PrimeWater Transaction: A Number That Represents More Than Just a Digit

When looking at the newly released PrimeWater 2024 financial statements, the first thing that catches the eye is not losses, but rather the continued increase in profits. With net income reaching ₱1.35 billion and operating cash flow of ₱6.08 billion, the company demonstrates a strong financial profile from a purely numerical perspective. Assets have increased to ₱42.37 billion with liabilities of ₱26.04 billion. However, these figures become more troubling when connected to the reality on the ground: tens of thousands of customers pay increasingly higher bills while facing pipes that often run dry.

The Paradox of Profit and Service Failure

The fundamental question is not PrimeWater’s ability to generate revenue, but how that revenue is managed within the context of social responsibility. The financial statements signed by Punongbayan & Araullo show that ₱5.85 billion has been reinvested into infrastructure — a figure reflecting the ongoing investment needed to maintain the existing system.

Nevertheless, behind these promising numbers lie more challenging questions: does the accounting assumptions used in the valuation of the ₱26.1 billion concession assets reflect operational reality? The change in accounting policy in 2024 — from revaluation model to cost model — has resulted in a retrospective restatement that removes ₱1.3 billion from assets and reduces equity by ₱905 million for 2023. This demonstrates how sensitive PrimeWater’s capital structure is to technical accounting considerations.

Concession Assets: A Pendulum of Dependence

To understand why company ownership becomes important, one must appreciate the nature of the dominant assets in the balance sheet. Economically viable service concession assets only exist if three conditions are met: stable ongoing financing, continued support from lenders, and regulators maintaining confidence in the supporting entities.

Any issues related to the financial depth of the ultimate owner become questions about the sustainability of the concession itself. Debt related to the parent entity stands at ₱3.58 billion, while management fees of ₱350 million continue to flow within the group. Fully depreciated assets valued at ₱947 million are still operational — a normal situation for an old utility but one that raises significant capital replacement risks.

Transparency and Regulatory Oversight Questions

The transition to Crystal Bridges as the new owner raises a clear unanswered question: can the new ownership structure shoulder the same responsibilities? The absence of publicly available financial statements from the buyer itself is a signal that regulators cannot ignore.

In a healthy capital market practice, silence can reveal as much information as disclosure. Water utilities are not side businesses; they are public infrastructure touching the lives of six million customers. When private investment entities gain control over service providers with nationwide concessions without publicly verifiable financial footprints, legitimate concerns about operational sustainability and accountability to users arise.

History and Trust

The new owner carries a distinct contextual baggage. Public records of Lucio Co, although not resulting in criminal convictions, show a pattern of repeated allegations spanning over two decades related to smuggling and tax disputes. The courts ultimately ruled in his favor in major tax disputes, but this historical pattern raises questions about perceptions of trust within the regulatory sector.

Unresolved claims, even if technically not proven misconduct, add a layer of scrutiny to transparency in such transactions. The utility sector cannot operate in gray areas; it requires clear and full trust.

Lessons of Unlimited Privatization

When the Villar family announced their withdrawal, the narrative presented was one of fatigue — too many complaints, too much political pressure, too little return. However, a more critical view shows that this decision was an acknowledgment that the business had become unsustainable from a reputation and electoral perspective, not just from a financial standpoint.

The fundamental lesson from PrimeWater’s experience is not that privatization has failed. Instead, privatization without ongoing capital, full transparency, and user-focused enforcement will continually collapse. Utilities need more than profits; they need patience, visibility, and a willingness to be questioned — qualities not all conglomerates are ready to accept.

Looking Ahead: Accountability or Silent Legacy

The question now shifts to Crystal Bridges: will it face service liabilities directly and openly, or will it leave them inherited in administrative silence? With continued rising revenue contrary to documented service complaints, the growing (1) collection, (2) chronic service failure allegations, and (3) changes in control to a publicly opaque financial structure create an environment that demands the sharpest and most user-oriented regulatory posture.

The agreements may be legally valid. They may also be strategically wise. But until water flows with certainty and clarity — and until the new owner operates transparently — the market should view this transaction as a mere transfer of billing rights, not a promise of restored service.