The cost of providing water and sewerage services is approximately $2.8 million per year. Of this, $600,000 is collected in fees. The balance, $2.5 million (17% or domestic revenue) is met through the Government’s annual budget appropriation. This high subsidy—at 80% of costs and 1.2% of gross domestic product (GDP)—is a significant burden on the Government.
The Government does not provide subsidies to other State-owned enterprises including the Palau Public Utilities Corporation and the Palau National Communications Corporation.
The Government has an outstanding liability to the Palau Public Utilities Corporation of $4.2 million, predominately for arrears in electricity payments for the Water and Sewerage Division of the Ministry of Public Infrastructure, Industries and Commerce.