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Water firm sets bold, lofty dreams
Manila Bulletin: Bernie Cahiles-Magkilat

Cristino L. Panlilio is first and foremost a professional businessman, but he could also be remembered as the most passionate salesman of the Board of Investments (BOI), the government’s premier investment promotion agency, having served as Trade and Industry Undersecretary and BOI managing head during the time of President Benigno Aquino III.

As BOI managing head, the towering 6’2 Panlilio, a varsity player during his school days at Ateneo de Manila University while maintaining his honor student standing, shuttled from one engagement to another, not skipping even how small an event maybe to represent the government and rally investors and entrepreneurs alike.

Businessmen love his go-go attitude and always complimented him as the best cheerleader for the country’s drive to attract foreign investors.

But his family’s growing business beckoned. After a three-year sabbatical, Panlilio rejoined his company Balibago Waterworks Systems Inc., now the country’s largest provider of level 3 water systems in the provinces.

Balibago

Balibago Waterworks System, Inc. (BWSI or simply Balibago) is a privately-owned company established on May 20, 1958 by the Santos family of Porac, led by Mr. Eladio Santos. Its primary purpose was to acquire, establish, develop, manage and operate an effective waterworks utility system within its franchise area of 900 hectares composed of Barangay Balibago in Angeles City and Barangay Dau in the town of Mabalacat.

On June 22, 1963, BWSI was granted a Congressional Franchise for 50 years to operate exclusively within designated areas a waterworks system. It was also granted a Certificate of Public Convenience in the same year.

In 1998, Panlilio and his dynamic group of friends led by Michael L. Escaler, purchased BWSI from the Santos family. Under the guidance of this new management team, BWSI expanded in the last 18 years to serve other areas in different forms. Since then, BWSI has been approached to run and operate more than 50 municipal franchises in 16 provinces throughout Luzon, Visayas and Mindanao.
Today, BWSI provides level 3 water system, the highest form of running water system. It provides to more than 180,000 households throughout its franchise areas. It works closely with the National Water Resources Board (NWRB) in the pursuit of improving potable water supply in the countryside which is likewise one of the priority goals of the national government.

BWSI offers the following services to each new service area it contracts: the sourcing of underground water reservoirs, the filtration of surface water sources, the installation of pumps and motors, the laying of mainline distribution pipes, the chlorination of water sources, the connection of households and businesses to the mainlines and, the meter reading, billing for consumed water and payment collection. The company also provides after sales services such as repairs of broken meters as well as the repair of leaks of all kinds. Reduction of non-revenue water is likewise a major activity.

Panlilio attributed BWSI’s success to its Board of Directors, chaired by Escaler, and its management team who practice a “lean and mean” management strategy while maintaining a high quality of service to its customers. His daughter Cristina Isabelle Panlilio-Alejandro is now the COO and managing director of the company.

After 60 years in public service, the NWRB considers BWSI as one of the largest and most efficiently operated provincial privately owned waterworks system in the country. It has been recognized for its outstanding reputation of being able to deliver the best water service possible.

It adheres to its vision to promote growth and development in communities by providing quality basic services and proudly wears its tagline: Our Water – Your Progress, Your Joys!

Progressive

When Panlilio started running the company in 1997, he thoroughly studied the water sector and was disappointed at the backwardness of the country’s water system with many areas still with no level 3 water systems even in his home province Pampanga.

He also learned that under the Revised LGU Code of 1991, the national government has devolved its responsibility to the local governments and even barangays to institutionalize utility operations like water, electricity and even sewerage system when the national government cannot provide.

“That inspired me to expand our operations so that by 1999 we were able to negotiate the expansion to level 3 water system to other towns,” says Panlilio. Now Balibago provides level 3 water direct into the household faucets in 13 out of 18 municipalities of Pampanga.

It is serving level 3 water as well to five greenfield towns in Nueva Ecija where they were the first to lay out pipelines, wells, and overhead tanks to households, industrial outfits and commercial establishments. They are now also operating in 7 towns of Bulacan.

Panlilio’s water world was interrupted in 2010 when he took a sabbatical from his business to join the government. While he was away, Balibago expanded into the Visayas starting in Pasi, Iloilo and then to Zaragoza, Pototan and Jaro district in Iloilo City.

Balibago also operates level 3 water system for the Panglao island in Bohol where they laid out a 40-kilometer pipeline from its water source in Corella, the longest water pipeline in the country costing them close to P100 million. They have to think out of the box because Panglao, which is the core of Bohol’s tourism is now teeming with tourists, but has no source of potable water.

When Panlilio got out of government service after three years of serving the BOI, he rejoined the company a year after. Further expansion brought them to Mindanao in the town of Maasim in Sarangani province. They have also gone into Mati in Davao Oriental even as they build more in Iloilo. They are also finalizing discussions for a parallel water system in the district one of Cagayan de Oro to complement the existing local water district.

“All told we have 62 franchise branches,” says Panlilio.

There is no stopping the company’s dynamism and proactive outlook as it sets to reach 70 franchise branches by 2021 and 100 by 2028.

Water crisis

The water business, however, is becoming more challenging with dwindling sources of water as more areas have become urbanized.

Before, Panlilio explained, deep wells can easily produce clear water because they have been filtered by nature after reaching the aquifers through the rocks for the past 100 years. But now, there has been over pumping where young water that have not gone past the aquifers are harvested, resulting in murky water.

“Before, water is a God given resource, but this time there is already a need for human intervention to cleanse the water from contamination,” he adds. “Bulacan is worst hit by dirty water and salt water because it is very close to the Manila Bay.”

To ensure Balibago only producer safe drinking water, an accredited Department of Health laboratory conducts monthly tests on its water.

“Water supply situation is already dangerously threatened with lack of sources and deteriorating quality of ground water,” he adds.

Concerned about dwindling water sources, Panlilio said the company’s next major strategic move is to look for alternative water sources other than ground water.

“What we’re intensifying now is to improve our capacity to supply filtered potable water because for the longest time we’ve been relying on ground water supply or deep wells, but not tapping surface water or rain water captured in lagoons, lakes and in springs,” says Panlilio.

Modestly profitable

Despite the challenges, Panlilio admitted that water business can be modestly profitable.
As a regulated industry, their pricing, the return on investment and the internal rate of return are actually dictated by the government’s NWRB.

“We are regulated. The thing is water business is very capital intensive,” he adds.
Last year, Balibago posted P300 million in net income and gross income of P1.2 billion. This year, the company expects a higher net income of P350 million to P450 million. From an acquisition cost of P40 million for one area operation, Panlilio estimated the company’s market capitalization should be around P5 billion already.

They have five companies that consolidate all their franchise areas. One is the South Balibago Resources Inc. for Visayas and Mindanao and Hiyas Water Resources Inc. for the Bulacan franchise areas. The three other entities are for its Luzon franchises.

The company has a lean organization of 700 direct employees and 200-300 indirect workers through its contractors in the provinces.

“We employ hydrostatic engineers, we also have water diviners, who are unschooled people but possess characteristics that can detect magnetic field for water sources,” he adds.

With growing demand, Balibago has to invest more to ensure sustained growth.

Easily, Panlilio said Balibago must be investing P2 billion for new franchise areas alone in the next three years. This may be funded through a combination of debt and equity or via a P2-billion public bond issue, which will be the first time for the company.

“We have an IPO plan in the medium-term, but for now we can still leverage our strong balance sheet,” says Panlilio, who pointed out that they are still under leverage right now as most of their projects are funded by internally generated funds.

Aside from expanding into new franchise areas, Balibago is investing more for new facilities to ensure water supply for the communities that they serve.

For instance, Panlilio said Balibago is now building two major water treatment plants that will produce 20 million liters per day of water in Iloilo for an investment of P600 million.

It is also investing P750 million for district one in Cagayan de Oro City, and a bulk water supply in Pampanga and Tarlac. One bulk water facility can easily cost P200 million.

Aside from its foreign suppliers and technical consultants, Panlilio said they are also developing a homegrown chemical department.

Joys

But it is not all about profit. During his presidency at the Rotary Club in Makati, Panlilio made it his personal advocacy to provide potable water to impoverished communities.

The 3H program of Rotary International seeks to provide service to the needy through non-profit ventures addressing humanitarian, health and hunger needs where providing level 3 water system is qualified. The proposal was approved with $200,000 donation from the Chicago-based Rotarian International.

“We sell water at 20 percent cheaper than the rate of the commercial operator. It cannot be given free because we have to plow back the earnings for future expansion,” he adds. BWSI supervises, en gratis, the Makati Rotary 3H Resources, Inc. project.

“I will not enter into it if this is not something sustainable because the idea is to duplicate it to other poor communities,” he adds.

Through BWSI’s support, the Rotarian project is currently serving more than 1,000 low income families in Bamban, Tarlac and is in the construction stage for its newest franchises in the municipalities of Sto. Domingo and San Juan both in Ilocos Sur Province.

“The joys of servicing this basic need is subliminal, the joys consumers get from their faucet with clean, safe to drink running water – that is really joy to consumers so we cannot take water for granted anymore,” he adds, noting that one can live without electricity, but not without water.

Government service

Looking back, Panlilio’s short government service provided him a different perspective from what used to be an all corporate view.

“The intention was to help President PNoy, so I took a three-year sabbatical leave from my private business,” says Panlilio.

“At least I can be proud that I can tell my grandchildren that I served the government honorably and finished without any controversy,” says Panlilio as he expressed hope that he left BOI in a much better shape than when he found it.

Despite his short stint, Panlilio helped BOI achieved over P500 billion in approved investments, surpassing previous investment approvals.

He was instrumental in bringing a solution to the problematic power rates for investors, arguing that government provides an energy to ensure the three mega foreign investors pour in billions of dollars in the country and not elsewhere in ASEAN. Had it not for the power subsidy, the huge investments of Texas Instruments and Phoenix Semiconductor in Clark and Hanjin Heavy Equipment in Subic Freeport would not have been made possible.

“It was fun, very fulfilling sense of accomplishment and it was good to work with bright and professional people at BOI,” he adds.

He recalled how those years moved progressively along with the steady growth in investments. “Even if there were small glitches or hiccups, there was political stability up to the very end,” he recalls.

Panlilio also observed how governments build on the platform created by previous administrations. During the time of President PNoy, he said, the government worked on what has been started by the previous administration of President Gloria Macapagal-Arroyo. In the same manner that the current administration of President Duterte is also building from what was started by President PNoy.

“Because six years is too short for one administration to accomplish more, every president has to work on the success of the past and build on it,” he pointed out.

Engagement

Panlilio has always been a collegial manager, whether he is in government or in the private sector but he will argue his point if push comes to shove.

“As a leader, as much as possible I involve people into the thinking process and into decision making because I believe that a knowledgeable workforce is more productive and effective so it is important that everybody can relate to the objective,” adds Panlilio.

Thus, he can relate very well to the Socratic Method of teaching, which was created by Harvard and is adopted in all the top schools of the world. It goes: Tell them and they will forget; Show them and they may remember; but involve them and they learn.

The Socratic or case method of teaching requires no lecture but students are responsible to read the case and are asked to bounce off ideas against the technique learned from it. It forces someone to study and understand and get involve in a realistic discussion of a particular case.

He looks up to business guru John Gokongwei. He also admires Eugenio Lopez Jr., Rafael Buenaventura and Jobo Fernandez for their very collegial approach as managers.

“One cannot get away from not admiring Henry Sy Sr. and the younger Andrew Tan and of course Manny Pangilinan, the Zobels, the Aboitiz siblings led by Moncho who have shown exemplary managerial competence,” adds Panlilio, who finished economics and MBA at Ateneo and advance management program at Wharton School of Finance.

The 67-year-old Panlilio is not really a bookworm but he reads one that interests him the most. He was raving about the “Edge of Eternity”, “Winds of War” and “War and Remembrance”.

Sensitive

Business as it relates to money makes most businessmen insensitive. But Panlilio uses his sensitivity to make his business more successful and himself as a more effective leader.
“A good businessman has to be sensitive on what has been happening on the ground, knows how to reach out and attends to matters even how trivial they maybe,” says Panlilio.

In fact, he said, five of Balibago’s successful franchise branches came from simple folks who do not get to talk or be granted an audience by big corporate leaders.

Panlilio adheres to a beautiful line from Desiderata: “Listen to others, even the dull and ignorant, they too have their story.”

“Give them a chance and check them out you might find out something that will prove to be successful ventures in the future,” adds Panlilio, who once dabbled as college instructor on economics and business at his alma mater.

“I am patient, I don’t have a cordon sanitaire because I am very spontaneous which has its own rewards as information gets to you unfiltered because you have direct link to people. I talk to plumbers and billers and ask their experiences and pick up things that I throw to the highest management,” adds Panlilio, a proud father of five children.

Even as managing head of the BOI, Panlilio disdained being surrounded by a cordon sanitaire. He prefers spontaneity, and delivers his speeches extemporaneously.

His parents may have provided him a good education and some comforts in life, but Panlilio said he is no different from any other ordinary Filipinos.

“We grew up like most other Filipinos, we rode buses, jeeps and walked when we run out of transportation allowance. We used the school campus as our playground because we are not members of country clubs, we are above average but not rich. We stay grounded,” says Panlilio.

At Balibago, where Panlilio cited the leadership of Chairman Escaler, they are also challenged and intrigued by George Bernard Shaw’s, “ Some people see things as they are and ask why, I dream things that never were and say, why not?”

All of these factors have contributed to where his water company now.

“It made us bold and lofty dreamers and eventually, enablers!”

 

Source Article: Manila Bulletin (Bernie Cahiles-Magkilat)