Sri Lanka invests heavily in water supply; leaks, weather changes big risks
ECONOMYNEXT – Sri Lanka’s National Water Supply and Drainage Board, is investing 1.2 billion US dollars to increase access to safe drinking water, but high borrowing costs, leaky pipes, and volatile weather may require more alternative financing, a finance ministry report said.
The Water Board provides pipe-born safe drinking water to less than half the Sri Lankan population and has several projects worth around $1.2 billion US dollars (190 billion rupees) to increase its coverage to 100 percent of the population by 2025, the Ministry of Finance 2018 Annual Report said.
Nearly 11 percent of the population, or 2.3 million people, don’t have access to safe drinking water.
"In pursuing the objective of providing to the entire population, the Board is faced with many challenges amongst which the lack of credible water sources due to the impact of weather patterns is a key issue," the Ministry of Finance said.
"Ground water contamination due to unsafe environmental practices is also a concern. In this context the Board has undertaken a project in the Jaffna peninsula to construct/install a desalination plant," it said.
There has not been a tariff revision since 2012 resulting in the government infusing 12 billion rupees in 2017 alone including Treasury guarantees to bridge investment gaps.
"The board is exploring private-public partnerships as an alternative to government financing and borrowings," the Treasury said.
The Ministry of Finance has guaranteed up to 51 billion rupees of the Water Board’s bank loans by the end of 2017.
Separately, there were around 75 foreign credit lines totalling 142 billion rupees for drinking water related projects in 2017.
The Water Board treated 679 million cubic meters of drinking water in 2017, up 4.6 percent from a year earlier, but lost 25 percent or 171 million cubic meters due to leaks. This amounts to 8 billion rupees in lost revenue.
Colombo was the biggest offender wasting 43 percent of the water it treats for drinking due to neglected pipes and broken roadside taps.
The Water Board reported revenue of 1.8 billion rupees during the year, down 38 percent from a year earlier, on revenue of 24 billion rupees, up 1 percent from a year ago.
Cost of production increased 5.3 percent to 14.2 billion rupees, administrative expenses rose 8.7 percent to 9.9 billion rupees and operating expenses grew 4.9 percent to 714 million rupees. (COLOMBO, 13 June 2018)