Leaky Excuses

Sept. 1, 2012
Water leakages and illegal theft continue to plague water companies in Asia, even when water is scarce.

Why Asia's Urban Water Management Needs to Step Up

Water leakages and illegal theft continue to plague water companies in Asia, even when water is scarce. Yet certain utilities are overcoming the odds and achieving non-revenue water rates of just 6%. A report from the Asian Development Bank reveals how and WWi picks three example utilities to share as best practise.

Historically a myth has existed that unaccounted-for-water (UFW) is impossible to manage properly in developing countries. Excuses have been made – lack of investment, water scarcity and inability of the poor to pay for water – from utilities as to why adequate water supply cannot be supplied. Yet these myths and excuses have now been proven wrong enough times that it's becoming difficult to continue using them.

Around 29 billion cubic meters of water is lost each year in Asia alone, leading to a $9 billion loss in revenue. That's according to a report from the Asian Development Bank (ADB) entitled: Good Practices in Urban Water Management: Decoding Good Practices for a Successful Future.

The report highlights some landmark results, which are summarised below in detail. These include Cambodia's Phnom Penh, celebrating just a 6% water loss in 2008. In India, JUSCO has also achieved a reduction in non-revenue water (NRW) from 36% to less than 10% over the space of four years. A mixture of government-owned utilities (Phnom Penh) and private entities or joint ventures (Jamshedpur and Manila) from the report has also been provided.

Manila, Philippines

Metro Manila is the smallest region of the Philippines in terms of land area, covering 636 square kilometers (km2), or 0.21% of the country's total land area. It is the most populated region, with over 11.5 million inhabitants or 13% of the country's total population. Metro Manila is vulnerable to natural disasters such as typhoons (average of three to five typhoons per year). In early August this year torrential rain led to severe flooding, leaving low-lying areas underwater and at least 19 people allegedly killed.

Historically, the Metropolitan Waterworks and Sewerage System (MWSS) was the main corporation providing water and sewerage services in Metro Manila. MWSS was privatized in 1997 with the East concession zone awarded to Ayala Corporation and its international partners—United Utilities (United Kingdom) and Bechtel Corporation (United States). This new company took on the name Manila Water Company, Inc. (MWCI). The West concession zone was awarded to Benpres Holdings of the Lopez Group of Companies together with its international partner, Lyonnaise des Eaux (France). This concessionaire became known as Maynilad Water Services (MWSI).

Both MWCI and MWSI took very different approaches to resolving the problem of NRW following privatisation. MWCI emphasized on building relationships with communities that were pilfering its water with the objective of encouraging them to sign up instead for authorized water connections. It also set up a two-track program aimed at reducing NRW through:

(i) commercial oversight to address under-metering, illegal connections, and unbilled accounts; and

(ii) technical solutions to fix physical defects, including mainline leaks and pipe bursts, in the system. MWSI, on the other hand, was not able to make any dent in NRW. The Asian financial crisis and the huge increase in peso-denominated concession fees that MWSI had to bear gave it serious cash flow problems. The company also found out during its second year of operations that there were close to 2,000 km of pipe infrastructure not included in the original MWSS inventory for the West concession zone and these had to be rehabilitated. For MWSI, 70% of NRW was due to physical problems (leaks, water bursts, and others), and only 30% was due to pilferage and wrong billing.

In MWCI's case, addressing the physical defects of the water network was less complicated than dealing with the problems of illegal connections and under metering, which were linked to human behavior. While replacing rusty underground pipes was a major undertaking that could be capital intensive, it was seen as a fairly straightforward job as opposed to dealing with pilferage.

To repair leaking pipes in the networks, MWCI took advantage of technology provided by its international partners. It began to clean underground pipes without digging them up unless it was absolutely necessary. This initially involved the use of grinding technology to clean the interior of existing steel pipes while they remained underground and coating these with an interior layer of liquefied PVC that would harden, effectively sealing leaks.

However, the existing pipe network was in far worse shape than expected and actual pipe replacement became the norm. Over 1998–2008, pipe replacement projects were estimated to have saved about 482,000 m3 per day of water that would have otherwise been lost through leaks.

To improve on equipment performance and ensure that pipes are aligned properly, MWCI invested in laser alignment, thermal imaging, and vibration analysis technology to lessen mistakes in pipe-laying and improve on leak detection. A pump refurbishment program by MWCI has improved pump efficiency from 79% to 84%, reducing power consumption by 5% across the system.

The leading premise behind the low bids during the initial phase of the privatization of MWSS' water services was the private operators' belief that they could bring down NRW and translate this into billed volume and revenue. MWCI and the old MWSI had different approaches to this concern.

While both started with technical solutions including re-metering, pipe-laying, and pipe replacement, MWCI soon realized the importance of addressing community behavior that was driving pilferage. This evolved into a field operations structure that had direct contact with communities, where informal leaders helped provide information about pipe bursts, leaks, and water outages.

Phnom Penh, Cambodia – an example of good governance

Cambodia is generally well endowed with water resources. It has a high annual rainfall (up to about 3,000 millimeters [mm] in the highlands), three major rivers (Mekong, Bassac, and Tonle Sap) with many tributaries, and excellent sources of groundwater both in terms of quantity and quality.

Until the late 1960s, urban water services in Phnom Penh were similar to what then existed in many of its neighboring countries. Many of the residents of Phnom Penh had an uninterrupted 24-hour water supply of reasonable quality water.

The situation, however, changed dramatically after the late 1960s due to considerable political turmoil. This condition continued unabated for the next two decades. By the 1980s, the Phnom Penh Water Supply Authority (PPWSA) was in bad shape— institutionally, technically, financially, and in management terms.

Furthermore, a major problem in 1993 was the substantial losses due to UFW, which was well over 70%. One of the biggest changes was to the utility's institutional culture. During the early 1990s staff members demoralized, faced with poor governance, below subsistence pay, lack of discipline, absence of any incentives, and pervasive corruption. Work culture had to be radically changed by enforcing strict disciplines in a sensitive, fair, and transparent manner.

It started with senior officers who had to become the role models. During the 1980s and early 1990s, one of the perks of the job was employees of PPWSA received free supply of water. This practice was stopped. Staff members not only had to install meters but also had to pay their water bills in full, like any other citizen, and within the stipulated time period. Otherwise, they were treated exactly as those who were delinquent in paying their water bills.

With its autonomous structure and good management, PPWSA decided to maximize its income by:

• Reducing UFW significantly so that the water produced can be sold to the consumers

• Fixing a tariff structure and implementing it fully with a social conscience

• Preparing and continually updating a roster of customers on a regular basis

• Completely restructuring the billing system so that bills can be produced and delivered on time and in a transparent manner

• Improving the bill collection ratio with appropriate incentives and disincentives for late or nonpayment

• Increasing the annual profits of PPWSA by making it increasingly efficient progressively.

The increase in tariff was very carefully planned. A survey collecting information on how much consumers were paying for water from private vendors, and what was their likely reaction if the supplier was replaced by PPWSA. This survey also showed the willingness and capacity of consumers to pay a higher tariff than what they were being charged by PPWSA provided they received a significantly improved service. In 1994 some 100 PPWSA staff members visited all houses in the city to record if they were receiving water or not.

The process took one year to complete. The results were revealing. The survey found that 2,980 households were ostensibly connected to the system, but were not. They were being billed for phantom water supply, and surprisingly, many were paying water bills although they never received any water. In contrast, there were 13,901 customers who were connected and receiving water, but were not in the list and thus were not being billed. In effect, they were receiving free water.

Within the 15-year time frame, 1993–2008, PPWSA increased its annual water production by 437%, distribution network by 557%, pressure of the system by 1,260%, and customer base by 662%.

During the same period, it reduced UFW losses from 72% of treated water produced in 1993 to only 6.19% in 2008. By judicious use of incentives and sanctions for its staff with transparent policies that were consistently implemented, and a strong and determined focus on capacity building for its staff, the number of accounts served per employee increased by 671% during the same period.

Phnom Penh has proved that excuses cannot be made when it comes to not providing adequate water supply. Many reasons are given by water utility managers and politicians as to why clean water cannot be provided to urban centres in developing nations. These include water scarcity, lack of investment, inability of the poor to pay for water and expertise.

The ADB says "all of these are mere excuses to hide the real and fundamental reason for this shortcoming—poor leadership and governance practices of the urban water sector". Phnom Penh has very clearly shown how it can be achieved under the most difficult circumstances, and in less than 10 years.

Jamshedpur, India

Jamshedpur is located in the East Singhbhum district of Jharkhand, India. It is one of the country's oldest and largest industrial towns. The city owes its origins to Jamset Nusserwan Tata's vision of setting up India's first private iron and steel company, Tata Iron and Steel Company (currently known as Tata Steel).

JUSCO is legislatively responsible for providing water and wastewater services over an area of 64 km2 (which is also referred to as the lease area) in Jamshedpur. It supplies water to a population of approximately 700,000 through more than 48,000 direct water connections in a distribution network of 550 km.

Another of JUSCO's significant achievements is its reduction of NRW from 36.0% to 9.9% during FY2005–FY2009 (Figure 4). JUSCO recognizes the need to constantly reduce NRW to cut wastage and increase revenue. It diligently manages its potable water distribution networks through flow management, leakage detection, and proactive network maintenance.

JUSCO's NRW reduction program includes installation of DMA (district metering areas) meters and consumer meters, disconnecting illegal connections to convert them to authorized connections, and monitoring the number of leakages per month. The city is divided into 74 DMAs for effective management through better problem identification, service delivery, and resource conservation. To monitor flows in the distribution network, 124 electromagnetic meters have been installed, which log data at 15-minute intervals in distribution mains and 10-minute intervals in rising mains.

NRW is calculated, monitored, and reported on a monthly basis. The NRW program aims to focus on addressing leakages and illegal connections, which are the two key areas of water losses.

JUSCO resolves pipe breaks within three days. Leak detection equipment helps detect the exact location of leakages and identifies underground leakages. Proactive leak detection is carried out regularly by way of "walk-through surveys" along the network, using leak detection equipment.

The Minimum Night Flow as a technique has been introduced to identify physical water losses. If Minimum Night Flow in a DMA comprising close to 1,000–1,500 connections is in the range of 5–6 kiloliter per hour (kl/hr), then the chances of losses through leakages are close to zero. JUSCO has implemented this in all supply areas where regular monitoring takes place.

While leakages are monitored daily and reported weekly, reactive leak detection is carried out through complaints logged at the JUSCO Sahyog Kendra, JUSCO's 24-hour call center. These efforts have led to a decline in the number of leakages.

JUSCO also initiated a major disconnection drive to reduce illegal connections. Illegal connections are disconnected, and consumers are forced to pay a fine and get authorized connections. If the entire area is taking water illegally, then new networks are laid down to provide authorized consumption under the people–private partnership program.

ADB says that Jamshedpur presents an inspiring example of an integrated urban water management that has eluded a number of Indian and Asian cities. There is scope for other utilities across India and other developing countries to adopt and adapt several of the actions taken by JUSCO. While it has some way to go to fully attain global standards (given that only about 25% of its customers received continuous water supply in 2009), JUSCO's first five years have been transformational.

Author's note: Information for this article has been taken from the Asian Development Bank's report: Good Practices in Urban Water Management: Decoding Good Practices for a Successful Future. The study is the result of a research initiative titled Case Studies of Good Practices for Urban Water Management in Asia, undertaken by the Institute of Water Policy, Lee Kuan Yew School of Public Policy, National University of Singapore, through a Letter of Agreement between the school and the Asian development Bank (ADB). For more information on the study, please visit: www.adb.org