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A Tale of Two Concessionaires: A Natural Experiment of Water Privatisation in Metro Manila

Lee Kuan Yew School of Public Policy, National University of Singapore, 469C Bukit Timah Road, Singapore 259772, sppwuxun{at}nus.edu.sg

Nepomuceno A. Malaluan

Action for Economic Reforms, 40 Matulungin Street, Central District, Quezon City, 1100 Philippines, nepo{at}aer.ph

In February 1997, Maynilad Water Services, Inc. and the Manila Water Company, Inc. were awarded concession contracts from Manila's Metropolitan Waterworks and Sewerage System (MWSS) and split between them the service areas in Metro Manila. In the years thereafter, the paths taken by the two concessionaires diverged dramatically: Maynilad became bankrupt and was turned over to MWSS, whereas Manila Water has prospered and is now a listed company in the Philippine Stock Exchange. The co-existence of two concessionaires in the same city offers a rare opportunity to study the role of internal factors in the privatisation of urban water systems because the effects of many important external factors, such as political support, regulatory structure and unforeseen events, are effectively controlled. The findings suggest that corporate governance, financial management and operations management of privatised water utilities are among the most important internal factors that determine success of water privatisation in developing countries.

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