Manila Water expands business-

Manila Water Company, Inc. (or Manila Water) is a Philippines-based company specialising in providing water supply and wastewater services. While it serves various regions in the Philippines, such as Metro Manila, Laguna and Cebu, the company is establishing its international footprint by undertaking water supply projects in other countries such as Vietnam and Indonesia.

Areas of operations

In the Philippines, Manila Water holds the exclusive rights for providing water and sewage services to the eastern zone of Metro Manila. In August 1997, it entered into a concession agreement with  Metropolitan Waterworks and Sewerage Systems (MWSS) to provide these services to the city. While the original agreement was due for termination in 2022, in 2009 the MWSS extended the contract by another 15 years. Therefore, Manila Water currently holds the rights to provide water and sewerage services to the east zone of Metro Manila until May 2037. The company serves more than 6 million customers in the east zone of the city. Its operations include extracting and treating raw water, distributing and selling treated water, and collecting, treating and disposing of sewage (including industrial effluents) generated in the city.

Besides this, the company has four subsidiaries through which it operates outside Metro Manila. These are Laguna AAA Water Corporation, Boracay Island Water Company, Clark Water Corporation and Manila Water Consortium (which provides bulk water in Cebu province). It also operates in Tagum through its joint venture, DAVAO del Norte Water Infrastructure Company, Inc., with iWater, Inc. It has also partnered with the Zamboanga City Water District to provide water supply services in the city.

While the bulk of its operations are conducted in the Philippines, Manila Water has also established business operations in Vietnam. It operates two affiliated companies – Thu Duc Water B.O.O. Corporation and Kenh Dong Water Supply Joint Stock Company in the country. These two companies supply treated water to the Saigon Water Infrastructure Corporation (a holding company of Manila Water), which in turn supplies this to several municipalities across Vietnam. Besides this, the company also undertook a pilot project to reduce water leakages in Ho Chi Minh City from 2008 to 2014. Manila Water is also involved in some water supply projects in Myanmar and Indonesia.

Infrastructure in Metro Manila

The company owns and operates three water treatment facilities, which are all located in Quezon City. These are the two Balara treatment plants (of 470 million litres per day (mld) and 1,130 mld capacity) and the La Mesa plant (150 mld capacity). As of 2015, Manila Water had laid and maintained over 5,000 km of water supply pipelines across the east zone of Metro Manila. Further, by undertaking supply and pressure management works, it supplies water at a pressure of 7 pounds per square inch (psi) and above to almost all the areas served in the zone.

In the sewage and sanitation sector, Manila Water operates compact sewage treatment plants (STPs) to service feasible areas. It utilises the city’s existing drainage system to collect sewage from households, thereby eliminating the need to lay new sewage networks in the city. As of 2015, the company maintained about 368 km of sewer lines in Metro Manila’s east zone.  The sewage collected is treated at 41 STPs owned by the company. With a combined treatment capacity of 317 mld, these plants treat sewage generated from 172,370 households in Metro Manila.

Besides water and sewage management services, Metro Manila also offers services for desludging of septic tanks in Metro Manila. About 85 per cent of households in the city’s east zone are not covered by a sewerage system and hence use septic tanks to collect solid waste. The company operates and maintains a fleet of 50 desludging vacuum tankers for collection and transportation of this waste. In addition, it also operates two septage treatment plants which are capable of treating a total of 1,400 cubic metres of septage daily.

Recently, the company has undertaken the country’s first waste-to-energy project at the septage treatment plant in Taguig City. Waste at the plant is treated through anaerobic digestion, and biogas is generated as a by-product of the process. In February 2017, Manila Water completed the trial run of the plant. Once the plant commences operations, it is expected to generate savings worth PhP 17 million in power consumption for the company.

Operational and financial performance

Manila Water has recorded positive developments in its Philippine business ventures. It has exhibited a 21 per cent and 25 per cent year-on-year growth in billed volume of water and connections respectively in the financial year 2016. The company served 143,982 water connections, billing a total water volume of 75 mcm. However, the company records higher billed volumes of water through its Asia-Pacific operations. In 2016, Manila Water supplied about 168 mcm of water in Thu Duc and Kenh Dong, 2 per cent higher than that in 2015.

Through its operations, the company has successfully reduced non-revenue water (NRW) rates in Philippine cities. For example, in Metro Manila, the NRW rate has fallen from 63 per cent in 1997 to 11 per cent in 2016. In Clark, Manila Water reduced the NRW rate from 17 per cent to 4 per cent over a period of five years (2011-16).

At the same time, service coverage in these cities has also expanded under Manila Water. Under the Metro Manila concession agreement, service coverage has increased from 67 per cent in 1997 to 99 per cent in 2016. At the same time, the company was successful in achieving 100 per cent water coverage in Boracay in 2016 (from 64 per cent in 2009). During the same period, coverage was enhanced from 13 per cent to 74 per cent in Laguna.

Analysing the company’s financial performance, Manila Water exhibited a staggering net income growth of 97 per cent from its operations in the Philippines in the financial year 2016. Net income increased from PhP 290 million in the financial year 2015 to PhP 570 million in the financial year 2016. On the other hand, there was a steep decline in the net income recorded from the company’s international operations. From PhP 435 million in the financial year 2015, the net income from international operations fell by 36 per cent, to PhP 278 million in the financial year 2016.

The company’s operations augured well for its balance sheet in the financial year 2016. Manila Water increased its total asset and equity holdings by about 17 per cent and 34 per cent respectively in 2016 vis-à-vis 2015. At the same time, there was a marginal increase of 0.85 per cent in its liabilities over the same period.

Conclusion

Over the years, Manila Water has embarked on an aggressive growth path. The company has not only made international business forays, but has also expanded its business verticals. Besides treating and supplying raw water, Manila Water now extends services in sewage and septage management, designing and laying of pipeline networks, and sale of bottled drinking water. The company has also won new water supply contracts from Estate Water, and for the municipalities of Calasiao and Obando. Such developments will increase Manila Water’s billed volumes and water connections, pushing the company’s growth further.