Manila Water Company: Manila Water Bares Aggressive Expansion Plans

Manila Water Bares Aggressive Expansion Plans

Posted: Tuesday April 1, 2008

East Zone Concessionaire Manila Water Company will spend P37 billion over the next five years as it intensifies efforts to further expand and improve the water and wastewater networks in the East Zone.

This was announced today by the Company during its annual stockholders’ meeting. It also announced plans to form two subsidiary companies to respectively cater to the Company’s international and environmental business initiatives.

Manila Water earlier reported earnings of P2.42 billion for 2007, which was better than the previous year despite the full year provision for income tax worth P892 million. The Company’s income tax holiday expired at the end of 2006.

This year, the Company announced that it will spend P7.7 billion, in capital expenditures and concession fees. Among its major plans for the year is to start the construction of a P1.5 billion water treatment plant, which aims to increase the Company’s current production capacity by at least 100 million liters per day (MLD). This project will complement the network expansion and service sustainability projects worth P4 billion earmarked for 2008.

It will also embark on an ambitious program to help clean the Marikina River. This program entails the construction of at least three regional sewage treatment plants using combined sewage-drainage systems along the banks of the Marikina River to serve Rodriguez, San Mateo, Marikina, Quezon City, Pasig and Antipolo. Upon completion, the program is expected to benefit approximately 1.5 million people.

The Company now serves more than 5 million customers from just 3 million when operations started in 1997. Through these initiatives, Manila Water plans to add an additional 1 million more over 5 years which will come from the new areas in Rizal Province. It also announced plans to increase sewerage and sanitation coverage in its concession area. In addition, discussions are currently ongoing for the provision of bulk water supply to Bulacan.

“The approved business plan resulting from the recently concluded Rate Rebasing exercise is a good foundation for our thrusts to further improve water and wastewater services to our customers and to sustain the Company’s growth. At the same time, our experience in operating the East Zone concession provides us with the required capabilities needed to expand the business in both the environmental field and the international arena. The formation of the two subsidiary companies will serve as a springboard for the development of these projects outside the East Zone,” Manila Water President Antonino T. Aquino said.

The Company believes that it should be able to sustain its growth trajectory in 2008 on the back of higher water sales in the first two months of the year, while system losses further declined from the same period in 2007. Long term growth will still largely come from the East Zone. This will be supported by the company’s plan to arrange new loan facilities. Nevertheless, the Company had already started to explore and develop new business opportunities offshore.

“Looking ahead, our growth within the East Zone will be underpinned by our long-term business plan that was approved by the regulators last December 2007. We will continue to rely on the model of aligning business and sustainable development objectives as we pursue future growth initiatives,” according to Manila Water chairman Fernando Zobel de Ayala.