RP inks ¥6.59-B loan for relending to Mla Water

The World Bank (WB) has extended ¥6.592 billion loan to help improve sewerage and sanitation services in the east zone of Metro Manila and expand sewer coverage in the city from 12 percent to 30 percent in the next five years.

Under the loan facility agreement, Land Bank of the Philippines, the principal loan receiver, shall relend the money to Manila Water Co. Inc. which shall shoulder the payment of principal and equity investments for the project estimated to cost around $76 million.

Manila Water president Antonino T. Aquino said the project is "an innovative public-private sector approach that facilitiates the implementation of much-needed infrastructure projects and delivery of services at optimum cost, thus cushioning impacts on the water prices."

The WB loan manifests the new confidence by foreign investors in the Philippines’ financial and technical capacity to engage in major infrastructure investments. At a time when overseas financing institutions are calling for concrete improvements in the country’s investment climate, the aggressive sewerage and sanitation targets of the project further opens the door for investment opportunities by local and foreign companies.

More importantly, the project is expected to bring Metro Manila at par with other Southeast Asian mega-cities in terms of environmental compliance and quality of life.

Aquino noted that one of the biggest challenges of the project involves educating consumers about water pollution problems caused by the lack of proper sewerage and sanitation systems.

"About 85 percent of Metro Manila households rely on individual septic tanks which are not regularly emptied. Much of the discharge from these tanks overflow to canals and creeks throughout the city. Approximately 70 percent of the pollution flowing into the Pasig River comes from domestic wastewater. Under the project, Manila Water will build facilities that will receive and treat collected septage from all over the east zone. Facilities for sewage collection and treatment will likewise be built," Aquino said.

Manila Water serves over five million people in the east zone which covers major business districts in the cities of Makati, Pasig, Taguig, San Juan, Mandaluyong and Quezon City and residential areas in Marikina, Pateros, Cainta, Taytay, Montalban and Antipolo and extending up to the Rizal towns of Angono, Binangonan, Baras and Jala.

The company has brought down systems losses in its service area to 37 percent from a high of 63 percent in 1997. This was attributed to a major network expansion and pipe replacement program spread over the past seven years, costing some P9 billion.

Aquino said its strategy which involved the comprehensive replacement of the company’s pipelines throughout the east zone proved highly effective in reducing leaks and pilferages and improving service to customers.

The landmark NRW level is roughly equivalent to over 400 million liters per day saved since the Manila Waterworks Sewerage System was privatized.

This year, the company is spending over P4 billion to replace and lay over 200 kilometers of pipelines throughout the east zone.

Over a five-year period, Manila Water will invest a total of P20 billion to further reduce leakages and finance expansion projects in the eastern portion of Metro Manila, as well as in other parts of the country and Asia.

Manila Water recently prequalified to bid for a water supply and sewerage services project in Delhi, India. It has teamed up with Larsen and Toubro Ltd., India’s largest engineering and construction firm and the Mahindra Group, one of India’s leading conglomerates, to bid for the project.

Other groups that have submitted bids for the project are international firms Veolia Water, Suez and Saur. The auction is scheduled in October this year.

The project is part of a $100 million loan of the government of India from the World Bank. The Delhi Jal Board, the owner of the project, plans to spend about $60 million on two six-year management contracts, one for each operational zone, with a combined population of approximately 1.4 million.

Aquino said India’s water sector presents a lot of opportunities because of its huge market potential. – Donnabelle Gatdula