Manila Water to spend more if govt extends contract

Published by rudy Date posted on March 31, 2009

Ayala-led Manila Water Co., Inc. plans to increase its capital expenditures in the East Zone concession of Metropolitan Waterworks and Sewerage System (MWSS) if it would be granted an extension in its contract.

Rene Almendras, Manila Water president, said that the water utility will allocate P450 billion to cover its capital spending requirements until 2037 if its petition for a contract extension is approved by regulators.

Over the next few years, Manila Water targets to service an additional 200,000 people per year. It has also submitted a wastewater master plan that will require investments of up to P50 billion until 2018 to help clean up the Pasig, San Juan and Marikina rivers.

The company has also made proposals for a concession in Boracay Island and a bulk water supply project for Cebu province.

Manila Water currently holds a 25-year contract with MWSS that runs up to 2022. The utility has been seeking a 15-year extension, which company officials earlier said could help temper its rate increases by spreading the recovery period further.

It would be recalled that the government earlier blocked the utility’s rate hike this year, which took into account its capital expenditures over the coming years as these would have to be recouped from its customers. This was done to protect consumers from rising commodity prices.

Almendras said the company’s proposed capital expenditures—if its contract is extended—will be used to fund the construction of the P48-billion Laiban Dam and the expansion of its water and wastewater facilities.

MWSS’ water concessionaires, which include Maynilad Water Services Inc. that is controlled by DMCI-Metro Pacific Investment Corp., have been pushing for the construction of the project in light of Metro Manila’s growing demand for water.

Food and beverage conglomerate San Miguel Corp. (SMC) earlier submitted to MWSS its unsolicited proposal to put up the project.

SMC, like the Metro Pacific group, has been positioning itself in the board of giant utility Manila Electric Co.

Meanwhile, Manila Water announced the declaration of a P0.20 cash dividend per common share for shareholders as of April 16 and payable on May 8.

The projected cash dividend for the whole year of P0.40 per common share, which is based on a 35-percent pay-out ratio, is 14 percent higher than the prior year’s cash dividends.

The company earlier reported net earnings of P2.80 billion for the year 2008, or a 16-percent increase year-on-year.

Manila Water services the water and wastewater needs of the eastern part of Quezon City, Mandaluyong City, San Juan City, Marikina City, Pasig City, Pateros, parts of Manila and Makati as well as Rizal and Bulacan provinces. –Euan Paulo C. Añonuevo, Reporter, Manila Times

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