MANILA, Philippines – Maynilad Water Services Inc. is gearing up for a rate rebasing next year as its net income continues to remain much lower than its capital expenditures.
In an interview with reporters, Maynilad president and chief executive officer Ricky Vargas admitted that the West Zone concessionaire’s net income this year is projected at P6 billion, much lower than the water firms P10-billion capital expenditure for 201’1.
Vargas refused to reveal if Maynilad would seek an increase in its tariff structure, pointing out that the rate rebasing review next year follows a formula.
However, Vargas pointed out that Maynilad’s capex continues to remain much higher than its net income. Last year, Vargas said, Maynilad posted a net income of P4.5 billion while its capex was much higher at P6.5 billion. “We’re spending more than we earn,” Vargas said.
However, Vargas said that Maynilad’s continuing high capex is in line with its plans to further expands, improve and rehabilitate the water utility firm’s infrastructure network.
Expansion areas, Vargas said, include additional pipe-laying in Cavite, from Bacoor to Imus. Maynilad had earlier announced that it is spending P3.7 billion this year to expand its service coverage and improve service levels in its concession area.
The P3.7 billion will be spent for the reinforcement and replacement of primary pipelines, including the completion of pipe-laying projects along the Alabang-Zapote and Gen. Tirona highway which would connect previously unreached customers in the south.
Part of that expansion includes the connection of the BF Resort Subdivision to the Maynilad water grid.
Groundbreaking to signal the start of the P50 million pipe-laying was held Friday, July 1.
Once completed, Maynilad will be able to provide up to 10,000 households in BF Resort with potable water 24 hours a day, seven days a week at a pressure of 16 psi (pounds per square inch) or enough pressure to provide water flow up to the third floor.
According to Vargas, Maynilad has sub-contracted the pipe-laying to seven contractors so that, hopefully, Maynilad would already be able to provide water to BF Resort by December this year.
At present, BF Resort residents depend on deep wells and have an average 12-hour water supply window. To augment their deep wells, resident also have to rely on water deliveries which can cost as much as P1,800 per month.
Maynilad has also earmarked P2.6 billion for its Non-Revenue Water (NRW) management program which would include active leak management, NRW diagnostic, and the establishment, isolation, measurement and rehabilitation of District Metered Areas (DMA) all over the West Zone.
For leak management alone, Maynilad is allocating P269 million, and P981 million for meter clustering and pipe replacement projects.
According to Vargas, Maynilad hopes to bring down its NRW this year to between 48 percent and 46 percent.
Unfortunately, Vargas admitted that Maynilad would find it difficult to bring down its NRW to the 11 percent NRW level of Ayala-led and East Zone concessionaire Manila Water Company.
Maynilad is owned and managed by DMCI-MPIC Water Co., Inc. (DMWCI), a joint venture between Metro Pacific Investments Corp. (MPIC) and DMCI Holdings, Inc. (DMCIHI).
Maynilad’s concession area includes the cities of Manila (all but portions of San Andres and Sta. Ana), Quezon City (west of San Juan River, West Avenue, EDSA, Congressional, Mindanao Avenue, the northern part starting from the districts of the Holy Spirit and Batasan Hills), Makati (west of South Super Hi-way). Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon all in Metro Manila, Cavite City, and the towns of Bacoor, Imus, Kawit, Noveleta and Rosario, all in Cavite Province.