Manila Water Co. (MWC), the largest listed Philippine water utility, plans to expand in Southeast Asia to diversify and spread investment risks while it deals with regulatory pressure to cut tariffs in the capital.
“Political sensitivities around water tariffs can only heighten over time,” President Gerardo Ablaza told shareholders at the company’s annual meeting in Manila today. The utility has examined opportunities elsewhere and is committed to expand in emerging markets, particularly Vietnam, Indonesia and Myanmar, he said.
Manila Water, which serves half of the metropolis, is under pressure to pursue regional investments to achieve returns on a larger scale as it deals with a regulatory push to cut tariffs in the capital, where the market has matured.
Manila Water shares rose 2.1 percent to 24.55 pesos as of 3:20 p.m. local time. The Philippine Stock Exchange Index fell 0.4 percent.
The utility expects net income of 4 billion pesos from new locales by 2018, or 40 percent of the group’s earnings by that time, Ablaza said. “If we were to continue to grow, we must look at other markets and other opportunities.”
The company was ordered by the regulator in September to cut its basic water charge after a planned increase, prompting it to seek arbitration at the International Chamber of Commerce. The company will wait for a ruling, expected by July at the latest, before committing to a spending and financing plan, Chief Financial Officer Luis Juan Oreta told reporters after today’s annual meeting.
The utility proposed spending as much as 60 billion pesos in five years, Oreta said, adding that “until the arbitration is finalized, it’s very difficult to make any financing plans.”
The company signed an agreement to cut water leaks in Yangon City in Myanmar, it said on March 17. It qualified to bid for a bulk-water supply project in Bandar Lampung, Indonesia, according to a stock exchange filing in February.
In July, Manila Water failed to win approval to buy a 51 percent stake in PT PAM Lyonnaise Jaya, which supplies water to western Jakarta.
Net income at Manila Water, which is also planning to expand operations in Vietnam, rose 5 percent to 5.75 billion pesos last year as customers bought more water.
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