By MYLA IGLESIAS

Manila Water Co. said yesterday it would borrow P6.3 billion ($150 million) this year to partly finance its four-year expansion plan estimated at P37 billion ($885 million) that will see the addition of one million customers every five years.

Antonino Aquino, Manila Water president also reported that the company will set up two subsidiaries to handle local expansion outside of the Manila concession and another unit to handle foreign expansion.

Sherisa Nuesa, chief finance officer said the company is still watching interest rate and currency developments before making a final decision on what debt instrument to choose.

"Since the Fed is cutting rates, dollar loans are starting to look attractive. But we remain careful on foreign currency debt," Nuesa said.

The company plans to spend P187 billion in 15 years starting this year, including its P37 billion budget up to 2012, to hit its target of adding one million new customers every five years.

Of the total ,P100 billion would be set aside for capital spending and the rest would be for operating expenses.

Manila Water provides water and waste water services to around 5 million customers in the eastern part of the capital Manila and neighboring provinces. It took over operations of the water network from the government in August 1997 under a 25-year concession agreement.

The company has active bids to operate water and waste water projects in Vietnam, Hong Kong and India.

Shares of Manila Water slipped 1.4 percent in late trade on Monday, underperforming the main index which gained 1.14 percent.

Among the major plans for the year, is the construction of a P 1.5 billion water treatment plant, which aims to increase the company’s current production capacity by at least 100 million liter per day (MLD). This project will complement the network expansion and services sustainability projects worth P 4 billion earmarked for 2008.

The company is looking both local and foreign bank institution to raise the $150

At present, the utility firm, has a total of P 6.2 billion debts Nuesa elaborated that of the total debts , 50 percent is peso denominated , 30 percent is yen and the remaining is dollar.

Although the peso remains strong, Nuesa said that the company has no plan to hedge or prepay their loans, we plan to borrow more to finance our capex, she said.

Aquino said the new unit handling domestic expansion will focus on environment protection.

"Our experience in operating the East Zone concession provides us with the required capabilities needed to expand the business in both the environmental field and international arena. The formation of the two subsidiary companies will serve as a springboard for the development of these projects outside the East Zone" Aquino said.

For the domestic expansion, Aquino said that the Bulacan project is one of the its biggest projects after the Marikina River clean up program.

The Marikina River program included the construction of at least three regional sewage treatment plants using combined sewage-drainage system along the banks of the Marikina River to serve Rodriguez, San Mateo, Quezon, Pasig and Antipolo.

It will benefit 1.5 million customers.

Aquino said the company wants to focus in potentials projects in India, China and South East Asia where the environment is similar to the Philippines.

The Manila Water was one of the two which prequalified to handle the Ho Chi Minh water management program.

In 2007, Manila Water reported P 2.409 billion net income, which is slightly higher than the P 2.394 billion in 2006. At present, the company serves more than 5 million customers from just 3 million when it started its operation in 1997.