• Water tariffs to be increased alongside electricity tariff increment

The National Water Supply and Drainage Board (NWSDB) has finalised the percentages by which the water tariffs should be increased in parallel to the recently-increased electricity tariffs, The Sunday Morning learns.

It is learnt that the final decision on the new water tariffs had been taken at last week’s board meeting and the details about finalised tariffs have now been sent to the Ministry of Water Supply.

Accordingly, the NWSDB is likely to provide some relief for low-income consumers, especially those receiving Samurdhi benefits from the Government. 

However, details of the relief are yet to be finalised and specifics regarding the group of consumers which will receive the subsidies remain unknown.

Speaking to The Sunday Morning, NWSDB General Manager Eng. Wasantha Illangasinghe said the board had taken the final decision on the tariff percentage last week.

“Until it is approved by the Ministry, it is very difficult to predict the real percentages or the mechanism that will be applied, but Samurdhi beneficiaries will receive some sort of relief,” she said, when asked whether the water tariffs would be increased mostly for those who consumed a lower number of units, similar to the electricity tariff mechanism.

Increments in parallel to electricity tariffs 

She also noted that the water tariffs would have to be increased in parallel to the electricity tariff increment as the latter had directly affected the production cost of pipe-borne water provided by the board.

Addressing the recent electricity tariff hikes, Illangasinghe stressed that there should be a cost-reflective tariff increment for water tariffs as the board was currently incurring massive losses due to the high production cost.

According to NWSDB statistics, 16.68% of the total unit cost of water is decided on electricity tariffs and therefore the changes made to electricity tariffs have a direct and major impact on water tariffs.

“We have to pump water from the river to storage and to each and every consumer. For that, we use electricity. When the electricity prices go up, it affects the water tariffs as well,” the NWSDB GM said, adding that it was important to increase water tariffs to prevent the board incurring losses.

“If prices are not revised, the board won’t be able to operate due to the massive losses incurred at present,” Illangasinghe stressed.  

The State-run Ceylon Electricity Board (CEB) raised its tariffs by 66% with effect from 15 February after a prolonged clash between the CEB and the power regulator, the Public Utilities Commission of Sri Lanka (PUCSL).

As reliably learnt by The Sunday Morning, water tariffs too will have to be increased by another 200% in order to reflect the cost. However, an NWSDB official, who wished to remain anonymous, said that the tariffs would not be increased by such a wide percentage and therefore the tariff hike would not be likely to reflect the costs associated with water production.

They also believed that should a cost-reflective tariff hike be introduced, consumers would find it unbearable given the current economic situation, with inflation presently at 54.2%.

Current tariff revisions insufficient 

The last tariff revision was introduced with effect from 1 September 2022 via a special gazette notification issued by Water Supply and Drainage Minister Keheliya Rambukwella, in terms of Section 84 of the NWSDB Law, No.2 of 1974 after a lapse of nearly a decade since the tariffs were revised in 2012.

The tariffs have been revised for all consumers supplied with water from the water supply schemes of the NWSDB and includes monthly service charges, other charges, and applicable taxes in addition to the water charges, as per the gazette.

Even after the recent tariff revision, it is learnt that the board continues to incur a loss of around 10 cents per litre, since the price of a litre of water only increased from two cents to five cents when the actual production cost is around 15 cents.

According to NWSDB statistics, the current cost of water production alone is Rs. 54.63 per cubic metre. In addition, when calculating the unit cost, it includes costs related to personnel, electricity and pumping, chemical cost and repairs and maintenance, and other costs which reflect 44.67%, 16.68%, 4.17%, and 34.48% respectively of the total unit cost. 

The board earns an income of Rs. 79.53 per cubic metre as per the current tariffs. However, under the previous tariffs, it earned Rs. 43.42 per cubic metre. The Water Board produces a total of 2,299,017.91 cubic metres of drinking water per day.

Facilitating low-income households 

Prior to the tariff revision, Samadhi recipients who consume up to 15 cubic metres of water per month were provided a subsidised tariff. However, water consumption of over 15 cubic metres is subject to normal domestic tariff rates, as 500 litres per day is considered as an adequate supply for the average low-income household for its daily water requirements. 

The monthly water bill for average households is 2.7% of the average monthly income and for Samurdhi recipients it is 5.5%, assuming their monthly income is Rs. 3,600. Apart from this income, Samurdhi recipients also received financial assistance exceeding Rs. 500 per month.

In addition to Samurdhi recipients, low-income households too previously benefited from a subsidised water supply connection fee of Rs. 5,000 (which can be paid in instalments) instead of the regular one-time connection charge of Rs. 17,000.

Losses of the Water Board 

According to the Central Bank Annual Report, in 2021, the Water Board recorded an operating loss of Rs. 3.1 billion compared to the loss of Rs. 370.5 million recorded in the previous year, owing to increases in operation and maintenance costs during the period under review.

Further, the NWSDB experienced losses in the years 2018 and 2019, primarily due to the drop in the gross profit margin and the increase in administrative cost – particularly staff cost and capital depreciation.

By the end of 2020, around 53.1% of the total population was served with piped drinking water islandwide. 

The Western Province water supply system claims the major share of production mainly through the centres in Ambatale, Labugama, Kalatuwawa, Biyagama, Bambukuliya, Kandana, and Kethhena in Kalutara, amounting to 51.87% of the total water production of the NWSDB at the end of 2020 (as per statistics from the 2020 Annual Report of the NWSDB, the latest available). 

Meanwhile, when The Sunday Morning contacted Ministry of Water Supply Secretary R.M.W.S. Samaradiwakara, he said he would only see the board’s final decision on water tariffs tomorrow (27) as he was out of his office on Friday engaging in official work in Kandy.