Manila Water to expand in Myanmar, Indonesia

MANILA WATER Company, Inc. is finalizing proposals for projects in Yangon, Myanmar and Bandung, Indonesia, as part of its strategy to meet an ambitious profit target by 2020, company officials said on Monday.

Virgilio C. Rivera, Jr., Manila Water chief operating officer for new business operations, said the Ayala-led company will propose a scaled- up version of its just completed nonrevenue water reduction pilot project in Yangon, while at the same time looking at similar projects in second-tier cities in Indonesia.

“We intend to submit a scaledup version,” Mr. Rivera said in a press conference after the company’s annual stockholders meeting at Fairmont Makati.

Earlier this month, Manila Water said it had completed a pilot project in Yangon that significantly reduced water system loss in the area to 14% from 54%.

Mr. Rivera said he was hopeful of getting feedback from Yangon City Development Committee ( YCDC) “in the next few months.”

“The challenge is the readiness of YCDC to embrace PPP (publicprivate partnership) in a scale that is as large as Metro Manila,” he said.

Mr. Rivera described the Yangon area to be as big as Metro Manila’s east zone, the company’s concession area, and as densely populated but decades behind in water development.

“The distribution system is very old and losing a lot of water,” he said. “It would be great if the framework will be as comprehensive as a concession framework — let’s say half or a significant area of the city — because you generate a lot of scale.”

INDONESIAN EXPANSION

In Indonesia, Mr. Rivera said Manila Water was looking at secondtier cities led by “dynamic” local executives. In Bandung, the company completed a pilot project similar to the one in Yangon.

The water concessionaire’s bid to expand is in line with its goal to double 2015 profit to more than P11 billion by 2020. Net income reached P6.07 billion in 2016, up 2% from P5.96 billion in 2015.

Ferdinand M. Dela Cruz, newly appointed Manila Water president and chief executive officer, said half of the income target would come from non-east zone businesses.

“So it’s important that the east zone business, or the east Manila concession, stays stable throughout the period,” he said.

“The growth will come from new businesses, which should be predominantly in various areas — Philippine ventures and Asia Pacific. Bulk of that 50% will come from additional concessions in many more places,” said Mr. Dela Cruz.

About 10% of the target profit is expected to come from new products and services.

“We have a very robust pipeline through 2020, some in early stages, some in more advanced stages. It’s now up to us to execute against that pipeline,” the Manila Water CEO said, adding that regulatory and market forces would come into play.

Luis Juan B. Oreta, Manila Water chief finance officer, said expansion in the Philippines is on track, with the company already well-positioned in its concession areas in Laguna, Clark, Cebu, Zamboanga and Tagum.

“We look at those operations as jump off points for expansion,” he said.

In the east zone, Mr. Oreta noted the company still has room to expand east of its franchise.

“We still have to extend the network to all of Rizal province, which we estimate to account for another one million or so people. So there is growth within the Manila concession,” he said.

Mr. Oreta said Manila Water is “very well- funded” this year to meet its “very ambitious” capital expenditure plan, but declined to give a figure. He noted the company will spend “a lot more” than the P8.7- billion capex last year.

On Monday, the company also promoted Geodino V. Carpio to chief operating officer for Manila Water operations, the position vacated by Mr. Dela Cruz.

Mr. Dela Cruz replaced Gerardo C. Ablaza, Jr., who remains a member of the board and the executive committee.

Shares in Manila Water slipped by 0.15% to P32.50 each.