Manila Water eyes further expansion outside Metro

MANILA, Philippines - Ayala-led Manila Water Co. Inc. targets to significantly increase its net income level by 2018 as it continues to expand operations outside Metro Manila and its subsidiaries strengthen foothold in their service areas.

During the company’s annual stockholders meeting held in Makati yesterday, Manila Water officials said the firm is actively scouting for areas outside Metro Manila where it could gain water supply rights.

The company is searching for opportunities in locales with a population of half a million, an economically viable population for providing bulk water service.

Manila Water president and CEO Gerardo Ablaza Jr.  said the sustained operations and coverage expansion of its domestic subsidiaries as well as its Vietnam subsidiaries would be able to contribute additional earnings of around P4 billion by 2018, hiking its net income level to between P9 billion to P10 billion.

Manila Water closed 2013 with a five percent growth in net income to P5.75 billion from P5.49 billion in 2012. Its net earnings have grown consistently since 2009.

“From a strategic point of view, our focus is to prioritize the development of areas outside Metro Manila. These are areas with a population of half a million,” said Ablaza.

The company, he said, could also take on non-revenue water reduction projects in provinces that already have water service providers.

Outside the East Zone concession area, Manila Water operates Boracay Water, Clark Water and Laguna Water. Its Cebu Bulk water project is expected to commence operations in June.

Boracay Water and Laguna Water continue to expand service coverage in water and wastewater services.

In Vietnam, it operates Thu Duc Water and Kenh Dong Water. “We believe we have really gained traction in Vietnam,” said Ablaza.

Manila Water is expanding its presence in Vietnam through the acquisition last year of a 31.47-percent stake in Vietnam’s Saigon Water Infrastructure Corp. (SII) by its wholly-owned subisidiary Manila Water South Asia Holdings Pte. Ltd. SII, said Ablaza, would be a vehicle for developing other water ventures.

The company also continues to pursue expansion opportunities in Myanmar and Indonesia.

After a failed bid to acquire half of Indonesian water concessionaire PT PAM Lyonnaise Jaya (Palyja) last year, Manila Water has been pre-qualified to bid for a public-private partnership bulk water supply project in Bandar, Lamping.

“Indonesia remains to be a market of high interest for us even though we were not able to complete our acquisition of a major stake in Palyja,” said Ablaza.

He said the company is looking for opportunities outside of Jakarta, noting there are some 150 cities and municipalities in Indonesia that need water service solutions.

The company is also eyeing a non-revenue water project in Myanmar in partnership with Mitsubishi Corp.

Manila Water has signed a memorandum of understanding with the Yangon City Development Committee (YCDC) for the development of a proposed non-revenue water reduction project for the city.

Ablaza said the company is assembling a team that would conduct a feasibility study for the two-year project in Yangon City.

“They have an existing water system that needs improvement,” he said.

Manila Water is allocating P60 billion for capital expenditure in the next five years.

Company chief financial officer Luis Oreta said the firm would not ben raising fresh funds soon as it has “sufficient financial resources to carry out the capital expenditure.”