For Manila Water, rationing may be blessing in disguise
The short-lived “water crisis” in Metro Manila may turn out to be a blessing in disguise for Manila Water.
Days before it unveiled its water-rationing plan, a positive-looking Manila Water already spoke of the government giving the Ayala subsidiary the leeway for “additional tariff adjustments” needed to develop additional water sources.
“The first tranche of the adjustment was successfully implemented in October last year, with a P1.46 increase per cubic meter,” Manila Water said in a Feb. 26 regulatory disclosure, referring to the 28 percent tariff increase from 2018 to 2022 granted to it by the Metropolitan Waterworks and Sewerage System.
“Subsequent adjustments are programmed for 2020 and 2021 (at P2 per year), with MWSS incorporating additional adjustments in recognition of the need to develop additional water source projects,” the Ayala subsidiary added.
Manila Water did not say at that time what those additional water sources were, but last week the company referred to the Cardona, Rizal treatment plant and “several deep wells” that it has tapped to alleviate the shortage in its concession area. Previous Manila Water disclosures had also identified the Sumag, Tayabasan, and Kaliwa rivers in Rizal province as new water sources.
In that Feb. 26 report, an elated Manila Water president Ferdinand Dela Cruz reported that 2018 profit grew by six percent from the previous year to P6.5 billion.
The Manila concession area led the way, with a three percent increase in “healthy billed volume growth” out of the four percent consolidated growth for 2018. The higher 2018 earnings, in turn, prompted Manila Water to increase the cash dividend for the first half of the year by 5.7 percent to P0.4551 a share, which will be distributed, about P939 million in all, to shareholders on March 28.
The second installment of the higher 2018 cash dividend is scheduled for distribution in October.
“In the Manila concession, we have forged a clear path to regulatory stability with the positive conclusion of the rate rebasing exercise,” Dela Cruz said.
The cleared path aimed to double Manila Water’s profit from around P6 billion in 2015 to P12 billion in 2020, even with the El Niño phenomenon.
As an indication of its confidence, Manila Water even revised the risk assessment posed by the drought hazard on its water supply.
This was how Manila Water in 2016 assessed its water supply risk:
“The Philippines cyclically experiences the El Niño phenomenon which is characterized by prolonged and severe drought. During such periods, sources of water available to the company from MWSS is diminished dramatically which may affect the company’s ability to supply treated water to its customers.”
And this was how Manila Water addressed the same threat in 2017:
“The Philippines cyclically experiences the El Niño phenomenon which is characterized by prolonged and severe drought.
“During such periods, sources of water available to the company from MWSS is diminished drastically. However, the company can trigger supplementary sources to fill in the deficits, to supply adequate treated water to its customers.”
E-mail: moneygoround.manila@yahoo.com