United Utilities (UU) has today announced that it is selling the bulk of its remaining interest in Manila Water to its main Philippine partner Ayala Corp.for $73 million. UU is to continue to provide technical services. UU partially exited Manila Water in 2005 when it sold shares at PHP 6.50 each. The company has made big strides since then and the stock is now trading at PHP16.00.
When United Utilities first became involved Manila Water was in a bad shape, with numerous unregistered connections to an aging infrastructure and water losses of over 65%. It has been a rocky transformation with included a currency crisis in 1997, the El Niño phenomenon in 1998, an arduous arbitration process a little after that, and a myriad of political uncertainties on the national front that increased regulatory pressure on the company.
Now performance has been transformed. Water losses have dropped to 24%, customer numbers have increased by 2 million to about 5 million and the percentage of customers enjoying 24-hour water availability increased from 26% to 99%.
It may not have been an economic success for United Utilities but it is a positive example of the benefits of privatization. All those involved should be congratulated in their efforts to turn the situation round. It is an excellent example of the skills of the UK water industry in transforming the supply of drinking water and sewage and consequently the lives of those in a third world country.
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