Investing in Technology: Maynilad’s initiatives to improve water supply

Maynilad’s initiatives to improve water supply

Maynilad Water Services, Inc. is the largest private water concessionaire in the Philippines in terms of customer base, serving a population of about 8 million. It is responsible for water supply and wastewater services in the West Zone of the Greater Manila Area, which includes the cities of Manila, Quezon City, Makati, Caloocan, Pasay, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon (in Metro Manila); and the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario (in Cavite province).

The company was formed in 1997 after the privatisation of the Metropolitan Waterworks and Sewerage System, which had been in charge of providing water supply and sewerage disposal services in the Greater Metro Manila area. However, financial, legal and regulatory disputes led to a change in the ownership of Maynilad a decade later. In 2007, the consortium of DMCI Holdings, Inc. and the Metro Pacific Investments Corporation acquired about 84 per cent of the company’s shares, with Lyonnaise Asia Water holding the remaining 16 per cent.

Since its reprivatisation in 2007, Maynilad has been expanding infrastructure facilities and improving operations and network efficiency, investing about PhP 38 billion till 2012. More than 50 per cent of the investment was directed at reducing system losses through an extensive non-revenue water (NRW) management programme, which included the establishment of district metered areas (DMAs), undertaking massive leak repairs, obsolete and faulty pipe replacements and active leak detection. During 2007-12, the total physical loss measured on the basis of NRW in total water supply decreased by almost 29 per cent. The company replaced around 1,108 km of damaged pipelines. It also took several technology initiatives to ensure efficient management of infrastructure facilities and improve service delivery.

Water management initiatives

To improve management of the water distribution network, Maynilad has established 1,302 DMAs covering the entire concession area. Of these, more than 600 DMAs have been automated for faster acquisition of field data. This helps the company in monitoring and controlling water distribution as well as measuring the level of NRW in each hydraulic area. The company also has been at the forefront of using advanced technologies to detect physical water losses in its distribution network. A number of modern leak detection technologies including Bentley’s WaterGEMS technology, the Sahara® mobile leak detection system, the Aquascan Trunk Main leak noise correlator, and the JD7 LDS2010 Investigator closed circuit television leak noise correlator have been deployed. These technologies help in proactive leak detection and expeditious repair of reported leaks, which prevents water contamination and reduces water losses. To further reduce losses due to system inefficiencies, Maynilad undertakes pipeline replacement and repair every year. In 2013, the company invested about PhP 2 billion in its NRW management programme to reduce physical and commercial water losses. Of the total investment, about PhP 1.1 billion was spent on replacement of 168 km of obsolete and faulty pipes in its service area. The company recovered about 140 million litres per day (mld) of potable water, which is enough to meet the requirements of 140,000 households.

In October 2012, Maynilad had operationalised a meter laboratory to test residential, commercial and industrial water meters on a regular basis. The facility is capable of testing large meters of up to 300 mm in size. It is equipped with an advanced meter test bench, which determines meter accuracy by comparing the volume of water flowing into the meter with the registered reading.

In the same year, the company initiated a six-year programme involving the adoption of a supervisory control and data acquisition system to monitor and control infrastructure facilities. The system is being used for centralised supervision of supply operations. To begin with, the system has been implemented on a pilot basis in the Putatan water treatment plant and the Pasay pumping station with the goal of adopting the technology to automate operations in all treatment plants and pumping stations. Currently, it is being utilised for remote monitoring and data acquisition, which has helped in reducing operational costs and enhancing efficiency.

Maynilad is also installing a telemetry system for centralised data acquisition and monitoring of various facilities throughout the distribution network. The telemetry system uses the field monitoring user system (FieldMOUS) technology for monitoring vital field data in a compact manner. At present, the company has installed this system at the Pasay pumping station. All vital information regarding operations including production levels and daily supply averages is integrated with the telemetry system and made accessible through FieldMOUS. Likewise, other facilities including treatment plants, hydraulic system gauging points, pressure points and deep wells will be integrated with the telemetry system and will have dedicated site pages for monitoring operations data.

Meanwhile, the company has installed variable frequency drives (VFDs) and high efficiency electric motors at its 13 pumping stations and 14 online boosters to save on electricity costs. VFDs are electronic controllers that adjust the speed of an electronic motor, allowing the modulation of pump speed and flow rate according to actual requirements. They also help in reducing mechanical and electrical pressure, which reduces maintenance and repair costs.

To further improve its services, Maynilad has established a geographic information system department to update and validate the geographical location of its pipes and laterals. This enables the company to efficiently locate and decommission deteriorated pipes, search for possible leaks and illegal connections, and evaluate its pipe laying activities. The data repository, which earlier had only one access point, has been opened to multiple users with multiple access channels. Post-upgradation, about 40 authorised users can access and edit data on a real-time basis. Moreover, Maynilad has acquired 12 units of the global positioning system and 10 units of the electronic total station for better monitoring of infrastructure facilities. These technologies have helped the company in field surveying, data collection, project management, NRW management, and right-of-way and facility mapping.

Maynilad has also taken a number of initiatives to improve customer interface and collection efficiency. It has developed the infoboard service Text Tubig and customer service helpdesk email facilities to provide water service advisories and other useful information such as service application requirements. Maynilad has also introduced the Read and Bill facility, which involves the use of technology for immediate printing and issuance of water bills once the reading is recorded. Further, the company has initiated the issuance of electronic statement of accounts in lieu of printed bills to select customers. In November 2013, it signed an MoU with Citibank to allow customers to automatically pay monthly water bills through their Citibank credit cards. These initiatives helped Maynilad improve its collection efficiency from 92 per cent in 2009 to 96 per cent in 2012.

In the last one to two years, Maynilad has expanded its footprint in the Philippines by venturing into new water-related projects outside its concession area. In August 2012, the company signed a share purchase agreement with Philippine Hydro, Inc., effectively taking over operations and management of four water treatment plants in Luzon. The year 2012 also saw Maynilad enter the Visayas and Mindanao areas through a share purchase agreement between the Metropac Water Investments Corporation (MWIC) and the Manila Water Consortium to implement the Carmen Bulk Water Supply Project. Maynilad is MWIC’s technical partner in the venture, which will deliver about 35 mld of water to the Metro Cebu water district.

Financial performance

During 2007-12, the company’s total revenue witnessed a compound annual growth rate of 20 per cent. In 2012, the total revenue stood at PhP 15.4 billion, registering an increase of 15.6 per cent over the previous year. Its earnings before interest, taxes and depreciation grew by 17 per cent to PhP 10.83 billion in 2012 as compared to PhP 9.25 billion in 2011.

On the other hand, the company’s total cash operating expenses increased by 16.5 per cent year on year to PhP 4.63 billion in 2012. At the same time, total non-cash operating expenses increased by about 15 per cent to PhP 2.13 billion from PhP 1.86 billion.

The way forward

As a result of various initiatives, the share of Maynilad’s customers with 24×7 water availability increased to 97.5 per cent in 2013. At the same time, the share of NRW dropped to 38 per cent from 41 per cent in 2012. The company expanded its customer base by connecting 70,962 new accounts to its distribution network. This took Maynilad’s total number of accounts to 1,129,497. Moreover, its asset base increased by 10.7 per cent to PhP 61.13 billion at end-2012 from PhP 55.21 billion in 2011.

Going forward, Maynilad plans to continue with its efforts to deliver improved water services. To this end, it has earmarked PhP 18 billion of investment for improving water supply and wastewater services, the highest capital investment by the company since water services in Manila were privatised in 1997. Around PhP 8.2 billion (46 per cent) of the capital investment will be spent on wastewater management projects, including the construction of several sewage treatment plants and conveyance systems in Muntinlupa, Parañaque and Valenzuela. To ensure sufficient water supply and pressure in the West Zone,

PhP 2.3 billion has been earmarked for constructing, rehabilitating and upgrading boosters, pumping stations and reservoirs.

Further, the company plans to reduce its physical water losses to 36 per cent by end-2014. It has earmarked PhP 2.2 billion for the NRW reduction programme, which covers meter and pressure management, active leakage control, primary line assessment, selective pipe replacement, and DMA management. Of the total amount, PhP 1.4 billion would be used for pipe replacement projects in select parts of Manila, Caloocan, Malabon, Valenzuela, Parañaque, Las Piñas and Cavite. About PhP 665 million would be used for meter management projects, establishment of smaller DMAs, leak repair and diagnostic activities. The rest of the allocation would be used for leak detection equipment and technical services. In addition, about PhP 314 million has been allotted for the modernisation of the company’s data management and information systems.

Maynilad also plans to expand its customer base by 53,000 accounts in 2014. It has earmarked an investment of about PhP 500 million for expanding coverage in Bacoor, Imus, Kawit, Noveleta and Rosario (in Cavite province). Around 70 km of primary pipes and over 80 km of secondary pipes will be laid to expand its distribution network.