In conversation with Mr. Michael Rubio, Former Director of Communications & Corporate Affairs at Ecosystem Technologies International Inc., we attempted to seek his opinion and understand his side of the story about the changing fortunes of the Industrial Waste Water Treatment Market in Philippines and how are companies gearing up for it.
“In Philippines, the limited presence of Sewage lines, strict government regulations and growth in the industrial sector is working towards the acceleration of Industrial Waste Water Treatment Market. Taking advantage of the issues in the existing waste water treatment facilities, the players have been working to improve the shortcomings such as power usage and quality of BOD discharge.”
Q1) What is the current stage of the Industrial waste water treatment market in Philippines?
The Industrial Waste Water Treatment market is market driven by the rate of industrial expansion and the growth of manufacturing facilities in the country. In most of the cases, the industry is all about expanding and repairing existing wastewater treatment systems which are sourced from a few local providers, but in the case of international locators, the treatment plants are also sourced from outside the country.
When an overseas company enters the market, they usually source their Waste Water Treatment plant from an overseas provider rather than preferring a local provider, therefore in majority cases there are no tenders made in the country and the decisions for such plants are taken even as early as the planning stage.
The market is highly dependent on the manufacturing sector of the country, it is very difficult for a Waste Water Treatment provider to start a business and participate in tenders without close relations in the industry.
In 2020, the industry saw a boom in the warehousing sector in the country, therefore the Industrial parks are concentrated with warehousing providers as the economy is growing towards a trend to import consumer goods for the e-commerce market. These warehousing facilities are connected to centralized sewage treatment facilities rather than an Industrial Waste Water Treatment facility as there is no industrial wastewater generated.
The sewage line in the country is almost non existing, therefore the residential and industrial sectors are required to treat their own waste generated. When a new facility is being constructed in the country, a focus is given to the used water treatment for both the sectors.
Q2) What are some of the major growth drivers and challenges in this industry?
Growth in the Industrial Waste Water Treatment market is driven by the growth in the manufacturing units such as there are food processing not only for grocery food items and canned goods, but also including commissaries for large fast food restaurant chains. There the major component of used water treatment in this sector is the removal and handling of fats, oils, and grease.
Also, after the update in the government regulation, Clean Water Act in 2016 and 2021 proving a standard for effluent discharge has given the Industrial Waste Water Treatment market a boost. There might not be further revision in these regulations by DENR but they might not be the growth driver in the near future. The fact that waste water treatment plants are designed to live for a very long time also affects the growth in this sector.
In terms of challenges, cost of energy is one of the major challenges as technologies like ultra-filtration or nano filtration have a lot of power requirements and the cost of energy is the most expensive in the region.
Q3) What are recent changes in the Waste Water Treatment sector in Philippines as there were several projects to construct a centralized Waste Water Treatment plant for industrial parks.
The sewage line in the country is almost non existing, therefore the residential and industrial sectors are required to treat their own used water. When a new plant is being undertaken in the country, both the sewage and waste water must be accounted for. This means either 2 distinct treatment plants are built and operated in the industrial facility, or 2 kinds of waste are treated in an integrated treatment plant.
Q4) In respect to your past experience with Eco-system technologies, how has the company have grown over the last few years and what are the growth perspective?
Ecosystem technologies has a major growth from the housing sector in terms of waste water treatment. Since residential sector are supposed to have their own waste water treatment plant setup, ecosystem is able to grow in the STP market and it’s a very competitive market. It is also worth noting that non-industrial commercial buildings such as hotels, offices, and malls also require their own sewage treatment plants, and these are part of Ecosystem's portfolio.
In terms of industrial waste water, there are very few projects undertaken by the company as the company enters the Philippines with their own industrial plant, they generally bring an overseas partner for waste water treatment.
Q5) What is the size of food processing manufacturing industry in Philippines and the volume of waste water treated by this market?
Food processing sector is also one of the major sectors in terms of Waste water generation and its treatment in the Philippines. The size of the plant can have a treatment capacity of up to 1 million liter per day to 3 million Liter per day. Ecosystem had 4-5 major clients for food processing waste water treatment plants. In 2007, the company had one major project with capacity around 2.5 million liter per day with a value around $18 million (this is an exception, rather than commonplace).
As mentioned, large fast-food chains have commissaries that generate waste water at an industrial scale, these include Jollibee Food group, McDonald’s, Robinsons (mills) and others. The costing of a plant depends on certain parameters like Integration, design, equipment and construction expenses where designing is usually done by an external vendor.
Usually, Industrial Waste water treatment plants use bespoke chemical-based technology (removing specific matter from the waste water particular to the facility generating the waste) that are more expensive than the Sewage treatment plants.
Q6) What are the major government regulations that a company has to keep in mind while establishing a waste water treatment market? What is the process of registration and establishment?
Government regulations include the Clean Water Act (2004) with DENR (Department of Environment and Natural Resources) updates from 2016 and 2021. This act regulates the Water Quality Guidelines, and the General Effluent Standard and if not followed the company can be penalized.
Therefore, Waste water treatment plants should be designed in such a way that all designated guidelines are followed. Building permits are also required from the Environment regulatory authority. Discharge permits are also required from DENR and also from LLDA (Laguna Lake Development Authority), if the company is trying to set up a plant in the Laguna Lake area. In case of PEZA (Philippine Economic Zone Authority), the companies also need to take permission from the economic zone’s authority if located in a special economic zone it governs.
Q7) As the market is divided between EPC contracts and O&M players, what is the ground reality that this sector division has?
In the Philippines, EPC contractors have their own staff that can provide the operations and maintenance (O&M) services to the client. This is provided likely for the duration of 1 year after the construction of the waste water treatment plant. There is O&M sector in the market as the clients don’t consider O&M expense to be a viable expense. Even Eco-system Technologies had only 1 project in the last few years for Industrial Plants.
Specifically, it isn't viable for a local operation to maintain an expatriate staff for O&M. And, if locals can be trained to perform this anyway, then the company will find the cheapest way possible to satisfy its needs.
Q8) How do you think that Covid-19 pandemic had any role to play in the drastic change in this industry?
Since Covid-19, the number of new projects has slowed down and if there are any, they are for the development of residential waste water treatment plants. Companies in the Industrial Waste Water Treatment Sector survived by servicing the existing contracts.
Q9) How do you feel is this industry going to change in the near future?
There is a major room for growth in the Waste Water Treatment sector as there’s no sewage management system in the Philippines. Companies can grow if they invest in Sewerage as there is a lot of capital investment in civil construction and not much focus is given to the sewerage.
For building a sewage network, a lot of reconstruction will be required disrupting roadways and the household sector. Therefore, waste water treatment plants are required and is one of the major growth areas. Companies can also focus on building a centralized Waste Water Treatment plant setup to grow.
As to whether this is a viable sector for a private company to invest in, is another matter. But the fact remains that most of the Philippines are not serviced by sewerage, and therefore not by centralized or even clustered sewage treatment plants.
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