SCALING NEW HEIGHTS
Manila Water Asia Pacific (MWAP) steered the expansion of the Company’s business engagements in the ASEAN region and drove its internationalization strategy.
As Manila Water continued to leverage on its skillsets, MWAP successfully penetrated new markets outside the Philippines forging new partnerships and undertaking various acquisitions. MWAP remains bullish about the ASEAN region, as it intensifies its business development efforts by taking advantage of foreign investment opportunities in the water sector.
MWAP continued to make its presence felt in the region when it recently signed a Share Purchase Agreement with Electricity Generating Public Company Limited (EGCO) to acquire an 18.72 percent stake in Eastern Water Resources Development and Management Public Company Limited (East Water), a publicly listed water supply and distribution company in Thailand. East Water provides raw and Recently acquired an 18.72 percent stake in East Water, a publicly listed company in Thailand tap water supply in the eastern region of Thailand, including the country’s main industrial area with a total area of 13,285 square kilometers. This is nearly as large as the CALABARZON region in the Philippines. MWAP sees this development as a strategic entry point into Thailand, and part of its ongoing expansion in Southeast Asia.
In partnership with state-owned Saigon Water Corporation (SAWACO), Manila Water successfully ventured outside the Philippines in 2008 by winning a World Bank-funded non-revenue water (NRW) reduction pilot in the Zone 1 of Ho Chi Minh City. The goal of the project was to recover 38 million liters per day (mld) from the network. The successful implementation had a significant social impact to the unserved service areas of SAWACO and enabled the Company to earn the trust of Vietnamese authorities and local partners. This credibility paved the way for the acquisition of two bulk water companies in Vietnam under a take-or-pay arrangement. Thu Duc Water and Kenh Dong Water supply treated water to SAWACO, effectively supplying one-third of the demand of Ho Chi Minh City’s 8.3 million population.
As of 2017, Manila Water owned 49 percent stake of Thu Duc Water, which has a 50-year bulk water supply renewable contract for 300 mld. It supplies two urban (Districts 2 and 7) and three suburban (District 9, the Nha Be District, and the Thu Duc District) districts. Thu Duc Water’s revenues grew by three percent to VND330 billion, mainly driven by the higher water intake of SAWACO, resulting in a one percent billed volume growth which reached 110.9 million cubic meters (mcm). As Manila Water aims to serve more businesses and communities in Ho Chi Minh City, the initiatives to secure necessary approvals for the expansion of Thu Duc Water’s capacity to 600 mld, are now underway.
Manila Water likewise owns 47.35 percent stake of Kenh Dong Water which has a 20-year bulk water supply contract for 150 mld, and is expandable to 200 mld. It supplies the three suburban districts of Binh Tan, Tan Phu, and District 12 in the southern part of Ho Chi Minh City. Kenh Dong Water posted revenues amounting to VND217 billion as a result of a two percent billed volume growth at 57.8 mcm.
To further expand and strengthen MWAP’s presence in Vietnam, Manila Water recently acquired additional shares of Saigon Water Infrastructure Corporation (Saigon Water), a holding company in Vietnam that is listed in the Ho Chi Minh Stock Exchange, and now effectively owns a total of 37.99 percent stake of the company. Saigon Water serves as the Company’s vehicle to secure water supply, water distribution and used water treatment contracts across Vietnam. Its first concession project, Cu Chi Water, is a Build-Own- Operate (BOO) contract to develop and operate a water supply system in Cu Chi District, with a population of about 391,000. Saigon Water also acquired a 43 percent stake in Tan Hiep Water. Tan Hiep is a 300-mld plant that will supply the SAWACO-served area of Hoc Mon in Ho Chi Minh City, with a population of around 415,000. Adding to Saigon Water’s portfolio is its acquisition of a 51 percent stake in Gia Lai Water, which is a 20-mld water distribution operation servicing the Central highlands of Gia Lai Province, which has population of roughly 166,000. Saigon Water reported revenues of VND256 billion in 2017. However, this surged by 456 percent in its PFRS-translated income to P69 million due mainly to a government grant for Cu Chi’s Thu Duc Water Treatment Plant, supplying 300 mld in Ho Chi Minh City capital expenditures. Together with Thu Duc Water and Kenh Dong Water, the capacity in Ho Chi Minh City now stands at 820 mld, which is equivalent to approximately 50 percent of the city’s demand.
In the tradition of Manila Water’s maiden project in Zone 1, Asia Water Network Solutions (Asia Water) was formed to pursue NRW reduction projects in Vietnam. In 2017, Asia Water began to work on extending its business portfolio in the industrial market segment, by exploring business-to-business project opportunities with industrial park developers in the country.
As Manila Water broadens its regional reach through business opportunities in Indonesia, MWAP signed a Memorandum of Understanding in November 2015 with PDAM Tirtawening Kota Bandung (PDAM Bandung), a water utility company owned and controlled by the city government of Bandung. The agreement undertakes a demonstration project to reduce NRW in Bandung City, the capital of Indonesia’s West Java province with a population of over 2.4 million. From a high NRW level of 59 percent in September 2016, MWAP reduced NRW to 23 percent in December 2016. The pilot project successfully recovered 134,400 liters per day, enough to serve 379 new households and equivalent to 1,590 people. MWAP’s relationship with the city government of Bandung was further strengthened through its social project to build the city’s microlibrary, in collaboration with the Ayala Corporation.
With the successful completion of the NRW reduction project, Manila Water clearly showcased its best practices, and is now ready to take on other opportunities and to grow its expertise in the market. Very recently, Manila Water signed a Share Purchase Agreement to acquire a 20 percent stake of PT Sarana Tirta Ungaran (STU), a bulk water supply company in Indonesia with a capacity of 21.5 mld. STU services PDAM Kabupaten Semarang, a regency in Central Java, and industrial customers in its Bawen District. Notable customers in Bawen include PT APAC Inti Corpora, a textile and garment manufacturing company, with operations situated in a 100-hectare facility. Manila Water will continue to expand its presence in Indonesia through acquisition of key projects, and exploration of greenfield opportunities in strategic locations.