MWC II

completed

In 1997, Manila Water Company, Inc. (MWCI or the company) won a competitive tender to operate the Metro Manila East water supply and wastewater service zone under a 25-year concession agreement. It inherited facilities that require significant rehabilitation and to date MWCI has spent approximately $70 million for its own capital expenditures and close to $123 million in projects funded through multilateral bank loans to MWSS, the public Metropolitan Waterworks and Sewerage System. In 2003, IFC provided a loan in support of MWCI’s operations. IFC is now considering extending a second loan to help to support MWCI’s expenditure program through 2007. These expenditures will include the following components: - new water sources development; - service expansion to East and Southeast areas; - network distribution improvement; - other pipe extension and improvement projects; - water supply facilities; - non-revenue water (NRW) reduction programs; - sewerage & sanitation services; and - payment of concession fees to MWSS, the conceding authority. IFC is also considering an equity investment in the company in preparation for its planned flotation of shares on the Manila Stock Exchange as early as 2005. There have been a limited number of successful privatizations in the water and sanitation sector in emerging markets. IFC's assistance to MWCI builds upon the earlier IFC privatization advisory work by supporting a concessionaire who has demonstrated the efficiencies and client responsiveness that a private sector provider can introduce to the provision of public services. MWCI has made particularly good inroads into poorer areas of its concession area. In addition to financing MWCI, IFC is working with the company on issues of corporate governance and sustainability.