The National Audit Office has revealed that the National Water Supply and Drainage Board (NWSDB) has failed to establish a formal policy for revising water tariffs despite operating for more than 49 years.
According to a recent audit report, the Board has revised water tariffs on 17 occasions since 1990 without introducing a structured tariff policy to guide the timing and methodology of price adjustments.
The audit found that tariff revisions implemented in 2022 and 2023 placed a significant financial burden on consumers already affected by Sri Lanka’s economic crisis, with water charges increasing by between 70% and 100% compared to the rates in effect in 2012.
The NWSDB attributed the tariff hikes to rising bank interest rates, higher electricity and fuel costs, increased raw material prices and the depreciation of the Sri Lankan rupee.
However, the National Audit Office said several internal management issues had also contributed to the Board’s financial difficulties. These included rising manpower costs, delays in completing projects, loss of anticipated revenue, non-performing non-revenue water projects and delays in implementing initiatives aimed at reducing energy costs.
The report further noted that a number of projects financed through foreign loans had failed to achieve their intended objectives due to implementation delays.
The audit also found that 106 sub-projects under the NWSDB’s “Water for All” programme had made limited progress, preventing the Board from achieving its target of providing 1,316,542 new water connections by 2024. This, the report said, had affected consumers while also depriving the Board of potential revenue.
According to the audit, tariff revisions introduced in 2022 and 2023 resulted in water bill increases of 310% for households using 6–10 units, 319% for those consuming 11–15 units and 218% for consumers using 21–25 units.
The report also highlighted that employee costs accounted for approximately 36% of the Board’s operational expenditure, making them a significant factor influencing water tariffs.
Despite recording financial losses between 2019 and 2023 and experiencing delays in several major projects, the NWSDB continued to pay annual bonuses and incentives to employees. The audit said the Board spent Rs. 894 million on such payments in 2023 alone.
While the Board’s workforce declined by 1,254 employees, or 12.89%, between 2019 and 2023, the audit found that the average cost per employee increased by 26.67% over the same period.
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