Providing safe drinking water and access to sanitation services is an essential or fundamental element of the Government's program for the economic and social development of Sri Lanka. While coverage levels and service quality have improved markedly over the past decade, the need for water services has outstripped the government's ability to provide sufficient water and sanitation (including pipe borne sewerage infrastructure) and ensure equitable access to the citizens throughout the country. As such, the GoSL has initiated a program for sector reform. Key steps that are being undertaken as part of the reform process include: establishing a regulatory commission for water supply and sewerage and contracting private operators in selected regions of the country to improve operational efficiency and provide private sector investment finance. Further, GoSL has established a separate division under the line ministry for Rural Water Supply & Sanitation sub sector.

To guide the growth of the water and sanitation sector, the Ministry of Housing and Plantation Infrastructures has developed an overarching policy framework for the sector. This policy provides guidance for government agencies including provincial councils & local authorities, lending institutions, and other community based organizations, non governmental organizations involved in water supply and sanitation services in the design and implementation of programs and investment strategies to achieve the coverage, service quality, and cost recovery objectives of the GoSL.

This statement reflects the various policies that have been previously developed for the sector by the Ministry of Housing and Plantation Infrastructure the National Water Supply & Drainage Board and other Ministries and government agencies. It will be updated periodically by the Ministry of Housing and Plantation Infrastructure to facilitate achieving the goals of GoSL for the sector.

Sector Vision

The Government of Sri Lanka is committed to improving the standard of living, promoting economic prosperity, and preserving the environment by providing access to safe drinking water and adequate sanitation facilities to the people of Sri Lanka.

Goals in water supply

• Access to sufficient and safe drinking water is provided to 85% of the population of Sri Lanka by 2010 and 100% by 2025;
• Piped water supply is provided to 100% of the urban population and ….% of the rural population by 2010; and
• Service levels and the quality of water achieves national standards in urban and rural areas.

This policy statement covers the provision of drinking water from bulk water supply to the final distribution to the consumers through piped networks and other means such as tankers, tube and dug wells, and other community distribution systems. For sanitation it covers the collection of sewerage through piped systems, community-based sanitation facilities, on-site sanitation facilities, and the treatment of wastewater for discharge into the environment.

These policies are listed at the end of this document.

Goals in sanitation

• Access to adequate sanitation is available to 70% of the population of Sri Lanka by 2010 and 100% by 2025;
• Piped sewerage systems are provided in the major urban areas and selected growth centres; and
• Standard on-site sanitation is available to all those not connected to a sewerage system or other sanitation scheme.

• National Policy on Private Sector Participation in Water Supply and Sanitation (October 4, 1999)
• Urban Water Supply Policy. National Water Supply & Drainage Board (no date).
• National policy for rural water supply and sanitation sector, July 2001
• Policy on Quality Assurance of Water Supply & Services Provided by the NWSDB (no date).
• Water Supply and Sanitation Sector Reform Policy (draft dated December 2000).
• Tariff Policy on Drinking Water. National Water Supply & Drainage Board. (June 21, 2000)
• National Policy for Rural Water Supply and Sanitation Sector. Ministry of Housing and Urban Development. (September 2000)
• Corporate Plan (1999-2005). National Water Supply and Drainage Board. Volumes I-III.

The government has announced a national target: "Safe water for all by 2010"

The targets set are as follows:

• Increase coverage to provide access to safe water to 95% of the population by the year 2010 and at an affordable price.
• To achieve an adequate level of pipe borne water supply in urban areas,
• To meet the demand for 24 hour water supply from industry and service sectors.

The 1994 Demographic Survey of the department Census and statistics reflects that 72% of the populations have access to safe drinking water through protected sources. With the rapid increase in urbanization and standard of living, the demand for quality water supply is estimated to increase at around 8-10% per annum. Very few of the water systems in place have the capacity to provide 24 hour supply of water which is desired service level.

Industrial and service organizations consume a large amount of water and are important growth areas which generate income and employment in the surrounding area. A 24 hour water supply is needed for such commercial activity.

Safe drinking water and adequate provision for dealing with waste water is an important public health concern. Urbanization without adequate water supply systems and waste water collection and disposal facilities leads to contamination of water supply. Lack of adequate urban development.

The fund needed in the water sector to the year 2010 has been estimated by the National Water Supply and Drainage Board to amount to Rest. 85 billion. The funding available for the water sector from central government over the next 10 years amount to a total of Rest. 45 billion due to constrains placed by the capacity for public borrowing. This is around half of the funds needed for the sector.

Increasingly, multilateral donors are making long term funds available to the private sector to project finance investment in infrastructure. In order to meet the investment gap and also to attract long term multilateral funds designated to the private section into Sri Lanka, private sector investment in water supply is invited.

Public - Private Partnership

Private sector is invited to enter into partnership with the government to operate, maintain and extend water systems. This Public Private Partnership can take many forms including the following listed below.

• Service Contracts:
  Where the public authority retains responsibility for operation and maintenance of the system and limited scope services are contracted out or out sourced with payments to the contractor being linked to performance targets.
  
  
• Management Contracts:
  Where the public authority transfers to a private company the responsibility of the entire operation and maintenance of a system. The public authority will undertake capital investment while payments to the operator will be based on a fixed fee and incentives for increasing efficiency.
  
  
• Lease/ Concession Contracts:
  Where the private operator rents the facilities from the public authority and is responsible for the operations and maintenance including investing in the system on an agreed basis to ensure desired coverage. The operator needs to be ensured of a reasonable return on investment and should be incentives to increase efficiency.
  
  It is expected that all major fixed assets presently belonging to the water schemes would remain with the government. As private investment in water supply schemes would need to establish an adequate -rate of return on the project, it is anticipated that government resources will be targeted to make water affordable and increase accessibility including by providing government subsidy to cushion tariff levels.
  
  The most suitable model to be adopted will have to be assessed on a case by case basis based on coverage objectives and acceptable levels of tariff so that resources available with the government are used in the most appropriate manner.
  
  Private sector will be invited into partnership through transparent, open competitive biding procedures.

Urban Water Supply schemes

Integrated water supply systems identified for assessment are as follows:

The major integrated schemes that will remain within the NWSDB would be the Greater Colombo, Grater Kandy, Greater Nuwara Eliya areas.

Non Integrated Urban Water Supply

The NWSDB will continue to develop and support non Integrated urban water supply schemes which are small and capital intensive and also provide services for development of rural water supply.

Rural Water Supply

Local authorities, the community and small entrepreneurs will be encouraged to take over the management of small rural water schemes with the technical support from the NWSDB.

Head Works and Bulk Selling

Development of head works and bulk selling by private developers to operators is an area where private investment is invited. These investment can take the from of BOOT or reverse BOOT projects. Under the BOOT arrangement, the private sector builds, finances, owns and operates the facility and eventually transfers ownership to the government. Under reverse BOOT, the facility is financed and built by the government and the private firm operates the facility and purchases it by payment of an annual fee over time.

Waste Water Systems

Improvement of the waste water systems essential to meet the environmental needs of urbanization and industrialization. Waste water systems are more capital intensive than water supply systems will continue to be provided by the government in the medium term. During this period the government will move towards charging for operation and maintenance of waste water systems from the consumers with a view to providing a better service. Private sector will be invited to manage the operation and maintenance of sewerage systems.

Given the restricted level of government funding available for the water sector, the tariff level of coverage that can be achieved and the quality of service. At the same time, an affordable tariff rate has to be established taking into consideration and willingness to pay.

A dependable source of safe water is valued highly by most households. The affordability for water is estimated on average to be a maximum of 5% of income. Higher levels of consumption can be charged at progressively higher rates within a formula set for tariff adjustments. This formula should inter - alia be based the premium charge to the commercial sector over the medium term by proving competitive tariff.

An independent regulator will be established to protect the interests of the consumers. The regular will consist of a board of qualified persons who will be empowered by the law to:

• Set tariffs based on government policy and service cost levels,
• Ensure that operators carry out their legal responsibility under contracts with the State.
• Insist of standard of quality and service with appropriate penalties.
• Promote high standards of efficiency.
• Deal with complaints and settle disputes.

The regulator will have jurisdiction over both public and private providers of water.

General

The present urban population in Sri Lanka is around 5.7 million. It is expected that this will increase to 5.8 million, 9.5 million & 15 million by the years 2000, 2015 and 2030. Accordingly the corresponding urban population will reach 31.5%, 45%, & 65% in the respective years. (Source Presidential Task Force Report on House and Urban Development).

To cover the urban population and satisfy the demand of economic sectors such as Industry, commerce, shipping, tourism and also to improve the existing facilities to provide satisfactory level of service to the existing customers a National Policy for Urban water has become priority.

The policy described herein briefly summarizes the present status, future goals and objectives, selection criteria, investment strategies and implementation methods including the operation and maintenance scenarios to achieve the National requirement of Urban Water.

Further more this policy is in accordance with vision and mission of the National Water Supply and Drainage Board's plan.

Status of Urban Water Supply

Present Position of water supply coverage

The total population in Sri Lanka was 18.60 million in the year 1998. Out of this 5.6 million covers the urban area which amounts to 29%. At present 90% of this population has access to safe drinking water where 67% is provided with pipe borne water supplies. Out of the piped schemes maintained by NWSDB only 36% has the capacity to provide 24 hrs supply. Most of the other schemes have an average of 12 hrs supply.

Future Goals & Objectives

It is expected to cover the total urban population with access to safe drinking water by year 2010. Urban population is expected to reach 8.85 million in the year 2010 against a total population of 22.13 million. Service level improvements in terms of accessibility, duration of supply and quality of water supplied are the other major objectives.

Definitions

The Urban water supply would be defined as Water supply,

• Within Greater Colombo
• Within Urban and Municipal Council administrations
• Within newly designated areas by the Ministry of National planning.
• Where the adopted technology is complex.

Investment Selection Criteria.

A selection criteria shall be developed in order to prioritize the ranking of various projects. These criteria shall primarily address the priority of districts then the division of urban centers based on major parameters like population density, per capita investment, subsidy ration pertaining to the area ect. Similarly a division is necessary between new schemes and augmentation of existing schemes.

Following factors shall be considered in the need assessment study.

Priorities shall be established according to development plans based on substantial and periodical water supply & sanitation sector reviews prepared annually. It should be made available to the public. Financial resource priorities for the development will be established for the health and socioeconomic needs with demand driven approach on the basis of cost recovery for domestic sector. For non-domestic demands the criteria will be 100% cost recovery for capital and O&M.

Investment Scenarios

Once the needs are prioritized in the urban sector in consideration of coverage and service levels, investment requirements shall be decided for the planned horizon. Financing could be categorized in to following areas.

It is envisaged to secure major share of required capital investment through Government / Donor funding, and capital cost recoveries through tariff over a period in a phased implementation. Within [the National Tariff structure for domestic consumption a life line rate shall be retrained up to 10m³/ month as well as a higher rate for consumption over 25m³/ month. The cross subsidy from commercial/ Institutional/ Industrial consumer to domestic consumers shall be reduced annually. Tariff setting shall address the operation and maintenance costs, debt services, depreciation and capital recovery.

Cost Recovery objective for Urban Water Supply is to meet through revenue from tariffs, O&M costs, overheads and debt service or depreciation which ever is greater. Similarly Tariff setting shall address the demand management thereby reducing the stress on water resources and less contribution to waste generation.

Private sector involvement is encouraged in according with Government policies and within a regulatory frame work which will improve the management efficiently.

Investment for distribution systems through active financial involvement by the beneficiaries.

Loan/ Grant ratios shall be based on current levels with in urban areas.

Private Sector Participation

Involvement of Private sector in the management and investments of water utilities has been identified as a key strategy to overcome the present day constraints caused by rapid increase in demand for adequate and reliable pipe-borne water supply.

The national monopoly has to give way to open competition, and encouragement will be given to the participation of the private sector to attract needy investments.

Concerned Areas at Planning Stage

Following have to be considered in the planning stage;

Operation and Maintenance

Operation and maintenance of any scheme is of vital importance for the consumer satisfaction and long lasting service. In Urban Water Supply, following procures are important and to be developed and practiced for smooth operations of the schemes in accordance with quality policy.

• Preventive Maintenance Procedure
  This facilitate trouble free operation of civil mechanical equipment. Proper PM program can eliminate sudden break downs, and the enormous costs incurred during unexpected break downs.
  
  
• Quality Control Procedure
  Proper quality control can eliminate water borne health hazards in the area of service. Further this can strengthen the treatment process by detecting unit operations