Manila Water, Petron say PH companies have advantage in Asia

by Coco Alcuaz, ANC

Posted at Mar 25 2015 11:54 AM | Updated as of Mar 25 2015 07:54 PM

MANILA, Philippines - Manila Water Co. and Petron Corp.'s chief finance officers said Philippine companies have an advantage competing in other Asian countries because of their experience from early moves to open the economy to competition.

Petron, which bought Esso Malaysia two years ago, said its edge is knowing how to compete in a deregulated environment at a time when other countries are just beginning to do so.

The Philippines deregulated its oil industry in the 1990s, removing price controls and a subsidy fund. Petron was and remains the biggest player in the industry. Malaysia and Indonesia removed oil subsidies in December and January.

"There are still countries in the region that are heavily regulated," Petron CFO Emmanuel Erana said at an event in Makati. "Competition is still dull."

Manila Water, which has interests in Vietnam, said the Philippines' advantage is early experience with public-private partnership and build-operate-transfer projects.

Manila Water owns one of the two water supply franchises in the capital, which was privatized in 1997.

"Many countries underestimate our ability to work in the PPP scenario," CFO Luis Juan Oreta said at the same corporate finance event organised by U.S. law firm Latham & Watkins. "Other countries want to know how to harness private capital. We have the advantage of working with BOT for the past 20 years."

Philippine privatizations aren't without their problems. They have faced delays and legal challenges, including those of the current government.

Manila Water is in arbitration after the regulator decided to cut its rates last year.

The other franchisee, Maynilad Water, which went through arbitration on the same issue, was re-privatized in 2004 after the government blocked rate increases, contributing to financial problems that led to the original owner walking away.