Providing an adequate water supply is a major challenge facing many public water utilities in developing countries. A significant part of this challenge is non-revenue water (NRW), which is the difference between the volume of water put into a water distribution system and the volume that is billed to customers. It is estimated that water utilities in developing countries can lose 40-50% of the water they put into their systems and they are unable to bill their customers for this loss. high levels of NRW are damaging to the financial viability of water utilities, as well as to the quality of water service.
NRW can occur through physical losses from leaking and broken pipes, which are caused by poor operations and maintenance, the lack of active leakage control, and poor quality of underground assets. NRW can also come from commercial losses caused by the under-registration of customer meters, data handling errors, illegal connections and theft. Another cause of NRW is unbilled authorized consumption, which includes water used by utilities for operational purposes, water used for firefighting, and water provided for free to certain consumer groups. Reducing NRW can significantly improve the performance of developing country public water utilities by:
Despite the potential benefits, NRW is not a simple matter for public utilities to implement. New technical approaches need to be adopted and effective arrangements need to be established in the managerial and institutional environments. Some of the reasons for insufficient NRW reductions efforts are lack of:
PPIAF has supported several governments to help reduce NRW. In 2005, PPIAF funded the first activity in this area to help the public water utility in Ho Chi Minh City, Vietnam, prepare a performance-based NRW reduction contract with the private sector. Training modules based on international best experiences were prepared and presented at a workshop. The conference materials and the paper The Challenge of Reducing Non-Revenue Water (NRW) in Developing Countries – How the Private Sector Can Help: A Look at Performance-Based Service Contracting, are available below. In 2007 the Ho Chi Minh City water utility decided to request private sector bids on NRW management in certain areas of the city and came to PPIAF for support to help train its staff in evaluation of bids and preparation for oversight of the NRW contract.
Also in Vietnam, the Hanoi water utility requested PPIAF support in 2006 to help prepare a report on the various PPP options available to the city to improve its network management, leakage reduction and NRW management activities.
As an overall effort in implementing its Drinking Water and Sanitation Sector Framework Law, in 2008 the government of Honduras requested PPIAF support to assemble lessons from international best practices into the design of bidding contracts for PPPs in NRW. Based on the previously funded PPIAF activity in Hanoi, the report on The Challenge of Reducing Non-Revenue Water (NRW) in Developing Countries – How the Private Sector Can Help: A Look at Performance-Based Service Contracting is being translated in to Spanish and will shortly be available on the PPIAF website. In addition a series of training events will take place to increase the capacity of the staff in the utility regarding NRW issues.