The Provincial Waterworks Authority (PWA), the country's largest tap water producer, will proceed with investments worth 10.16 billion baht in fiscal 2010 to improve its distribution network.

Tospone Tiparos, the state utility's acting governor, said that nearly half of the budget would go to upgrading its 70,000-kilometre tap water pipeline network, in use for 25 years.

The remaining budget would be used to buy land for reservoirs and to improve existing reservoirs.

Last year the PWA sought funding for its massive investment project through bond issues worth 2 billion baht. Another 7 billion baht came from loans from commercial banks and nearly 2 billion will come from the state's fiscal budget.

"Half our pipeline network was built very long ago and that has caused a huge loss of water from leaks," Mr Tospone said. "We found that we lost nearly 50% of all water sent from our pipeline network to users."

The PWA's tap water loss was gradually reduced to 26% - down from more than 30% in 1999 - as the agency continuously repaired the network.

To participate in the government's economic stimulus programmes, the PWA will set aside another investment budget of 5.1 billion baht for 2010 to 2013 to improve production and distribution in big cities such as Chiang Mai, Chanthaburi, Hua Hin, Khon Kaen and Udon Thani.

The PWA's nationwide share of tap water service provision is 21%, or 2.8 million households. About 14% of the market, or 2 million households, are outside of its coverage area.

The PWA's service area excludes Bangkok, Nonthaburi and Samut Prakan.

The state agency estimates that tap water demand will rise by 19.7% to 1.035 billion cubic metres per year in 2013, up from 835 million cu m this year.

"For the 2009 fiscal year, we expect 15 billion baht in revenue with a net profit of 863,000 baht. Next year we expect revenue to rise by 3.5% to 15.53 billion baht with a loss of 71.3 million baht, due mainly to our higher production cost," he said.

Despite the expected loss next fiscal year, the PWA will move ahead with a tap water campaign relating to the World Health Organization's quality standards.

The PWA expects 20% of its tap water to meet WHO hygiene standards this year.