital, and even equity "if necessary."

"Extending long-term financing appropriate to this utility allows IFC to support the next phases of growth," Bhagat said.

IFC has, in fact, already extended a $30 million loan to the Ayala-led Manila Water Co. Inc, the concessionaire for the East Zone service area of the Metropolitan Waterworks and Sewerage System (MWSS).

It had also assisted Manila Water in securing a total of $115 million in various loan packages through international and local financial institutions.

Maynilad is a joint venture between the Lopez-led Benpres Holdings Corp. and Ondeo Services (formerly Suez Lyonnaise des Eax) of France. The Lopez group, which controls 51 percent of Maynilad, had openly declared its intention to return the concession back to the MWSS due to conflicts in their concession agreement.

The Ondeo group, however, can only operate the concession if it gets a Filipino corporation to acquire the 51 percent equity ownership of Benpres.

Bhagat said that they have been holding informal talks with prospective groups although he admitted that it is the Ondeo group that must formally get the Filipino partner "for the consortium to operate which in turn would allow it to regain the West concession area either through negotiations or public bidding."

Without the local counterpart, Ondeo cannot operate the concession as it was constitutionally barred being a foreign corporation. Without a private concessionaire, government would be hard pressed as it would resume operations of the service area burdened by huge foreign and local debts.

Bhagat qualified that only when Maynilad’s problems are basically settled would the IFC seriously consider the equity issue.