Manila Water hiking capex for expansion

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MANILA Water Co. (MWC) plans to hike its capital spending as it continues to expand its portfolio of new businesses across the country and the region.

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Manila Water president and chief executive officer (CEO) Gerardo Ablaza Jr. said their capital spending will be more than P10 billion starting 2016.

He said this is double the East Zone’s capex for this year pegged at P5 billion.

Last year, Manila Water spent P4.1 billion in capital expenditures (capex) for its new and existing service reliability projects.

The amount, however, is lower than the P7.7 billion capex before the impasse due to the ongoing arbitration case on the tariff rate adjustment dispute, which is still pending before an arbitration panel in Singapore.

In expanding its portfolio, Manila Water took over the water reticulation system of Laguna Technopark and was awarded a 10-year non-revenue water reduction project by the Zamboanga City government.

The company also secured another 15-year extension of its Clark Water concession and has started the Cebu Bulk Water project.

Manila Water is also bullish about the expansion of its ventures overseas particularly in Vietnam and Myanmar.

But in the absence of an approved Rate Rebasing Business Plan since 2013, Ablaza said their capital expenditures for the East Zone, amounting to P4.14 billion in 2014, were limited to ongoing and new service reliability projects.

“While we continue to seek a swift and equitable conclusion to the case, our efforts are focused on sharpening and streamlining the East Zone concession to make it more resilient to an ever-changing regulatory environment,” said Ablaza.

With the 2013 Rebate Rebasing exercise remaining unresolved for over two years, Ablaza said they have taken this as an opportunity to examine how their operating and financial platforms can be enhanced in the context of a maturing market and a more challenging regulatory environment.

For his part, Manila Water chairman Fernando Zobel de Ayala said that even with the challenges they continue to face, the company was able to increase its net income in 2014 to P5.8 billion.

During the company’s annual stockholders meeting, Zobel de Ayala said the East Zone concession registered a billed volume growth of 4 percent, the highest in six years.

The company’s new business initiatives in Boracay, Clark, Laguna and Vietnam continue to grow collectively posting a 34 percent increased in billed volume, he added.

“Our total shareholder return was at 36 percent at the end of 2014,” he said.

He said the pending arbitration case prevented the company to come up with an approved business plan in the East Zone concession.

With the dispute, the implementation of the company’s business plan for 2013 to 2017 was put on hold as well as the water tariff adjustment pending the resolution of the case.

Nonetheless, “we remain committed to fulfilling our service obligations to our customers while maintaining our financial prudence,” he said.

For his part, Luis Juan Oreta, Manila Water chief finance officer and treasurer, said the spending will still depend on the outcome of the arbitration case.

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