Manila Water forms P500-million unit for Laguna venture

MANILA, Philippines - Manila Water Co. Inc. has formed a P500-million subsidiary that will supply water services to the city of Sta. Rosa and adjoining towns as part of a joint venture agreement with the Laguna provincial government following its full acquisition of AAA Water Corp.

AAA Water Corp. owns 70 percent of Laguna AAA Water Corp., a joint venture company that won a 25-year concession to service the water requirements of the entire Cabuyao, Sta. Rosa City and Biñan areas in Laguna.

The new unit put up by the Ayala-led utility firm, Laguna Water Co. Inc., had been initially capitalized at P500 million, 70 percent of which shall be infused by Manila Water while the remaining 30 percent will be contributed by the Laguna provincial government.

Laguna Water president Virgilio C. Rivera said the joint venture company shall design, build, operate and upgrade the water facilities of Cabuyao, Sta. Rosa City and Biñan.

Laguna AAA currently serves around 120,000 customers out of a population of around 600,000. It expects to increase coverage to around one million within 15 years due to robust growth and development in the areas given the presence of urban centers and technology parks.

To support this growth, Laguna Water has earmarked around P2.5 billion for its capital infrastructure program which will include pipeline replacements and construction of water treatment facilities for the next 10 years.

Manila Water’s agreement with the Laguna government is renewable for another 25 years.

“We are happy and excited to have been given the opportunity to branch out to Laguna. Laguna has experienced sustained growth as the gateway to South Luzon with rapid development of commercial centers, modern techno parks and expanding infrastructure development,” Rivera said.

“We are confident Laguna Water will provide these areas with the huge improvements similar to what Manila Water has been able to do in the East Zone of Metro Manila and Rizal Province,” he added.

Manila Water currently has an existing concession in the East Zone of Metro Manila with a customer base of around 5.6 million people. Since the start of operations in 1997, the company has already increased 24-hour water coverage to 99 percent from 26 percent and reduced water losses from 63 percent to less than 20 percent at present.

Sewerage coverage in its concession area has likewise increased by more than 500 percent from only three percent at the start of the concession period to 16 percent at yearend 2008.

From a strategic perspective, the Laguna acquisition, along with Manila Water’s takeover of water and wastewater operations in Boracay Island, will further help open up more public-private partnership opportunities in the local water and wastewater sector.

Manila Water has also submitted an unsolicited proposal for a joint investment with the provincial government of Cebu for the development and delivery of treated bulk water to the province.

Under the proposal, Manila Water will supply 35 million liters per day of potable bulk water sourced from the Luyang River of the municipality of Carmen, to meet the growing water supply requirements of several cities and municipalities of Cebu province, namely Danao, Compostela, Liloan, Consolacion, Mandaue, Lapu-Lapu and Cordova.

At present, only 50 percent of these areas are being served.