Vital resource: Upgrades in the water segment are required to meet long-term development targets


Hydropower remains one of Sri Lanka’s top energy generators, and thus water has long been a key, multi-purpose component of the country’s broader utilities portfolio. This vital resource is set for tighter regulation as the country manoeuvres to meet the challenges of economic and population growth alongside climate change. Sri Lanka is also committed to meeting a 2020 Millennium Development Goal (MDG) target of 100% safe water coverage and a 2025 target of 100% access to improved sanitation. Achieving these objectives will require major infrastructural development, which is expected to provide a raft of investment opportunities.

Sector Players

Established in 1975 the National Water Supply and Drainage Board (NWSDB) represents the main government agency for the sector. The board is responsible for all aspects of operations, from design and construction of water systems to billing and collecting water charges. The NWSDB also manages the sewerage systems in parts of the Greater Colombo region. However, the Colombo Municipal Council owns and operates the network that serves the city itself.

New rules in the pipeline will see the Public Utilities Commission Sri Lanka (PUCSL) take over the regulatory functions governing the water sector, while petroleum is also set to become one of its areas of responsibility. The changes will be made via an amendment to the NWSDB Act of 1974, the board’s foundational document. At present the PUCSL oversees just the electricity sector. Meanwhile, the Water Resources Board, which falls under the Ministry of Irrigation and Water Resources, continues to look after the country’s rural and agricultural water requirements.

Increasing Access

The NWSDB supplied water to almost 2m connections in 2015 and produced 600m cu metres of piped water, 4.3% more than in 2014. A total of 804,082, or 41%, of the connections were located in the Western Province, highlighting both the comparative concentration of population and industry in that region and a broader scarcity of facilities elsewhere.

According to the government’s 2017 budget, some 9.6m people, or just under half (46%) of the population, have access to pipe-borne water. The budget aims to increase the number to 12.2m people, or 60% of the population, by 2020. Meeting this target will necessitate sourcing an additional water supply of some 600,000 cu metres per day – a considerable challenge for a country facing a number of geographical, meteorological and developmental challenges. The government estimates that around LKR300bn ($2bn) will have to be invested in water and sanitation infrastructure over the next three years, if it is to meet its goals.

Monsoon Ready

In addition to its groundwater resources, Sri Lanka receives 750-6000 mm of annual rainfall. A dry zone in the north, east and south-east sees 1200-1900 mm of annual rainfall, while the south-western and south-central wet zones receive averages of around 2500 mm. Wide seasonal variations are another characteristic of the country, with the south-west monsoon, which lasts from May until early October, and the north-east monsoon, which occurs from December to February, radically boosting rainfall. The monsoon seasons have determined the pattern of agriculture for millennia, with reservoirs, known as tanks, and associated irrigation systems designed to store water during drier periods, dotting the landscape.

The bulk of the nation’s water resources continues to go towards agriculture – and paddy in particular – with approximately 600,000 ha of irrigated farmland in the country (see Agricultural chapter). Many operations in this sector are less than optimal, with the International Water Management Institute putting efficiency at around 35-40% in 2010. Pressure to produce has also led many farmers to turn to groundwater resources, with these then coming under increasing strain and, in some instances, already depleted. At the same time, deforestation and urban development, coupled with climatic shifts, have led to erosion, run-offs and flash flooding, with a consequent loss of water resources.

Salination of the water table near the sea, where settlements are sometimes squeezed into narrow areas around coastal lagoons, is another issue. Water quality, too, has been adversely affected in many areas by rapid urban expansion and a lack of regard for and enforcement of environmental standards. Combined, these factors point to the need for a major revamp of water infrastructure in both rural and urban areas.

Turning The Tide

A number of projects financed by the Asian Development Bank (ADB) are contributing to Sri Lanka’s efforts to overhaul the sector. In 2012 the ADB approved a $300m multi-tranche financing facility to boost Colombo’s water supplies and improve its wastewater management system. The ADB has also approved a loan to finance a piped-water system for Jaffna, supplying water to some 300,000 people, while 80,000 more inhabitants will get a new sewerage system. The lender is also helping to finance a range of other safe drinking water projects, aimed at providing safe water and sanitation systems to an additional 1m people. Initiatives include the Dry Zone Urban Water and Sanitation Project, which will serve the Vavunya, Mannar and Chilaw/Puttalam areas. Recovery from the civil war, which ended in 2009, has been slow in these areas. The project is expected to play a key part in helping the regions move forward.

The NWSDB has also been active, contracting French company Suez to design and construct an expansion of the board’s drinking water plant at Kelani Bank in June 2016. This €168m project will extend the facility’s capacity to 360,000 cu metres per day, supplying the north-eastern zone of the capital, Colombo. The contract includes two degremont technologies, with a saline barrier to prevent seawater flowing upstream and degrading local water resources.

Elsewhere, the NWSDB has commissioned India’s VA Tech Wabag to construct the $108m Polgahawela Water Treatment Plant, with financing from the Indian Exim Bank. The Indian water major is also completing the Greater Dambulla Water Supply Scheme. The latter will produce 30,000 cu metres per day of drinking water.

Foreign Funding

Other foreign-funded projects commissioned by the board include the Ampara Phase III project, which will provide 40,000 new water connections to the Ampara, Batticaloa and Monoragala districts. The project is funded by Australian and New Zealand export finance and banking groups, along with Sri Lanka’s Hatton National Bank. The Greater Colombo Water Rehabilitation Project funded by the Japanese International Cooperation Agency (JICA) is now finalising the initiative, which has involved the construction of two reservoirs, the laying of new pipes and transmission systems and connections to 25,000 homes.

The NWSDB website lists a total of 15 foreign-funded water supply projects as currently in progress. In addition, several sewerage projects are also receiving foreign support. The JICA is behind the Kandy municipal disposal system, a LKR22.5bn ($153.4m) project that will provide 49,700 inhabitants with an effective sewerage system. Previous sewerage programmes have been supported by the World Bank, the Chinese and Austrian governments and the Swedish International Development Corporation Agency.

The government itself has also initiated some 35 projects in the water and wastewater management field, worth around LKR428bn ($2.9bn) in total. These include the Anamaduwa, Kundasala-Haragama, Anuradhapura North and Jaffna-Kilinochchi water supply projects, together with the Kelani Right Bank project.

Going Forward

Much remains to be done, however, as the government’s 2017 budget recognised. The document made special mention of the MDG goal of providing universal safe drinking water. On irrigation, the budget called for the acceleration of the Moragahakanda, Uma Oya and Yan Oya large, multi-purpose projects, with LKR60bn ($409.1m) earmarked for 2017 and further funds allocated for progressing initiatives.

The budget also sets aside additional money for the rehabilitation of the Minipe Left Bank – creating a large reservoir – and for the Heda Oya irrigation and water supply project. Foreign funding is being sought for this LKR20bn ($136.4m) project, which involves financing pipe-borne water delivery to people in the Lahugala, Pottuvil, Panama and Siyambalaanduwa districts.

The degradation of groundwater is also set for closer monitoring, via a LKR200m ($1.4m) pilot project in eight districts, including Polonnaruwa and Batticaloa. An additional LKR2bn ($13.6m) is being allocated to ensure that schools are supplied with safe water and improved sanitation. The government aims to increase the number of educational establishments connected to these vital facilities by 1000 before the end of 2017.

Sri Lanka’s water and sanitation sector represents a major investment magnet, with a vast range of projects under way or in the pipeline that require components and services across the board. The government is also keen to mobilise foreign investment to support the sector’s development to achieve its MDGs and sustainable development objectives, while providing its growing populace with greater health and prosperity.