ECONOMYNEXT – The International Finance Corporation (IFC) has said Sri Lanka needs to clarify incentives for private investment in wastewater treatment projects, saying lack of independent regulatory oversight of the sector is likely to be a continuing disincentive.
The Board of Investment is encouraging domestic and foreign private companies to invest in this sector through financial incentives for developers, the IFC, a member of the World Bank Group, said in a report.
“As such, there remains an opportunity for the private sector to help water and wastewater utilities increase operational efficiency and cost recovery in the sector,” said the report, a regional study that examines the climate-investment opportunities in south Asian countries.
“However, the lack of independent regulatory oversight of the sector is likely to be a continuing disincentive.”
The government’s preference to not privatize public utilities has precluded private sector participation in the provision of water and sanitation services,” the IFC said.
“Policy reform will be required to attract different forms of capital to help the sector rehabilitate and extend service coverage.”
Among its recommendations are that the government finalize and implement a national PPP (private-public partnership) framework, with standardized procurement processes to build investor confidence.
The government should clarify the incentives to be provided for private participation in wastewater treatment projects for the sector as a whole, rather than on an individual project basis, so as to attract developers, the IFC said.
It should also establish an independent regulator to oversee the water and sanitation sector.
(COLOMBO, December 12, 2017)