Herbert Consunji (2nd from left), chairman of the Subic Water and Sewerage Company Inc., signs the P200-million loan agreement with (from left) Land Bank of the Philippines Vice-President for Public Sector Department Lolita Silva, Philippine Export-Import Credit Agency (PhilEXIM) Senior Vice-President Atty. Jane Lim-Laragan and Vice-President for Business Development Lilia Baun.
Witnessing the event (standing from left) were Subicwater Assistant General Manager Jaime Garcia, Subicwater General Manager Edna Canlas, Landbank and PhilEXIM Account Officers Ernie Magsanoc and Aida Baun.
Photo by Malou Dungog
SUBIC BAY FREEPORT – Subic Water and Sewerage Company Inc. (Subicwater), a private utility firm serving Olongapo City and the Subic Bay Freeport, plans to invest P605-million on capex to meet its key performance targets for the next three years.
Subicwater General Manager Edna Canlas said the details of this capital investment is outlined in the firm’s three-year business plan and updated financial model, which were submitted late April this year to the Subic Bay Water Regulatory Board (SBWRB) for review.
These documents specify what Subicwater must achieve in that period in terms of operational and financial efficiency, response time on customer-related matters, and service level improvement, which include area coverage, continuity of water supply, average pressure, water quality, and sewage effluent quality, said Canlas.
“Achieving these targets requires the construction of new infrastructure and the procurement of related equipment worth P605-million,” Canlas said.
“However, the required capital expenditure is higher than that of Subicwater’s projected net income for the next three years. Capital expenditures will thus be funded by a mix of income and loans, which also meets the regulating body’s required 70-30 capex commitment” she said.
In a recent development, government-owned Land Bank of the Philippines has approved a P450-million loan for Subicwater. Canlas however clarified that Subicwater is keen on getting P200-million only for now.
The loan facility was made formal in a simple document-signing ceremony held at the DMCI office in Makati City recently.
Subicwater Chairman Herbert Consunji signed the loan agreement with Landbank Vice-President for Public Sector Department Lolita Silva and officials of the P200-million loan guarantor— the Philippine Export-Import Credit Agency (PhilEXIM) — led by its Senior Vice-President Atty. Jane Lim-Laragan and Vice-President for Business Development Lilia Baun.
PhilEXIM, also known as the Trade and Investment Development Corporation of the Philippines (TIDCORP), is a government-owned corporation attached to the Department of Finance (DOF).
In a statement, Consunji described the loan transaction as a ‘landmark development’ for Subicwater as the firm continues to raise capital spending while keeping water tariffs ‘as low as possible’.
The source of funding, he said, is one major factor that dictates water tariffs. “On behalf of Subicwater, I would like to thank LANDBANK for extending this loan, and PhilEXIM, for trusting Subicwater’s financial capability,” said Consunji, who is also the Chief Operating Officer of Maynilad Water Services Inc. (Maynilad).
“This loan will be used for the improvement of water and sewerage service in the Subic Bay Freeport and Olongapo City.
We assure our customers that we will continue to give them the best service at the lowest costs possible, to help our fellowmen keep up with the present cost of living,” Consunji added.
Landbank’s VP Silva, meanwhile, expressed confidence at Subicwater’s “proven” track record and said the state-run bank will readily make available the remaining P250-million should the private utility opt to avail of it in the future.
“Thank you for choosing Landbank. We hope that as Subicwater continues to grow, you will still deem Landbank as a viable finance partner,” Silva said.
Subicwater implemented the first built-operate-and-transfer (BOT) scheme for a water and sewerage system in the Philippines and in Southeast Asia, taking over the operation of the water supply and sewerage system of the Subic Bay Freeport and Olongapo City in 1997.
The firm was formed by a joint-venture agreement in 1996 among the Subic Bay Metropolitan Authority (SBMA), Biwater PLC of Great Britain, DM Consunji Inc., and the now defunct Olongapo City Water District.
