Trade groups urge industrial water tariff cuts

• Call made  by six leading trade associations
• Advocate for a cost-reflective pricing formula that ensures fair utility pricing
• Assert a progressive approach to water tariffs is essential for sustaining economic recovery and maintaining global competitiveness

A coalition of Sri Lankan trade associations is urging authorities to reduce water tariffs for industrial users, citing the need to ease financial pressure on local industries. The group advocates for a cost-reflective pricing formula that ensures fair utility pricing.

The Joint Apparel Association Forum (JAAF), the Federation of Chambers of Commerce and Industry in Sri Lanka (FCCISL), the European Chamber of Commerce in Sri Lanka (ECCSL), the Exporters Association of Sri Lanka (EASL), the International Chamber of Commerce Sri Lanka (ICCSL), and the National Chamber of Exporters (NCE) made the call.

Last month, Cabinet Spokesman and Transport Minister Bandula Gunawardana announced plans to introduce a new formula to reduce water tariffs. On August 23, the government confirmed a 7 percent tariff reduction for domestic consumers. 

A gazette also detailed a 4.5 percent cut for government hospitals and a 6.3 percent reduction for places of worship. These changes, issued by Water Supply and Estate Infrastructure Development Minister Jeevan Thondaman, took effect on August 21.

Despite these adjustments, the associations raised concerns over the exclusion of industrial tariffs from the revised formula. 

“Water is a critical input for Sri Lankan industries, directly influencing operational costs. High tariffs can severely impact competitiveness and deter investments in manufacturing,” JAAF Secretary General Yohan Lawrence said.
“A progressive approach to water tariffs is essential for sustaining economic recovery and maintaining global competitiveness.”

The new pricing formula, aligned with an International Monetary Fund (IMF) agreement, aims to reflect the actual cost of water supply. Although recent reductions in fuel and electricity tariffs have been implemented, industrial water tariffs remain unchanged. For instance, the tariff for water supplied to Board of Investment (BOI) zones rose from Rs. 65 to Rs. 85 per unit in 2022 and was further increased to Rs. 150 per unit in 2023.

The associations argue that, given recent cuts in electricity and fuel costs, a reduction in industrial water tariffs is justified. The National Water Supply and Drainage Board implemented the current water charges on August 1, 2023, based on the approved tariff policy and formula.

“Reducing water tariffs is a crucial step in supporting economic recovery and ensuring that essential services remain affordable for all Sri Lankans,” the associations said in a joint statement.