Vol. XXII, No. 176 [ BusinessWorld Online ]
Wednesday, April 8, 2009 | MANILA, PHILIPPINES
AYALA-LED Manila Water Co. will soon be awarded the water concession for the Boracay tourist haven this month, the Tourism department yesterday said.
A new joint venture to run Boracay’s water utility is needed to manage wastewater threatening to ruin the tourist haven, the Tourism department said yesterday. — BW FILE PHOTO
Tourism chief Joseph H. Durano said the government had decided to privatize the island’s water system and that Manila Water would be awarded the concession contract after the Holy Week break.
After that, the utility primarily in-charge of providing water to Metro Manila’s eastern zone should begin upgrading Boracay island’s water and sewerage system.
The government had solicited proposals for a joint venture to take over Boracay’s water system, and only Manila Water submitted a bid, the Cabinet official said.
"The period required for the publication of the terms of the joint venture was already completed and no competing proposal was submitted by other investors. For all intents and purposes, Manila Water is the winning proponent," Mr. Durano said
The project should commence by the end of April, he said.
The joint venture includes the Philippine Tourism Authority (PTA), which Mr. Durano said would account for 10% of equity. Manila Water would have the rest of the stake.
"Since PTA has the water rights and concession for Boracay, the joint venture corporation will pay a royalty to PTA," Mr. Durano added.
He explained that the joint venture is needed to expand and manage the water and sewerage system of Boracay, where congestion and environmental problems are threatening to drive away tourists.
The agreement gives Manila Water a 25-year contract to manage Boracay’s water system, which will be renewable for another 25 years.
Mr. Durano, who served as PTA general manager last year, had entered into an agreement with Manila Water to help manage Boracay’s water and sewerage system.
The consultancy deal, signed in May 2008, covered the operations and maintainance of the Boracay Water and Sewerage System (BWSS), a PTA unit.
The BWSS operates a water treatment plant in Caticlan in Aklan province and a sewage treatment plant on Boracay island.
When the management contract expired, Manila Water submitted an unsolicited proposal to enter into a joint venture with the government to take over the water system, Mr. Durano said.
Manila Water chief finance officer Luis Juan B. Oreta said the project to upgrade Boracay’s water and sewerage system would cost P1.2 billion over the next three years, starting this year.
"We will however have to observe how fast and how much tourist traffic grows in the island to determine how much more we have to invest to improve the service," Mr. Oreta told BusinessWorld in a phone interview yesterday.
Boracay, one of the country’s top tourist spots, has suffered environmental problems due to the influx of tourists and the increasing number of commercial establishments.
Boracay Chamber of Commerce and Industry President Charles Uy yesterday welcomed the government’s decision to privatize the island’s water utility.
"Right now, the facility has already reached its limit so there’s a need for improvement. [The chamber] welcomes the move and we hope it will improve our water service in Boracay," Mr. Uy said.
Manila Water provides water and wastewater services to nearly six million people in 23 cities and municipalities covering the east zone concession of Metro Manila. As concessionaire for the past 12 years, it was able to reduce non-revenue water in the east zone to just a fifth from 67% in 1997.
It operates and manages the country’s biggest sewage treatment facility in Makati, and the largest and most modern septage treatment facility in Southeast Asia, located in Taguig.
Manila Water also operates and manages a water supply and sewerage project in Tirupur, India.
Manila Water is also part of the consortium that bagged the P2-billion deal to supply water in bulk to the Metro Cebu Water District, with water from the Luyang River in Carmen town.
Last year, Manila Water bested four other water companies for a $15-million, five-year contract involving construction and leakage reduction in the water system of the Vietnamese capital of Ho Chi Minh City. — Ava Kashima K. Austria
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