Manila Water mulls cutback in capex

Ayala-led utility firm Manila Water Corp. said yesterday it may cut back on its capital expenditures after the Metropolitan Waterworks and Sewerage System (MWSS) thumbed down requests by water utility companies for rate increases this year.

“We might need to revisit our capital budget to mitigate the impact of the postponement of the rate hike,” said Luis Juan B. Oreta, newly-appointed chief finance officer of Manila Water.

Manila Water, which supplies water to Metro Manila’s East Zone, asked for an increase of its water distribution fees by P6.90 per cubic meter to cover capital expenses. The tariff increase was needed to ensure reliability of the supply of water to the eastern zone and to enable an expansion of services in the next 15 years.

Historically, Manila Water spends P10 billion for its capex annually.

Oreta said the company’s capex for this year is fully covered, noting that Manila Water just raised P4 billion from a bond issue in October 2008.

He said the firm might tap the debt market again this year to raise over P1 billion but not more than P2 billion to fund operating expenditures.

Despite the postponement of tariff rate adjustments, Oreta is confident that Manila Water would still post double-digit growth in revenues this year but not as much as last year.

The government approved “in principle” a 10-year extension of the concession agreement of the two Metro Manila water distributors to keep their current rates while increasing service expansion and quality.

A plan to extend the franchise agreement and expand the utilities’ coverage would allow Manila Water to increase revenues and the company’s total capex to over P300 billion.

If the extension gets implemented, Manila Water will be allowed to continue operations until 2032 from the original 2022.

Manila Water is looking for new water sources aside from Angat Dam in Bulacan province from where Metro Manila gets 97 percent of its water supply. It is currently aggressively expanding service to reach fringe areas of Taguig, Antipolo, San Mateo, Rodriguez, Cainta, Taytay and Angono. Service improvement and rehabilitation projects are also being done in the southeastern part of Quezon City, Mandaluyong City, San Juan, Marikina City, Pasig City, Pateros, the San Andres and Sta. Ana areas of Manila and the portion of Makati City east of the South Super Highway Aquino said.

Oreta said Manila Water is also expanding its wastewater operations and sanitation services all over the east zone.