Sri Lanka state Water Supply SOE heading for financial crisis, losses understated

ECONOMYNEXT – Sri Lanka state-run National Water Supply and Drainage Board is heading for a financial crisis due to the inability to service loans taken for new projects, minister in charge Rauf Hakeem said.

In the last few years the NSWDB had implemented water projects in areas including Homagama, Avissawella, Kosgama borrowing 54 billion rupees from domestic banks.

In the past few year more water supply projects had been built with loans from China, India and Korea.

The NSWDB had been originally told that in urban areas in only had to bear 50 percent of the capital cost and in rural areas 25 percent and the rest will be borne by the Treasury from general taxes from the people.

But after 2014 the Water Board has been instructed to service the loans.

Financial Crisis

Hakeem said the Water Board did not have the ability to service the loan and talks were underway with the Treasury to get financial help so that it only had to settle 25 percent of the loans taken.

The Water Board was supposed to hike tariffs from December 01, but it had now been put off.

Hakeem said the Water Board was not able to raise rates to very high levels.

AT the moment the capital cost of providing a new connection was between 500,000 to 600,000 rupees. About 10 percent of the revenue came from connection fees.

The capital cost of providing a one unit (1000 litres) of water was calculated at 170 rupees, he said.

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Operational costs were power for pumping, salaries, cleaning chemicals and interest on loans.

The Water Board followed a policy of providing a minimum amount of water, especially for poorer families.

He said industries and commercial establishments were expected to pay a cost recovery charge. (Colombo/Dec03/2016)
 

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