The Market Monitor Minding the Nation's Business
By Riza Lozada
Utility firm Manila Water Co. Inc. is alloting P4.2 billion for capital expenditures to expand its water service and network reliability in the Metro Manila East Zone, in which it has a concession with the government, said Fernando Zobel de Ayala, the firm’s chairman.
He said its flagship Metro Manila East Zone achieved its strongest billed volume since 2008 and allowed the company to post a consolidated net income growth of two percent to P6 billion.
“In the Metro Manila East Zone concession, the conclusion of the arbitration has given way to an approved business plan, kicking off a huge capital expenditure program that is designed to meet our service obligations to our customers,” Ayala said during the recent Manila Water annual meeting.
The company has set a strategic goal of doubling its net income and generating a 50-percent contribution from new businesses by 2020. Ayala cited Manila Water’s expansion plan in Indonesia, resulting from a memorandum of understanding, signed on Nov. 15, 2016, that engaged Manila Water and Indonesian water-service firm PDAM Bandung for a demonstration project to reduce nonrevenue water in Bandung City, Indonesia.
“This development marks Manila Water’s initial foray into that country and the first step in the implementation of frameworks,” Ayala said.
Manila Water President and CEO Gerardo Ablaza said Manila Water’s consolidated revenues grew to P16.9 billion, or 4 percent higher than that of the prior year, driven by improved earnings in the East Zone business and the strong contribution of domestic and international subsidiaries. Consolidated net income increased to P5.96 billion, or 2 percent higher from a year ago, and resulting in a return on average equity of 16 percent, according to Ablaza.
Ablaza said Manila Water has achieved in maximizing the market impact and earnings contribution of new businesses.
These subsidiaries are under the umbrellas of Manila Water Philippine Ventures (MWPV) and Manila Water Asia Pacific (MWAP). “Our operating subsidiaries’ outstanding performance in 2015 resulted in an aggregate net income of P860 million in 2015, growing by 26 percent over the prior year.
This represents a contribu-tion to Manila Water’s total earnings of 14 percent from just one percent in 2011,” Ablaza said.
Boracay Island Water grew revenues by 23 percent to P401 million in 2015 and delivered net income of P70 million.
Cebu Manila Water Development first year of operation since January 2015 contributed a net income of P103 million.
The delivery of bulk treated bulk water to the Metro Cebu Water District started on Jan. 5, 2015, and is the first ever significant supply of surface water to a water scarce city that is depleting its ground water resources at an unacceptable rate, according to Ablaza.
Clark Water Corp.’s net in-come increased by 17 percent to P177 million, boosted by a decrease in depreciation cost result-ing from the 15-year extension of the concession contract last year.
Laguna Water, a new business unit, drove revenues by 22 percent to P828 million, with net income reaching P203 million, up by 23 percent.
The expansion of Biñan, Cabuyao, Sta. Rosa, and Technopark led to service connections increasing by 19 percent and breaching the 100,000 mark.
Laguna Water also launched recently Tubig Para sa Barangay (TPSB), a program implemented through a joint-partnership between the Manila Water Foundation (MWF) and Laguna Water.
One hundred households of Florinda Compound are now connected to the Laguna Water piped network, giving them access to a clean, safe, and uninterrupted water supply.
Through TPSB, a program directed toward low-income communities, the water connection fee of a chosen barangay is subsidized and a favorable payment scheme is offered for budget efficiency.
In a turnover ceremony on March 10 in Florinda Compound, Barangay Chairman Danilo Aguilar recalled the struggle of the said community in sourcing clean water.
“Mahirap makahanap ng pondo para makapagpatayo ng poso, ilang kabahayan ang matagal nagtiis sa iilang igiban ng tubig bago dumating ang Laguna Water,” he said in his message during the event.
TPSB was first implemented in 2013 at Barangay Soro-Soro in Biñan, where 150 households gained connection to the Laguna Water network. “The program aims to assure delivery of our service to all communities,” said Real C. Magtangob, regulatory and external affairs head of Laguna Water.
He also said these kind of engagements, involving the local government is very strategic, especially in determining rightful direction of support.”