Call it by any other name but gotta be Smart Water

What’s in a name?

The Maynilad Water Services Inc. (Maynilad) has ridden the ebb and flow of three management changes in the decade-old water services concessionaire for 17 cities and municipalities comprising the so-called West Zone of Metro Manila and surrounding provinces.

But it has kept its name.

But even with a completely new management, new logo and a slew of fresh investments, Maynilad is hard put to wash off the unflattering image it acquired through years of financial problems, legal and regulatory disputes and failed service.

Most people don’t register the recent changes and continue to associate the company name with its murky past.

So why not change the name? Why not call itself Smart Water or Mannylad (after its chair Manny Pangilinan) and so on, it has been suggested.

The question of a new name came up at a recent roundtable with Maynilad officials at the Inquirer office.

And as in any discussion with Maynilad officials, what came up were the complaints from customers in its concession area since water services there were privatized in 1997—the water baggage, if you will, that finds the “Maynilad” brand soaking in negative associations.

For instance, when talk comes around to water bills or services, people invariably ask each other to which concessionaire they belong to.

Those in the Maynilad concession area get sympathetic looks when they relate how they have to store water because service shuts down regularly, and so on. Those residing in the other concession area run by the Ayala-led Manila Water Co. are routinely congratulated with, “Ang swerte mo naman (You’re so lucky).”

No name change

Ricky Vargas, Maynilad president and CEO, admitted to having wanted to tweak the name when he took over the helm of the company, if only to assure people that things would be “flowing” differently.

He wanted to add the word “New” to make it “New Maynilad.” But the management decided to retain the old name, he said.

There are no plans to change the name now, he said. Instead, the company is trying other ways to change the image it inherited, partly by a change of logo, and by communicating with the public.

Looking back

Maynilad’s corporate history began with the privatization of water and sewerage services in the country in 1997. Until then, the government, through the Metropolitan Waterworks and Sewerage System (MWSS), provided water and sewerage disposal services in Metro Manila and surrounding areas.

In 1997, the Lopez-owned Benpres Holdings Corp. (Benpres) and Ondeo Water Services, (formerly Suez Lyonnaise de Eaux) won the concession for the West Zone franchise area, consisting of the cities of Caloocan, Las Piñas, Malabon, Manila, Muntinlupa, Navotas, Pasay, Parañaque, Valenzuela, parts of Quezon City, a part of Makati, Cavite City and the Cavite municipalities of Rosario, Imus, Noveleta, Bacoor and Kawit. Their company, Maynilad, was given a 25-year concession to operate this franchise area.

However, Maynilad soon ran into financial problems, which it blamed on the unforeseen deterioration of the peso, the ill effects of the weather and certain allegedly disadvantageous features of the concession agreement. Following years of legal wrangling, Benpres transferred its majority stake to the government which the latter then bid out to private companies.

The consortium of DMCI Holdings (DMCI) and Metro Pacific Investments Corp. (MPIC) won 84 percent of the water company’s shares in a public bidding. Lyonnaise Asia Water Limited (LAWL) held a 16 percent share. MPIC later bought out LAWL’s shares in Maynilad.

Rehabilitation begins

The MPIC-DMCI consortium took over on Jan. 24, 2007, and immediately worked on the financial and operational rehabilitation of Maynilad. In August 2007, the consortium signed a prepayment and settlement agreement with Maynilad’s creditors and MWSS.

By January 2008, the new owners of Maynilad had paid off the company’s outstanding debts, which had reached $240 million. A catch-up plan was aggressively implemented, according to the new management, to improve revenue, boost water service operations, and slash commercial losses.

To demonstrate that the floodgates of change are about to open, Maynilad launched its new company logo in November 2008. The company said the new logo reflected the new direction and renewed mission of the management team.

Moving forward

Vargas said he hoped customers would know how well the new Maynilad management had ridden out the storms.

He acknowledged that after the collapse of the old Maynilad and the reversion of the concession to the MWSS, the company’s service reportedly worsened.

“When we took over, $250 million was paid to get out of rehabilitation faster. We worked on re-piping, curbing water losses (due to leaks and illegal connections), and reorganizing people. We undertook anti-redundancy programs and brought in new people. DMCI’s presence was very helpful at this time, [because of] their experience in construction,” Vargas said.

The other concession, Manila Water, is thus 10 years ahead of the new Maynilad, he said.

“But what they achieved in 10 years we achieved in 5 years. The amount of spending we put in is at P30 billion in capex (capital expenditure), to be recovered over the period of the concession which is until 2037,” Vargas said.

He admits, however, that Maynilad’s concession may take more effort to fix since it is “more complex.”

But for now, he is happy with what he said were the achievements of the new Maynilad management: saving 400 million liters per day of water, which can serve 2 million people; an expanding network of sewage treatment plants; more than 82 percent network coverage, from 32 percent before; non-revenue water at 42 percent, from 68 percent in 2006, prior to the takeover; and generally getting good feedback from people who used to pay more but are now enjoying cheaper, 24/7 water service.

The question of changing the brand name being a moot point, it remains to be seen whether the new management can overcome the tide of bad associations or whether its efforts and goodwill will turn out to be like water being poured into a broken jug.