Dhaka Water Supply and Sewerage Authority (DWASA) faces a financial hurdle due to a significant rise in foreign exchange rates. The rising costs have created a funding gap of Tk 1,665 crore for six projects undertaken in fiscal years 2022 and 2023.
In an attempt to bridge this gap, WASA has submitted a formal request to the Ministry of Finance. The letter, obtained by The Business Post, urges the government to intervene and compensate WASA for the losses incurred due to currency fluctuations. This financial strain threatens to impact the completion of Dhaka's crucial water supply and sanitation projects.
Responding in this regard, a Ministry of Finance official from the Financial Division told The Business Post, "We have received their letter seeking government compensation for foreign exchange rate fluctuations. The application is currently under review, and a decision will be made by the minister."
According to sources at DWASA, the corporation locked into contracts for six projects during FY22 and FY23, but the exchange rate for the US dollar has risen by 20 per cent since then. This translates to a staggering Tk 1,665 crore in additional costs that WASA simply cannot absorb on its own.
DWASA Deputy Managing Director (O&M) AKM Shahid Uddin explained to The Business Post, "WASA's income from water does not cover its expenses. So from time to time, we have to seek support from the government. Hence, exemption from losses due to forex rates has been sought."
He also informed, "The renovation of Dhaka's old water lines continue. The reforms, so far, have reduced system losses from 40 per cent to five per cent. Once the rest of the renovations are completed, the water loss will be greatly reduced."
When asked about the aforementioned letter, Taqsem A Khan, the managing director of Dhaka WASA, could not comment on the topic as he was abroad.
According to the letter, the six projects were: Saidabad Water Treatment Plant (275.65 million euros), Padma (Jasha.) Water Treatment Plant (Phase-1) $290.80 million, Wel Field Constr Proj at Tetul - Bhak Area of Savar Upazilla $41.28 million, DSTP $280 million, DSTP Loan No 6566- $154.10 million, and DSTP Loan No 1024 0A $170 million.
According to Dhaka WASA's audited financial statements, the additional payments due to foreign exchange rate fluctuations for these loans will be Tk 682.83 crore in the fiscal year 2021-22 and Tk 982.16 crore in the fiscal year 2022-23. The total amount of these payments for the two fiscal years is Tk 1,664.99 crore.
Surface water supply increases
According to WASA sources, Dhaka WASA currently provides 65 per cent of its water supply from groundwater and 35 per cent from surface water. Various projects have been undertaken to increase the surface water supply capacity to 75 per cent. The costs of these projects are significantly higher than that of the groundwater ones.
The recently completed Padma water treatment plant bolsters the city's water supply, while the ongoing Dhaka Environmentally Sustainable Water Supply Project (DESWSP) looks ahead, aiming to provide clean water by purifying Meghna River water.
Additionally, WASA is tackling sewage management with new projects focused on modernising the existing system. These combined efforts aim to ensure an environmentally responsible water infrastructure for Dhaka's growing population.
AKM Shahid Uddin said, "As the groundwater level is decreasing by two metres every year, DWASA is being compelled to increase its reliance on surface water instead. This shift, however, comes with a cost increase. As a result, DWASA cannot proceed without government support.
Dhaka WASA is an autonomous organisation governed by the WASA Act of 1996 under the Local Government Division of the Ministry of Local Government, Rural Development and Co-operatives. Established in 1963, DWASA initially commenced its operations to provide safe drinking water to the residents of Dhaka.
