Chattogram Wasa creaks under debt load
Wasa has borrowed Tk6,328 crore from three foreign organisations, including Jica and the World Bank, for the implementation of four mega projects
Highlights:
- 4 mega projects being implemented at a cost of around Tk9,900 crore
- Tk281cr in annual installments have to be paid against the loans
- In total, Tk628 crore in interest has to be paid for Tk6,328 crore long-term loans
- Chattogram Wasa counts Tk50 crore loss annually as system loss
The Chattogram Water Supply and Sewerage Authority (Wasa) is staggering under the burden of a Tk6,328 crore loan.
In the last decade, Chattogram Wasa has undertaken four mega projects to increase water supply in the port city at a cost of around Tk9,900 crore, a major portion of which came as loans provided by various organisations, according to sources concerned.
The sources said a total of Tk6,328 crore has been borrowed from three foreign organisations, including Jica and the World Bank, for the implementation of the four projects.
The utility service provider will have to pay around Tk628 crore in interest for these long-term loans. The installments for repaying the loan will start from this year. In order to pay the installments, the Chattogram Wasa authorities have signed a subsidiary loan agreement with the government.
Two of the four projects have been completed while the other two are being implemented. Among the projects, Karnaphuli Water Supply Project (Phase-2) is the largest project of Chattogram Wasa.
A water treatment plant, intake station, reservoir, and transmission and distribution pipeline are being constructed under the Tk4,489 crore project, which is scheduled to be completed in 2023.
The Japan International Cooperation Agency (Jica) has provided Tk2,892.50 crore loan for the project. Chittagong Wasa will have to pay Tk4.6 crore in interest in 40 years at the rate of 0.01%. This loan has to be repaid by 2051, with a Tk93 crore annual installment from 2023.
The Chattogram Water Supply Improvement and Sanitation Project (CWSISP) has been implemented at a cost of Tk1,539.68 crore. A loan of around Tk1,530 crore was taken from the World Bank for the project completed in June 2021. The loan has to be repaid by 2054, with around Tk345.21 crore in interest at the rate of 1%. Annually a Tk43 crore installment, including interest, will have to be paid from next year.
A water treatment plant and a distribution pipeline are being constructed on the banks of the River Karnaphuli under the Bhandal-Juri Water Supply Project at a cost of Tk1,994 crore. Exim Bank of South Korea provided Tk1,224 crore loan for the project, scheduled to end in September this year. The loan has to be repaid by 2054, with around Tk1.59 crore in interest. According to the agreement, an annual installment of about Tk49 crore will have to be paid from 2030.
The Karnaphuli Water Supply Project (Phase-I) was completed in June 2016 at a cost of Tk1,848 crore. JICA provided a Tk773.44 crore loan for the project. Wasa will have to pay a total interest of Tk 227.74 crore at the rate of 1%. According to the agreement, about Tk96 crore will have to be paid in annual installments from 2023.
At present the income and expenditure of Chattogram Wasa is almost equal. In 2020, the organisation earned Tk173.60 crore while the expenditure was Tk165 crore.
Although a Tk214 crore income target was set in 2021, the organisation could not earn Tk180 crore. Chattogram Wasa has no source of income other than water supply, tube well license and FDR interests.
The organisation can try to increase its income by increasing the price of water. But there is dissatisfaction among the stakeholders about this. Moreover, Chattogram Wasa counts Tk50 crore in losses annually as 28-30% of the produced water is shown as system loss or non-revenue water.
Maksud Alam, chief engineer of Chattogram Wasa, told The Business Standard, "The government will repay the loans on behalf of the organisation. We will gradually repay the government at 1% interest. For this, a subsidiary loan agreement (SLA) has been signed with the government."
"From this year, we will pay Tk8-10 crore annually to the government. The amount will increase later. Efforts are being made to increase Wasa's income. A modern pipeline network is being set up to bring down the system loss to single digit. Smart metres are being installed. Besides, a multistoried commercial building is being constructed in our office," he added.
