Dhaka WASA's 'Shanti' water sold below cost, losses mount
The factory is there. The water purification system is in place. So is the bottle manufacturing facility. Every month, several hundred thousand litres of bottled water are produced. Yet Dhaka WASA's bottled water brand, Shanti, is virtually absent from the market.
It is rarely found in most grocery stores, hotels, tea stalls or supermarkets across the capital, even though bottled water from private companies is readily available.
According to WASA officials, producing a half-litre bottle of Shanti, including the bottle itself, currently costs nearly Tk 11. However, the bottle is sold to dealers for Tk 9, meaning the state-owned utility incurs a loss of Tk 2 on every bottle before it even leaves the factory.
Nearly two decades have passed since the plant, built at a cost of around Tk 170 million in Mirpur Section 10, began operations. Officials estimate that cumulative losses over this period have reached approximately Tk150 million. Even excluding staff salaries, the plant now loses between Tk 20 million and Tk 30 million annually. Monthly sales amount to only Tk 1.5 million to Tk 2.5 million.
Meanwhile, retailers can earn profits of up to Tk 9 on a half-litre bottle sold by private companies. They make only Tk 4 by selling a Shanti bottle of the same size. As a result, shop shelves are dominated by private brands, while Shanti remains largely confined to its factory and a handful of WASA sales centres.
Objective not achieved, profits never materialised
According to Dhaka WASA officials, the bottled water project was launched to prevent private companies from arbitrarily increasing prices and to ensure that consumers had access to safe drinking water at affordable rates. However, that objective has not been achieved. The plant has never become profitable and continues to generate losses.
The Mirpur-10 plant was inaugurated on 30 July, 2006, and Shanti entered the market in September that year. The facility can purify 10,000 litres of water and bottle 6,000 litres every hour.
Officials, however, could not explain how a product that is scarcely available in the market could influence the pricing strategies of private bottled water companies. Nor has the objective of providing affordable drinking water to the general public been realised. Instead, Dhaka WASA has continued to bear the costs of production, transportation, staffing and maintenance year after year.
Dhaka WASA Managing Director Aminul Islam told Prothom Alo that producing Shanti bottles costs about Tk 1 more per bottle than it does for private manufacturers. He said the unit cost could be reduced if production volumes increased.
To achieve that, WASA plans to double production within the next six months and expand it further during the following six months.
He also said a technical committee and a marketing committee had been formed to make Shanti commercially viable, with the goal of turning the plant profitable within the next two years.
Production far below capacity
According to WASA, the plant currently produces around 800,000 litres of bottled water each month.
Shanti is sold in 250ml, 500ml, 1-litre, 1.5-litre, 2-litre and 5-litre bottles, as well as in 20-litre jars.
Compared with the plant's bottling capacity of 6,000 litres per hour, current production remains low. Producing 800,000 litres requires operating the machinery for only about 133 hours a month—less than four and a half hours a day over a 30-day month. Even after accounting for bottle-size changes, machine cleaning and maintenance, a significant portion of the plant's capacity remains unused.
A plant official, speaking on condition of anonymity, said the facility is capable of operating continuously for 10 hours a day. However, some of the machinery is nearly 20 years old, and expanding production will require both replacement of ageing equipment and installation of modern machinery.
WASA said bottled water is delivered to dealers and customers using its own vehicles for a service charge, while dealers collect the 20-litre jars using their own transport. Customers may also purchase water directly from the Mirpur plant or WASA sales centres.
Produced, but missing from store shelves
Shanti's biggest challenge is distribution.
The primary retail outlets for bottled water in Dhaka are grocery stores, hotels, restaurants, tea stalls and supermarkets. Yet Shanti is rarely found in any of them.
WASA officials said private companies maintain organised distribution systems, with delivery vehicles supplying shops daily. Retailers can simply call sales representatives whenever stocks run low. No such network exists for Shanti. Its distribution channels and sales centres remain limited, and in many cases dealers or customers must collect supplies directly from the plant or WASA outlets.
The relatively low retailer margin is another major obstacle.
Retailers naturally prefer products that generate more than twice the profit while occupying the same shelf space.
Shanti also lags behind in marketing. Private companies promote their products through advertisements, shop signboards, branded refrigerators, umbrellas and various promotional materials.
WASA has virtually no visible promotional campaign for Shanti. Consequently, despite being on the market for nearly two decades, many consumers remain unaware that Dhaka WASA even produces bottled water.
For years, WASA has also failed to market Shanti as a fully commercial product. A portion of production is supplied to government offices, institutions, meetings, official events and emergency purposes. However, no effective system has been established to make the product readily available where consumers regularly purchase bottled water.
Recent visits to shops in Mirpur, Mohammadpur, Jatrabari, Shahbagh, Malibagh, Gulshan, Banani and Karwan Bazar also failed to find Shanti on sale.
Will higher sales reduce losses?
A Dhaka WASA official, requesting anonymity, said producing a half-litre bottle currently costs nearly Tk 11, but dealers purchase it for Tk 9. The maximum retail price printed on the bottle is Tk 15.
By comparison, retailers buy a half-litre bottle from a private company—sold at a retail price of Tk 20—for roughly Tk 11, allowing them to earn profits of up to Tk 9. Some companies offer retailers even greater incentives.
Although Managing Director Aminul Islam believes increasing production will reduce losses, officials acknowledge that expanding production while maintaining the current production cost and selling price could actually increase overall losses. In simple commercial terms, selling a product below its production cost does not become profitable merely by producing more of it.
Nor would raising prices alone solve the problem. WASA would also need to reduce production costs, establish a reliable distribution network, offer retailers reasonable profit margins, and improve consumer acceptance of the brand.
Meanwhile, Bangladesh's bottled water market continues to expand rapidly, driven by urbanisation, growing demand for safe drinking water and rising incomes. Besides water quality, product availability and pricing remain key factors influencing consumer purchasing decisions.
Private companies do not publicly disclose audited figures showing their net profits from bottled water. However, their products are widely available throughout the country thanks to extensive distribution networks, attractive retailer margins and reliable supply systems.
A grocery shop owner in Mirpur-11 told Prothom Alo, "Why would retailers stock a product that isn't supplied regularly and generates lower profits than competing brands?"
No full-time management for nearly two decades
WASA officials said no officer had been assigned full-time responsibility for operating the plant for many years. Instead, plant management was treated as an additional responsibility alongside officials' regular duties.
As a result, no clear accountability mechanism existed when production remained low, sales stagnated or losses mounted.
Only recently has a dedicated official been appointed to oversee the plant full-time, with plans now underway to increase production and sales and eventually make the facility profitable.
Officials familiar with the matter say it represents a major management failure that it took nearly two decades to establish the professional management, marketing strategy and accountability structure that should have been in place from the very beginning.
What needs to be done
Experts say the first priority should be an independent assessment of the plant's actual production costs. Expenses for water purification, bottles, caps, labels, electricity, manpower, transportation, machinery repairs and product wastage should all be calculated separately.
A selling price should then be set that enables WASA to avoid losses while also providing retailers with sufficient incentives to stock the product.
Rather than operating the facility as part of WASA's routine administrative structure, experts recommend turning it into a separate commercial unit. Its management should be assigned clear performance targets for production, sales, market expansion and loss reduction.
A wider distribution network should be established across Dhaka to ensure regular deliveries to retail outlets.
Shanti could also be supplied under transparent agreements to government offices, hospitals, educational institutions, railway stations, bus terminals and official events. Introducing online ordering, home delivery of water jars and dedicated supply arrangements for institutional buyers could also boost sales.
Experts further recommend publishing regular data on monthly production and sales, revenue and expenditure, as well as details of companies supplying bottles, raw materials and transport services. If bottled water is sold below cost for social reasons, the amount of government subsidy should also be disclosed separately.
Urban planning expert Professor Adil Muhammad Khan told Prothom Alo, "If a plant built with public money cannot deliver its product to consumers and continues to incur losses year after year despite producing bottled water, it clearly reflects a management failure. Without transparent accounting, professional marketing and a strong distribution system, Shanti will never become profitable. WASA must take effective action without delay."