Water Champion

Water Champions initiate or implement water reforms in their chosen field, and are directly involved in improving the water situation in their respective countries.

Rogelio L. Singson: Maynilad’s New Lease on Life
May 2008

By Maria Christina Dueñas Knowledge Management Officer ABOUT THE CHAMPION
On 1 July 2007, Mr. Rogelio L. Singson assumed office as the 5th President of the Maynilad Water Services, Inc. (MWSI) and the first under the company’s new management. Six months earlier, new owners took over the reins of Manila’s beleaguered concessionaire, replacing the decade-long partnership of previous shareholders Benpres Holdings Corporation, Suez Environment, Lyonnaise Asia Water Pte Ltd, and Metrobank. When the allFilipino partnership of DM Consunji Holdings Incorporated and Metro Pacific Investments Corporation took over, Maynilad had about $240 million foreign debts and a staggering 70% nonrevenue water (NRW). Capital investments have also ceased. A year later and six months since Mr. Singson assumed office, the new Maynilad has paid off its debts, mainstreamed new strategies to reduce NRW, and embarked on a P33 billion capital expenditure program for 2007-2015. For Mr. Singson, bringing the ailing company back on its feet is a challenge for which his previous professional experiences have prepared him well. He has extensive involvement in various privatization projects of the Philippine Government. This includes his stint as President and Chairman of the Bases Conversion Development Authority, where he saw to the overall implementation of projects converting former military base lands for private use. He was also involved in the development of the Subic-Clark-Tarlac Expressway project, and the land use planning, construction, and formulation of privatization programs for the Fort Bonifacio and Villamor Airbase development, Subic Bay Metropolitan Authority, Clark Special Economic Zone, Camp John Hay in Baguio City, and Poro Point in La Union. Prior to these, Mr. Singson served in the Government in various capacities— from Executive Director for the Coordinating Council of the Philippine Assistance Program to Assistant Cabinet Secretary at the Office of the President.

What is Maynilad’s overall strategy in the coming years We have 5 strategic goals that will guide our projects for the next 5 years— improve network and operational efficiency; improve organizational efficiency and right size the organization; create shareholder value; focus on customer care; and improve corporate image. What is your greatest challenge in turning Maynilad’s operations around? Three big challenges come to mind. First would be changing the mindset and culture of the organization from a “public utility” into a “consumer marketing organization.” When our employees worked with the government—the Metropolitan Waterworks and Sewerage System (MWSS) —and the previous owners, they were oriented more toward the task and less toward the customers. Now, we want them to focus on responding to the needs of individual customers. Next would be executing our P33 billion capital expenditure program in an efficient and cost effective way, resulting in significantly reduced nonrevenue water (NRW) and a modern network. Finally, there is the challenge of changing the attitude of our customers regarding the value of potable water. Our customers need to appreciate their access to potable water and show it by paying water bills on time, reporting illegal connections leaks, and protecting water meters from illegal tampering. How much is Maynilad investing to achieve its targets and how does it compare to the investments of the other concessionaire, Manila Water Company, Inc. (MWCI)? In 2007, we had a capital expenditure (capex) budget of P5 billion. This year, we will invest another P8 billion even if our tariff adjustment will only take effect, if at all, in January 2009.

I’d say our investment program for the first 5 years of the new Maynilad will be higher than the budget of MWCI in its first 10 years. What is your projected return on investment over the next 15 years? Being a regulated entity covered by a Concession Agreement, we are allowed a return on our investments and expenditures equivalent to an Appropriate Discount Rate (ADR). In the current rebased period, we had a 10.4% ADR. We are looking at an ADR of 9.3% for the period 2009–2012. How does Maynilad intend to recover its investments? Among others, we intend to reduce water losses through dedicated NRW management and improve organizational efficiency through a reduction in our workforce We’re also undergoing a rate rebasing and tariff adjustment process, for which we already submitted to the MWSS Regulatory Office our 2008-2012 Business Plan specifying capex investments to improve service levels. Since our proposed tariff adjustment is less than half of what was granted to MWCI, we’re hoping we won’t have problems on this score. What tariff level is ideal for Maynilad to recover its costs? Given the way the privatization was structured—with us shouldering 90% of MWSS loans through concession fees and MWCI shouldering the rest —customers of Metro Manila’s East zone (MWCI) and West zone (Maynilad) pay significantly different tariffs. We hope to narrow down that differential by improving our efficiency and reducing NRW. Also, with the more tempered tariff adjustment we’re working to secure, we hope that 2012 will see almost similar tariffs in the 2 zones. In the latest rebasing, MWCI was given about 70% tariff increase staggered in the next five years. In Maynilad’s case, we’re proposing about half of that due to improved efficiency and reduction in NRW over the next 5 years.

_______________________________ 1 Metropolitan Waterworks and Sewerage System (MWSS) has jurisdiction over all waterworks and sewerage systems in a service area comprising the National Capital Region, the entire province of Rizal and part of the province of Cavite. *This article was first published online at ADB's Water for All website in May 2008: http://www.adb.org/Water/Champions/singson.asp.
The Water Champions series was developed to showcase individual leadership and initiative in implementing water sector reforms and good practices in Asia and the Pacific. The champions, representing ADB’s developing member countries, are directly involved in improving the water situation in their respective countries or communities. The series is regularly featured in ADB’s Water for All News, which covers water sector developments in the Asia and Pacific region.

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