From PrimeWater to ‘Puregold Water’

Will retail tycoon Lucio Co’s acquisition of the Villar Group’s PrimeWater lead to better services for consumers?

For sure, PrimeWater customers across the water company’s more than 75 concession areas from north to south are waiting with bated breath.

They want an end to their woes, which range from high water bills to no water at all.

For months, we’ve been hearing that investors were quietly eyeing to buy PrimeWater but there were always issues on “valuation.”  Some potential buyers also did not want the whole package but just some areas.

But the Villar Group wanted to sell “all or nothing.”

Industry sources said that  AlphaPrimus, the advisor, tried to offer Prime Water to big players in the industry – the Manuel Pangilinan-led Maynilad, Enrique Razon’s Manila Water, the Aboitizes’ Aboitiz Infrastructure and a few others.

No less than Pangilinan had said early November that his group and the Villars were in talks, followed by the opening of PrimeWater’s books for due diligence. Both parties signed a non-disclosure agreement.

Weeks after Pangilinan’s announcement, MVP Group insiders said the price tag was on the high side, something they did not agree with, considering that some PrimeWater areas were fundamentally problematic and complicated.

This means that whoever takes over would really need time to provide efficient services there. Aside from these nuances, the new owner would have to honor PrimeWater’s investment obligations – different in every area – or renegotiate these.

One source from another group said the price tag reached at least $1 billion, which many investors deemed too high.

Aside from Pangilinan, another party was already in the due diligence stage but before they could move to the next step, Co had already made his move.

In the end, it’s the retail king who emerged as the White Knight of the troubled water company.

So there it goes.

In the announcement on Tuesday, Co’s Crystal Bridges Holding Corp. said it had entered into definitive agreements for the acquisition of 100 percent of PrimeWater.

Co is low-key but his empire spans across industries, from retail to banking. He chairs listed holding firm Cosco Capital Inc., which has investments in grocery retailing through Puregold and S&R, liquor distribution, commercial real estate, specialty retailing, oil and minerals and a growing renewable energy portfolio.

The retail magnate also operates a water utility company called Pamana Water Corp.

Co and Villar weren’t necessarily friends or buddies but Co’s PBCom was among the lenders of PrimeWater so Co, a quiet but aggressive tycoon, must have been eyeing the company for quite some time already or since the Villars’ “troubles” started.

No less than former senator Cynthia Villar, the wife of tycoon and Villar Group chairman Manuel Villar, said in August that her husband wanted to “dispose of” the water service provider, saying it was being used against them in politics.

According to its website, PrimeWater’s services include water system development and construction, bulk water supply, water supply improvement and rehabilitation and septage management.

Its coverage is practically across the entire Philippines – from Cagayan Province in the north, Zamboanga City in the south and many provinces in between.

Company data show that it is present in 16 regions, 161 cities and municipalities and 1.7 million service connections.

However, in recent years, complaints from consumers have made their way on social media – from no water to dirty water to expensive billings.

Public procurement undermines gov’t modernization

Our government procurement system is obsolete and needs drastic changes.

Let me tell you why.

Imagine a government agency acquiring smart phones for the communication needs of its employees. As a government office, it chooses the basic model to stretch the funds so that every employee will receive a unit.

But then it goes through the whole government procurement process, which can take six months, assuming all things go well, from issuing the notices, evaluations and securing the approvals.

In reality, however, these things can take longer that by the time employees receive the actual smartphones, major providers like Apple and Samsung would have already released a newer model, putting the earlier chosen model outdated. Its price had depreciated.

It’s even more complicated for more sophisticated products such as ICT systems. Think firewall or data centers. As new systems or technology emerge, prices change, faster than the government can keep up.

Clearly, public bidding in the Philippines moves on government time, way slower than the pace of technology time. Those two clocks do not sync.

Against this backdrop, we must improve our government bidding procedures so that when we procure the necessary ICT systems, which are increasingly more important now in the era of cybersecurity challenges and the like, we are able to keep up.

Suppliers quote goods and services at the rates during the time of bidding. But when the contract is finally awarded – possibly six months or even a year later – the same products already cost far less because succeeding models have already been released.

All of us who own smart phones know this. New models are introduced every year and the latest ones are the most expensive.

Thus, government agencies cannot blame the suppliers when it’s really our slow procurement process that’s the culprit.

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