Manila Water: From Privatisation to Sustainable Growth

In order to resolve severe water management problems in Metro Manila, the Government of Philippines began rolling out a privatisation scheme in 1995 with the objective to provide piped water to everyone in the city with regular 24-hour access. The scheme aimed to auction off service provision of Metropolitan Waterworks and Sewage System (MWSS), a government agency that handled all water and sewage services, through two 25-year concession agreements that divided Metro Manila into East and West. On August 1, 1997, Manila Water won the East Concession.

By 2013, after 16 years of management and operations, Manila Water had more than doubled their customer base and achieved 24-hour access to safe and affordable piped water to 99 percent of its distribution network in the East Concession, whereas before just two-thirds had any access at all and only 26 percent had regular 24-hour access. Moreover, system leakage and pilferage were improved from 63 percent to 12 percent water loss.

To come so far, Manila Water had to overcome both internal and external challenges. Internally, the company had to transform its highly centralised organisational structure and bureaucratic culture into a de-centralised one where actions could be undertaken through bottom-to-top directives. Human capital and leadership development, as well as putting in place the right incentives, were key to accomplishing this objective. Externally, Manila Water had to address environmental, socio-economic and political challenges. In this regard, tri-sector engagement between government, business and civil society was essential. Moreover, the company had to seek out new business and a means to sustainable growth if it were to stay relevant in the future.

Through this case, students will understand and analyse Manila Water’s business strategy and leadership development after it won the East Concession. Students will learn to explain human resource strategies and company privatisation, and visualise the importance of tri-sector engagement in its privatisation process. They will examine the company’s internal and external challenges and opportunities, especially during the period of corporate transformation. The case provides a rich illustration of change management. This case can be used for teaching human resource/strategy courses for undergraduate, postgraduate and executive development classes.