Manila Water deal extended

[ manilastandardtoday.com] April 18, 2009

The Metropolitan Waterworks and Sewerage System has finally approved the request of Manila Water Co. Inc. to extend its concession agreement by another 15 years from 2022 to 2037, Manila Water president Jose Rene Almendras said yesterday.

The extension will allow listed Manila Water to increase its investments for the duration of the extended contract to P450 billion from the original P187 billion.

“This will greatly help pump prime the economy for a much-needed boost in its economic stimulus program. Additionally, the magnitude of these investments will also redound in the creation of more jobs as the implementation of water and wastewater infrastructure programs is labor-intensive,” said Almendras.

Manila Water, the water utility unit of the Ayala group that owns the concession in the eastern section of Metro Manila, earlier said it would cap rate increases to P1 per cubic meter a year from 2010 to 2012 if the government agreed to extend its contract by 15 years. It also planned to free the rate this year.

A utility official earlier said the “petition to renew our concessionaire agreement is the only way we can effectively recover our investments if we are to frontload much of our projects by 2016 as demanded by Congress.”

Manila Water has committed to effectively lower water rate increases by 66 percent over the next three years to P3 per cu. m. until 2012, or P1 starting in 2010 instead of the cumulative P8.75 per cu. m.

Manila Water said the longer concession period would result in lower water rate increases by spreading the cost recovery.

The extension also addresses the government’s directive to speed up the implementation of wastewater programs to curb the worsening pollution in Metro Manila’s river systems.

Manila Water provides water and wastewater services to the eastern part of Metro Manila, including several towns of Rizal province.

Lawmakers have asked Manila Water and DMCI-MPIC Water Co. Inc., owner of Metro Manila’s west concession, to complete their work as early as 2016 instead of finishing their commitments at the end of the concession period, or in 2022.

Manila Water said an extended concession period would allow the company to recoup its investments and the government to increase its income by P96 billion while providing world-class service to consumers.

Manila Water may also forge a partnership with food and beverage conglomerate San Miguel Corp. to develop Laiban Dam in Tanay, Rizal as a future water source.

“We’re still in discussion with the MWSS. We submitted our proposal, so did San Miguel. We’re hoping we could work together on this,” Almendras earlier told reporters. Othel V. Campos

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