The water bill has increased due to the board's inefficiency - the audit report reveals

A special audit report issued by the National Audit Office reveals that the losses incurred due to operational inefficiencies, long-term project delays, and poor financial management within the National Water Supply and Drainage Board have been unfairly passed on to consumers by increasing water tariffs. Auditor General L.S.I.

According to this report, issued with the signature of Mr. Jayaratne, the general public of this country has directly borne the cost of various weaknesses within the Board itself.

Before issuing bills to consumers and generating revenue, 'Non-revenue water' (NRW) lost due to reasons such as water leaks, illegal water connections, and meter errors has been a major cause of this additional financial burden. Although the optimal level to be controlled is 15 percent, the Board's NRW percentage had risen to 28 percent by 2023, with the loss incurred from it in that year alone estimated at Rs. 11.6 billion. The highest loss rate is reported from the Kandy North area, at 38.72 percent. The Water Supply Board has not taken proper steps to manage this problem, and as a result, the financial loss incurred has been transferred to consumers who pay through high water tariffs.

The audit revealed that 19 infrastructure projects implemented under foreign loan assistance have been delayed for periods ranging from one and a half years to seven years. Due to the delay of just five of these projects, the Board lost Rs. 870.52 million in revenue by being unable to provide new water connections according to the scheduled timeline. Furthermore, the government had to pay Rs. 2.25 billion in commitment fees to foreign lenders because the Board failed to utilize loan funds within the agreed periods, and this significant cost has also ultimately been recovered through the consumer water tariff structure.

36 percent of the Water Supply Board's total operating expenses are allocated to employee costs. Despite incurring significant operating losses between 2018 and 2022, the Board paid Rs. 894 million in bonuses and incentives in 2023. Moreover, although the number of permanent employees decreased between 2019 and 2023, the cost per employee increased by 26.67 percent. Meanwhile, the Ministry of Water Supply has failed to pay the Board Rs. 263.33 million for 15 employees who have been released to the Ministry but are still drawing salaries under the Board's payroll.

Against this backdrop, water tariffs were increased by 70 percent in September 2022 and revised again in August 2023. As a result, the overall tariff increased by nearly 100 percent compared to the rates in 2012. Water bills for ordinary households, which consume between 6 and 15 units per month and represent the largest consumer category in the country, have increased by 310 to 319 percent compared to 2012 levels. Furthermore, following the 2023 revision, the average monthly bills for educational institutions have seen a colossal increase, ranging from 275 percent to 21,454 percent.

The audit report indicates that although a 5 percent reduction in water tariffs was implemented in August 2024, coinciding with the decrease in electricity prices, consumers have received a negligible relief. The average monthly water bill, which was Rs. 2,303 in December 2023, decreased to Rs. 2,284 by December 2024, a mere Rs. 19 reduction. Even after this relief, water bills remain more than 52 percent higher than in January 2023. Furthermore, several sectors, including religious institutions, commercial consumers, bulk water supplies, and public standpipes, did not receive any tariff reductions in 2024.

By the end of 2023, only 48.1 percent of the country's total population had access to piped water facilities. The audit noted that the progress of the 'Water for All' program, launched with the aim of increasing this to 79 percent by 2025, is very slow. Although 22 percent of water production costs are spent on energy, several planned energy efficiency projects, including the modernization of the Ambatale Water Treatment Plant and a Rs. 153 million solar energy investment project, have been halted midway.

The Auditor General has recommended that losses incurred from project delays, management weaknesses, and operational inefficiencies should no longer be passed on to consumers. It states that since the Board has operated without a formal water tariff policy for 49 years, future tariff revisions should be carried out transparently according to the formula introduced in 2024, and that non-revenue water should be minimized, with strict legal action taken against those who waste water. It is also recommended that employee bonuses should be based on targeted performance. Although attempts to contact the Minister of Water Supply, the Deputy Minister, and the Chairman of the Board regarding this matter were unsuccessful at the time of reporting, Mr. Chandana Bandara, Chairman of the Water Supply Board, later commented to 'The Sunday Morning' newspaper that a water tariff formula and a national policy are currently being implemented.