Maynilad CEO gushes about water ‘renaissance’ in the PH

CEO Ricky Vargas (left) with PACC Vice President Michael Nierva

President and CEO Ricky Vargas was at the Philippine Center last week to talk about the “renaissance” that is the Maynilad Water Services, Inc. He was a guest speaker of the Philippine-American Chamber of Commerce’s “Conversation with leaders,” where business executives discuss the growth of their companies.

Maynilad was one of two private companies that provided water services to Metro Manila when the government-owned and heavily in debt Metropolitan Waterworks and Sewerage System decided to privatize in 1997. Maynilad won the bid to invest, operate and provide services to the west zone from Caloocan city to Cavite province, while Manila Water took the east zone from Quezon City to Rizal province.

Before privatization, he said only 60 percent of Metro Manilans had water. He did not say which parts, but anecdotally the areas with exclusive residential villages — such as Makati, Greenhills in San Juan and Ortigas in Pasig – are known to have little problem with water. What he did say was that those who had water would experience them in trickles and sometimes enjoy them only during the wee hours of the day. I know a family that took showers at 3 a.m. and went back to bed.

Even when there was water, continued Vargas, the quality was in question because in some depressed communities, the pipes were old and rusting. Deeply in hock, the MWSS could not undertake upgrading and modernization and so decided to take the operations private.

Maynilad was confronted with a series of hurdles: the Asian financial crisis of the late 1990s, the extreme water shortage because of the El Nino weather pattern, and the exit of the Lopez Group/Benpres from the consortium. Manny Pangilinan’s Metro Pacific Investments Corporation stepped in with DMCI Holdings and won the 25-year exclusive concession.

Today, Maynilad services 8.1 million people – 96 percent of their west zone area — with clean and affordable water. Vargas hastened to add, “Twenty-four hour service.”

About 94 percent of employees are part owners, holding shares in the company and displaying more involved service in the workplace. With the Japanese conglomerate Marubeni Corp. as a new partner, Vargas said Maynilad is looking to provide water services in Vietnam and parts of Southeast Asia.

“We’re committed to grow outside of our concession area,” said Vargas.

Maynilad, according to Vargas, is moving toward the path of automating the entire water system and possibly reducing its reliance on Angat Dam, which is the source of 97 percent of all its water.

“This innovation is slow and untested,” he said, “but we need to take some risks.”

He said corruption remains a fixture in doing business in the Philippines, but it is no longer the biggest issue. In his concession area, he deals with 14 local government units or LGUs. It can get “frustrating,” he said, having to go through the chain – from the local police chief to the mayor – simply to ask permission to lay a pipe.

“We deal with this every day,” shrugged Vargas, “the good mayors, the bad mayors and the evil mayors.”

CEO and philanthropist Loida Nicolas Lewis called Vargas a “miracle worker” for being at the helm of a company when it embarked on a difficult period of restructuring.

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