Identification of competitive regime for water industry in Sri Lanaka

Abstract

National Water Supply & Drainage Board, under Ministry of Water Supply & Drainage, functions to provision of safe drinking water and facilitating the provision of sanitation in Sri Lanka as a state owned monopoly. The Organization evolved up to the present status from 1965 as a sub department of the public works department. Presently as the principle organization for Water Supply and Sanitation to the nation, the NWSDB operates through eleven Regional Support Centers. Currently NWSDB employs around 8950 staff and operates 308 water supply schemes. Pipe borne water coverage is 32% of total population. Hand pumps and tube wells gives a further coverage of8%. Water sector reforms were initiated by successive governments in Sri Lanka in the last thirty years focus on improving Water Supply and Sanitation Services. Over the world, reforms are undertaken to help deliver better and more efficient services and to protect consumers against potential abuse of monopoly power by public or private operators. This includes creation of regulatory agencies, open up market for private participation or public private partnerships, institutional reforms etc. However, evident suggested that there is no single fit best practice model for Water Supply Sector reforms. A check box approach to introduce regulation has often failed. A better approach might be to incorporate country-specific sector characteristics and make room for politics and pragmatic design features in reform in considering institutional evolutions. Regulatory initiatives often should occur simultaneously with organizational reforms or reshaping the monopoly to fall in line with regulation. Reform or reshaping of state owned NWSDB can take place gradually with different forms in regulation and maturity. Water sector reforms have often sought for decentralized service delivery to introduce operational efficiency and regulatory monitoring. Related literatures show the importance of analyzing the institution under perspectives of the institutional environment and the internal functioning of the NWSDB. Institutional environment looks into external autonomy and accountability. The internal functioning of utility looks at factors such as corporate culture, customer orientation, internal accountability for results, and the ability to delegate within the organization. Public Private Partnerships as reform tool have three motives to attract private capital investment (often to either supplement public resources or release them for other public needs); to increase efficiency and use available resources more effectively; and to reform sectors through a reallocation of roles, incentives, and accountability. Two questionnaires to analyse the institutional environment and to assess the management and other sector specialised stakeholders view converge to derive Competition Regime for Water Industry in Sri Lanka. Based on the findings, it is recommended that Water Supply Sector reforms in Sri Lanka should start with regulation by contract. This shall initiate having pubic vs. public contracts with each Regional Support Centres (RSC) so called Independent Service Units (ISU) with decentralised service 'delivery. However some function should remain in NWSDB central unit to be developed them as commercially oriented businesses.