P500M loan signed for water, sewerage services in Boracay Island

CEBU, Philippines - A P500 million loan- with an option to increase up to P1 billion-was recently signed by the Boracay Island Water Company, Inc. ("Boracay Water") with the Development Bank of the Philippines and Security Bank through the Philippine Water Revolving Fund (PWRF) to finance the additional capital expenditures for the company's environmental projects in Boracay over the next few years.

The PWRF is a collaborative undertaking of the Philippine government, the United States Agency for International Development (USAID) and the Japan International Cooperation Agency (JICA) to address the need to mobilize additional and sustainable resources to meet the country's Millennium Development Goals.

This deal was the first and the biggest loan provided by the PWRF to a private company from the water sector. It was the first of its' kind in the Philippine corporate market, carrying a 20-year tenor with an upsize feature of up to P1 billion.

The loan structure with a 75 percent fixed and 25 percent floating rate has aligned with the company's concession period of 25 years making cash flows more manageable and predictable.

The P1 billion term-loan facility will support key projects such as network improvement and expansion to achieve 100 percent water coverage by 2014 and 100 percent sewerage coverage by 2018. 

Such project would provide adequate quality water and sanitation services, support future growth and maintain environmental sustainability amidst the growing tourist inflow in the island.

Since taking over the island's water and wastewater operations last January 1, 2010, Boracay Water has brought down water losses significantly from 37 percent to 24 percent, increased water pressure from 15 psi to an average of 30 psi resulting in the provision of 24/7 water supply to 96 percent of the island's population.

Recently, Boracay Water upgraded the island's Sewage Treatment Plant (STP) to boost wastewater treatment capacity by 250 percent (from 2.6 million liters per day to 6.5 million liters per day.)

Since the STP upgrade, the treated water released from the facility to Bolabog beach has been safe for swimming and aquatic life.

Boracay Water is a Public-Private Partnership between the Tourism Infrastructure and Enterprise Zone Authority (TIEZA) and the Manila Water Company, Inc.