119% profit growth in 5 years belies Wasa tariff hike logic

The Dhaka Water Supply and Sewerage Authority (Wasa) made a profit of around Tk50 crore last year, according to its audited financial report, while its chief presented a gloomy balance sheet at a press briefing on 9 February.    

"No public agency can stand on its own feet if it continues taking handouts from the government," Wasa Managing Director Taqsem A Khan told journalists on that day, while advocating a 20% water price hike.  

In the 13 years since the Awami League government assumed power, water tariffs rose 14 times, while the prices went up five times in the capital in the last five years.

Terming the water hikes every year "an immoral way to put a squeeze on the consumers", Consumers Association of Bangladesh (CAB) President Ghulam Rahman pointed finger at Wasa's profiteering mentality and the officials' eagerness to continue enjoying higher salaries and other perks.

According to the Wasa act, it can raise water tariffs at most 5% a year after the government's permission.

Since the 5% hike effective from July 1 last year, the tariffs for each unit of water is Tk15.18 for residential use and Tk42 for commercial use.

The autonomous institution this year proposed a 20% hike and wants to charge the new rates from 1 July this year.

Infograph: TBS

If the tariffs are raised as per the new proposal, the per unit residential use of water will cost Tk18.25, while for commercial use, it will stand at Tk50.4.

Taqsem A Khan said they do not have any objection if the government wants to raise water tariff in Dhaka more than the proposed 20%. "There is an instruction from the top level of the government to reduce water subsidy gradually since there has been a huge gap between production cost and retail rates."     

In a recent press conference, he claimed Wasa currently spends Tk25 to produce one unit (1,000 litres) of water, but they sell it at Tk15, meaning that the government has to give a subsidy of Tk10 per unit.

Civil society members have criticised the Wasa proposal, saying the hike would compound people's Covid-led financial woes. In protest to the hike proposal, the CAB will hold a discussion on Tuesday.

119% profit growth in past five years 

Wasa has been making profit over the past five years. The water supplier's profit rose substantially in the last couple of years buoyed by water tariff hikes. 

Wasa's total income in the last five years jumped by 51%, while profit edged up by 119%, according to audited reports. The breakdown shows the institution's revenue ticked up by 53% from water supply while 41% from sewerage management. 

The latest audited report shows Wasa earned Tk1,753 crore in the 2020-21 fiscal year as its profit was around Tk50 crore.

The water-sewerage breakdown shows the institution raked in around Tk1,201 crore from water and Tk391 crore from sewerage management. Wasa pulled in the remaining Tk161 crore from bottled water sales, water connection charges, fixed deposits in banks and other segments.  

The total income was around Tk1,155 crore five years ago in the 2016-17 fiscal, while the profit stood at around Tk22 crore.

Wasa's 70% earnings come from supplies of water and sewerage management to residential buildings in the capital and it also makes money by providing the services to commercial establishments.

'It is a torture'

Urban planner Adil Mohammed Khan told TBS, "Raising water tariffs every year is a kind torture for people who are already squeezed by rising commodities prices.  It is totally unacceptable."

Talking about water quality, he said Wasa in its own research found that people do not drink water directly. They have to boil it to make it safe for drinking, which consumes a lot of gas.

Wasa has been making profits since the programme "Turn around, Dhaka Wasa" (Ghure Darao Dhaka WASA) came into effect, Taqsem told TBS, adding, "Wasa had never been in profits before and we have now been able to make it a profit-making institution."

Asked why they proposed hiking water tariffs despite Wasa being in profit, the Wasa managing director said, "First, we have to understand what kind of profit it is. It is important to know whether it is actual or accrued. Not as simple as it sounds, bring the audit report to me, I will explain to you."

Wasa at a glance

For water supply and sewerage management in the capital, Dhaka Wasa was established in 1963 as an independent organisation. Its total service area is divided into 11 geographic zones, which includes 10 in Dhaka city and one in Narayanganj town.

In 2021, Wasa supplied 2,740 million litres of water exceeding the 2,520-million demand. Wasa's production capacity was 450 million litres per day by using 887 deep tube wells, and 4 water treatment plants, according to Wasa's annual report for the 2020-21 fiscal year.

Wasa supply comprises 78% underground water extraction and 22% surface water sourcing after treatment.

According to Wasa, more than two crore people live in Dhaka and Narayanganj at present.

According to the institute's sewerage report, the Wasa sewerage network was initiated in 1923. Wasa's sewerage master plan includes four sewage treatments in Dhaka. Of them, only the Dasherkandhi Sewage Treatment Plant is now in operation.