BRITAIN'S United Utilities is to proceed with its share of a massive water privatisation project in the Philippines despite facing a ?90 million (about HK$1.13 billion) loss on a similar project in Thailand. The firm, formed last year after the merger of North West Water and North West Electricity, confirmed it would continue with its stake in the Manila scheme. 'There will be no change to the Manila project,' a company official said from its headquarters in Manchester, England. At HK$54 billion, the controversial project is billed as the world's largest water privatisation, involving the sale of Manila's Metropolitan Waterworks and Sewerage System. United Utilities, together with United States engineering giant Bechtel and Philippine blue chip Ayala Land, secured a 25-year concession to operate and upgrade the eastern side of the city last month. A similar deal was struck with France's Lyonnaise des Eaux and Philippine outfit Benpres Holdings for the western zone. The spokesman said a different approach had been adopted between the Manila and Bangkok schemes. 'The model for Manila was that we would lead the operational side, responsible for customer billing and maintaining water and sewerage services. Bechtel leads the construction,' he said. 'In Bangkok, we were responsible for construction. We have pulled out of international contracting.' The decision to withdraw from overseas construction was taken by the United Utilities board after the $3.15 billion Bangkok project became dogged by escalating costs and tough restrictions imposed by the city administration. The final straw came when Bangkok governor Bhichit Rattakul refused to pay claims covering extra costs and additional work. Chanchai Vitoonpanyajit, director of the Bangkok Metropolitan Authority (BMA) drainage division, said there was no extra work involved. 'This is a turnkey contract so [the United Utilities group] was responsible for everything. If any problems arise, it is their responsibility,' Mr Chanchai said. This is disputed by United Utilities, which said BMA's consultants insisted on extra construction including a 24 per cent increase in the length of tunnel and more than triple the number of manholes. The cost increases led to United Utilities making provisions of about $1.13 billion against claims for payment for this additional work and other problems. The firm is considering how it can pursue the issue, but it sees little chance of recovering the money after Mr Bhichit said he no longer considered the claims valid. The board's decision angered United Utilities staff because they believe there is a rich source of business available, particularly in the Far East, both as a construction outfit and as an operations company. The group is hoping to start work next month on the Manila deal after appeal court judges threw out the last of the legal challenges to the privatisation. Once contracts are signed it will pave the way for a spending programme worth about $20 billion over the next 10 years. A similar amount is expected to be spent by the Lyonnaise venture. The task will be to repair and expand Manila's crumbling network of underground water supply and sewage disposal pipes. Only about 65 per cent of Manila's population has piped water and only at certain times of the day. A mere 50 per cent of the water supplied reaches consumers. The rest is lost to leaks and theft through a crumbling network of underground pipes.