Manila Water looks inward

Razon-led Manila Water Co. is looking at more onshore investments for expansion even as it continues to keep an eye on offshore opportunities, according to Jose Victor Emmanuel de Dios, president and chief executive officer of Manila Water.

In an interview, De Dios explained that while the company has expanded to Vietnam and Indonesia, and is aware of opportunities in other parts of the world, it sees more need for investments in areas outside of its east zone concession.

Manila Water’s east zone concession comprises a 1,400-square-kilometer area that covers 23 cities and municipalities in Metro Manila and Rizal. These include Mandaluyong, Makati, Pasig, Pateros, San Juan, Taguig, Marikina and parts of Quezon City and Manila. The towns of Angono, Baras, Binangonan, Cainta, Cardona, Jalajala, Morong, Pililia, Rodriguez, Tanay, Taytay, Teresa, San Mateo and Antipolo in the province of Rizal are also part of the east zone.

However, aside from the Manila concession, Manila Water has a holding company for its domestic operating subsidiaries in Manila Water Philippine Ventures Inc. (MWPV).

Companies under MWPV are Metro Ilagan Water Co. Inc., Manila Water Consortium Inc., with its subsidiary - Cebu Manila Water Development Inc., Davao del Norte Water Infrastructure Co. Inc., with its subsidiary - Tagum Water Co. Inc.; water distribution and waste water services namely, Boracay Island Water Co. Inc., Clark Water Corp., Laguna AAAWater Corp., Calbayog Water Co. Inc., North Luzon Water Co. Inc., Leyte Water Co. Inc. and Filipinas Water Consortium Holdings Corp., with its subsidiaries Obando Water Co. Inc., MWPV South Luzon Water Corp. and Bulakan Water Co. Inc.

Another subsidiary of Manila Water is Calasiao Water Co. Inc., a water supply project for the Calasiao Water District; and three business-to-business water and wastewater services comprised of Aqua Centro MWPV Corp., Bulacan MWPV Development Corp., Manila Water Technical Ventures Inc., and EcoWater MWPV Corp. Under MWPV is a division, Estate Water, which operates and manages the water systems of townships developed by Ayala Land Inc. Beginning 2021, Estate Water provided waste water services to Ayala Malls.

Manila Water, through Manila Water Asia Pacific Pte. Ltd. (MWAP) -- as its holding company for international ventures-- is the sole shareholder of Manila Water South Asia Holdings Pte. Ltd. (MWSAH), Thu Duc Water Holdings Pte. Ltd. (TDWH), Kenh Dong Water Holdings Pte. Ltd. (KDWH) and Manila Water (Thailand) Co.

Under MWAP are two affiliated companies in Vietnam, namely Thu Duc Water B.O.O. Corp. (Thu Duc Water) and Kenh Dong Water Supply Joint Stock Co. (Kenh Dong Water), both supplying treated water to Saigon Water Corp. (SAWACO) under a take-or-pay arrangement. Also under MWAP are Saigon Water Infrastructure Corp. (Saigon Water), a holding company listed in the Ho Chi Minh City Stock Exchange and Cu Chi Water Supply Sewerage Company Ltd. (Cu Chi Water).

Apart from its operations in Vietnam, MWAP has associates in Thailand and Indonesia through Eastern Water Resources Development and Management Public Company Limited (East Water), a fully integrated water supply and distribution company listed in the Stock Exchange of Thailand (SET), and PT Sarana Tirta Ungaran (PT STU), an industrial water supply operation in Indonesia, respectively.

In the Middle East, MWAP has two Management, Operation and Maintenance Contracts (MOMC) with the National Water Co. (NWC) of the Kingdom of Saudi Arabia for its northwest and eastern clusters.

The MOMC contains the management, operations and maintenance of the water and wastewater facilities to be undertaken through the consortium of Manila Water with Saur SAS and Miahona Company.

As such, De Dios said, “Obviously we’re abroad already. And I think what we have stated is where we can add value to the markets that are available and where it makes sense for us... we’ll take a look. We haven’t since the Razon group came into Manila Water, we’ve not actually made any new investments offshore.

“Now, and I guess the thinking is, water’s a little different... a different beast altogether because, I guess all water is local... not all the jurisdictions will allow foreign entities to do the distribution aspect of it. So, bulk is typically what you leave for foreign entities because of course that’s where you bring the expertise, the capital.”

However, De Dios acknowledged that in investing in foreign utilities, “you have to be very, very careful, because all water is local, the customers will be affected by water or the lack thereof, or services, which is not good. And so we have to be very, very careful. There’s a regulatory environment. There are challenges, etc.”

He pointed out that “we’re not meant to rush into offshore investments, just for the sake of saying, oh, we’re in this country or that country. That has to make sense for the host, make sense for us. And in fact, we see a lot of need outside of our east zone in the Philippines, because it’ll be much easier to do projects outside of the east zone than offshore. We’re not saying we won’t do projects offshore. We have to say that we have to be a little more careful evaluating... the non east is it’s a little easier for us in the sense that we Filipinos, we know the country.”

Outside of its east zone concession, De Dios said, its largest market is Laguna. “I think we cover about 28 percent of the demand. We are in a joint venture with the province there. It’s a very successful partnership.”

He revealed that MWPV made an acquisition last year, buying a share owned by Metro Pacific Water of a water service provider to Los Baños and Bay, to improve Manila Water’s footprint in the Laguna province.

At the same time, De Dios revealed that they divested two Bulacan assets, selling these to San Miguel Corp. “They have the airport ongoing there. They have a bulk water, so we felt it’s better maybe that the two municipalities were not such a significant scale, and strategically we felt maybe it might be better to recycle that capital for a jurisdiction where we have a better footprint, which is Laguna. It was a very mutually beneficial transaction.”

Manila Water, De Dios added, is now “being more deliberate” in its acquisitions. “I guess we’re looking to maybe see how we can be of greater value in the areas that we’re in.”

New acquisitions, he said, would “depend on the opportunities that arise. Obviously, it’s always easier to build from what you have because, you know, the water business is a tricky business in the sense that you have to deal with customers. If you’re on the full concession... distribution, even if you deal with the bulk water supply, you deal with the water district where you are partners and they have to deal with you, collectively you have to deal with your customers. So we’ll take a look if it makes sense to us.”