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Metro Manila’s PPP experience in contributing to SDG 6

Mark Tom Mulingbayan20 March 2017

WATER SUPPLY AVAILABILITY:3.1 million customers

ILLEGAL CONNECTIONS

LEAKS

POOR CUSTOMERSERVICE

LOW WATER PRESSURE

TO NO WATER

26%24/7 water service

Water Supply before 1997

Sewerage before 1997

• Sewer coverage at 3% mostly built before the 1970’s.

• More than 80% use septic tanks

• Most improperly designed

• Not regularly maintained

• The rest, esp. the urban poor, had no access to sanitary facilities

44 1997 Public Private Partnership

Personnel

Procurement

Financing

Inherent weaknesses in government owned and controlled corporations…

1997 Public Private Partnership

WEST ZONE EAST ZONE

Metropolitan Waterworks and Sewerage System (MWSS)

CONCESSION AGREEMENT

1997 to 2022, extended to 2037

Ayala Group Strategy adopting the SDGs

The Ayala 360° Degree Sustainability Framework

48.3%* 51.8%*30.7%*

Emerging major player in power generation with a combination of both renewable and conventional power assets

Growing portfolio of key transport infrastructure public-private-partnerships (PPPs) in the Philippines

Key player in Philippine automotive distribution and dealership with Honda, Isuzu, and Volkswagen

Leading and most diversified property developer in the country with the largest landbank

(approx. $10-13B market cap)

Pioneering financial institution and one of the most profitable banks in the country

(approx. $7-9B market cap)

Regional player in water infrastructure services and development

(approx. $1.0-1.5B market cap)

Global footprint with a focus on automotive and industrial EMS; among top 10 automotive EMS companies in the world

Leading digital lifestyle and content producer, supported by a robust telecom platform

(approx. $5-7B market cap)

47.1%*

100.0%* 100.0%* 50.7%* 100.0%*

New investments in educational institutions delivering affordable high quality education to improve outcomes and employability

100.0%*

Developing a portfolio of businesses focused on affordable medicine and primary health care services

100.0%*

A Y A L AE D U C A T I O N

($200-280M market cap)

*Economic ownership as of July 2016

Real Estate TelecommunicationsFinancial Services Water Utilities

Power and Transport Manufacturing and Automotive Social Infrastructure

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Manila Water as part of the Ayala GroupPioneering in several industries for more than 180 years

Corporate sustainability anchored on corporate governance and strategic partnership.

88

Full Cost Recovery: Tariff‐Setting Mechanisms

Performance‐Based Metrics

Dispute Resolution via Arbitration

CONCESSION AGREEMENT‘Regulation by Contract’

How the PPP contract works

99 Water Supply situation

3.1 MILLION CUSTOMERS

24 hours 13‐23 hours 0‐12 hours

26% 99%*99%*

6.6 MILLION CUSTOMERS

* Percentage of people reached by the network who have 24 hour water availability 

1997 2017 Losses from 63% to the current 11%. 

Water recovered from efficiency measures were made available to new customers.

In the last 20 years, no new major water source was developed. 

Service expansion and better quality

Satisfied customers

Customers willing to 

connect/pay “Full Cost Recovery”

High collection efficiency

Increased investment

s

Used Water situation

In 2017, 39 used water facilities (319 MLD cap) diverted 6,417 tons of BOD from the waterways of 

Metro Manila.  

Additional 100 MLD for commissioning in late 

2018.

14 more facilities for construction (~850 MLD) by end of concession.

Manila Water and UN SDGs

Growth Aspiration:replicate our successes

Water services in the Philippines 

Water rates dependent on…

Governance Characteristics

Efficiency in WD managementSubsidies from the LGUConnection density

Natural Characteristics

Availability of waterSource of waterQuality of bulk water

David, C.P. et al. 2013. Statistical Analysis of Philippine Water District Characteristics and how these Affect Water Tariffs. Water International Journal

Uncoordinated investment planning,despite wide fiscal 

space

Uncoordinated investment planning,despite wide fiscal 

space

11 22

Local bank rates for subsidiaries not as attractive as those offered to mother

Local bank rates for subsidiaries not as attractive as those offered to mother

Different modes of water service regulation

Different modes of water service regulation

55Different tariff 

models depending on PPP partner & 

regulator

Different tariff models depending on PPP partner & 

regulator

44

Challenges

33Inconsistency in interpreting 

regulations and timelines to comply

Inconsistency in interpreting 

regulations and timelines to comply

Institutional environment

NAPC-WASCODOF-CDADBP DAR

DPWH MWSSLWUA-WDsPTA HUDCCDILG-PMO

PEZA LGUs

Water Supply

NIA DABSWM

Irrigation

DOE PSALMNPC PEMC

Hydro Power

BFAR

Fisheries

DOST-PCAFNRRD

ERDB

Research

PAF BSWM

Cloud Seeding

EMB DOHBRL EHS

LGUs MWSSLWUA-WDs

Water Quality & Sanitation

FMB BSWMNIA NPC

PAWB

WatershedManagement

NWRB BRSNAMRIA LWUAMGB PAGASA

MWSS NIA

DataCollection

DPWH-PMOOCD-NDCC

PAGASAMMDA

FloodManagement

LLDA RDCsBOI PEZA

RBCO

Integrated AreaDevelopment

NEDA

Policy Making

NWRB

Coordination / Regulation

• Water PPP addressed inherent weaknesses in govt‐owned and controlled water corporations:  people, procurement and financing.

• The water PPP exercise is successful to date, and has significantly contributed to the SDGs. But water service improvement has not really gained traction across the country, with or without PPP. 

• Our Public Private Partnership contracts have clear service obligations and targets, and allow full cost recovery of expenditures through the water tariff.  However, the regulatory setup is not uniform across the subsidiaries.

• Need for Water Sector Reform

Summary

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“…a mission to fulfill, 

not a business to run…”

Fernando Zobel de AyalaChairman

Manila Water Company