How To Improve Water Week
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1 Water Week - Session 24 Building is Easy, Maintaining is Not - 2 NRW Reduction in Developing Countries: The World Bank's Perspective Jan G. Janssens Energy and Water Department The World Bank Washington DC, March 2, 2005
2 Why reduce NRW? Integrated approach to WSS operational efficiency improvement NRW captures key elements of operational/financial efficiency and sustainability (service continuity, water quality, asset management & capacity augmentation, financial flows, demand management) But, a complex issue in practice multiple components / sources of losses, lack of common terminology, choice of indicators, what is adequate goal/target for developing countries? Water Week Session 24 2
3 Outsourcing: Performance-based MC, Operators contract, or Affermage Determine a realistic target performance ratio in terms of NRW at a target time horizon Determine a realistic NRW time curve from baseline value to target value, to assess the network rehabilitation needs to make this possible Draft an investment strategy to improve network efficiency and water delivery including identification of priority immediate investments Water Week Session 24 3
4 Continuity of service and network leakage (case study Senegal) Evolution of losses index in m3/d/km 17,0 16,0 15,0 SDE strengthens its performance improvement plan SONES accelerates network renewal rate 14,0 13,0 12,0 11,0 10,0 Re-establishment of continuity of service Source: Report ICEA, 2003 Water Week Session 24 4
5 Performance-based MC, Operators contract, or Affermage - 2 Outsourcing: Performance Assess the network renewal rate necessary to maintain the targeted NRW performance Assess a realistic share of rehabilitation and renewal investments in the distribution network to be financed by the operator and recouped by him out of the tariff or operating subsidy during the initial years when average tariff is lower than the O&M costs Determine the monetary incentives to reach target performance ratios in terms of NRW and bill collection efficiency, as a contractual obligation. Water Week Session 24 5
6 Example: International comparisons Figure 7: Unaccounted for Water (%) # of utilities Developed Developing 5 0 0% 10% 20% 30% 40% 50% Percent UfW 60% 70% 80% Water Week Session 24 6
7 Utility Performance Where We Are And Where Can We Go! Utilities performance in a majority of developing countries Unaccounted for Water Staff/1,000 Connections Bill Collection Period Working Ratio Currently recorded > 45% >20 > 18 months > 1 Attainable levels* < 25% < 6 < 3 months < 0.7 Connection Charges (% of GDP/Capita) 5-60% < 20% Service Continuity < 12 hrs/day 24 hrs/day *Based on actual performance of top 25% of developing country utilities in data set) Water Week Session 24 7
8 Benchmarking for NRW Level: Choosing the right Indicator - 1 What is the purpose of an indicator? Help determine whether a given utility is performing well or badly, relative to others (metric benchmarking) Provide guidance on setting target level for improvement (process benchmarking). In this, due consideration must be given to the specific circumstances of a given utility Note: A good indicator must be easily measurable so that progress can be tracked during implementation of improvement project Water Week Session 24 8
9 Benchmarking for NRW Level: Choosing the right Indicator - 2 The basic indicator: % Input Volume Misleading, but, easily understood in policy dialogue Key factors: customers density, network length, pressure, location of customer meter on connection, age/nature of network A better indicator? : Losses (m3) per connections / length of network the best compromise for the practitioner? Improving on the indicator: Weighed average of number of connections and network length Water Week Session 24 9
10 Benchmarking for NRW Level: Choosing the Right Indicator - 3 The Infrastructure Leakage Index (ILI) concept Difficult to conceptualize in a policy dialogue Use the proper taxonomy Does ILI provide a more meaningful ranking in a benchmarking process? Is the real benefit of ILI to estimate achievable target of physical leakage (concept of the economical level of leakage?) Water Week Session 24 10
11 the Economic Level of Leakage (ELL) Economically Recoverable Physical Losses Economic Level of Leakage Current Annual Volume of Physical Losses Source: adapted from Roland Liemberger, 2002 Water Week Session 24 11
12 Inflow Analysis Water Week Session 24 12
13 The Economic Balance Economic Leakage Level Cost of Water Lost Background Leakage and Reported Bursts Cost of Leakage Control COST OF LEAKAGE CONTROL AND WATER LOST LOSSES (Ml/d) Water Week Session 24 13
14 Assessing commercial losses - 1 Commercial losses come from various (unrelated) sources: metering errors, illegal connections, reading/billing (data transfer errors) There are wide discrepancies in commercial losses among utilities. Is there a typical ratio for commercial vs. physical? Water Week Session 24 14
15 Assessing commercial losses - 2 Metering errors: a technical but also management issue that can be dealt with Illegal connections: complex issues with social/political implications Reading/billing system: chain of data transfer, from reading to invoicing; risks for errors and corruption; use of IT systems Water Week Session 24 15
16 Reducing commercial losses - 1 Reduction can be achieved down to very low level since no technical constraints (no buried pipes, no high investment costs) Direct impact on utility cash-flow: maintaining meters is not costly/difficult dealing with illegal connections and billing/reading errors is largely a matter of good operational practices Water Week Session 24 16
17 Reducing commercial losses - 2 Putting in place an adequate metering policy: a priority goal Pre-requisite for demand management = only way to provide incentives to customers to reduce physical losses beyond utility network (after meter, internal plumbing) Cost-benefit analysis of metering, even with intermittent supply Importance of the utility owning the meters (as opposed to customers) for efficient meter management Water Week Session 24 17
18 Reducing commercial losses - 3 Reducing illegal connections intrinsically linked to the problem of fostering access for the poor. Unless viable (often grass-root) mechanisms can be put in place, illegal connections are due to keep growing with population growth as the only available way for poor households living in informal areas to access water. Water Week Session 24 18
19 Reducing commercial losses - 4 Reducing errors in the reading/billing chain through IT and better processes: Hand-held equipment for meter readers, with integrated IT system up to billing: Do they make sense in developing countries? Options to mitigate risks of corruption/errors: rotating reader crews, third party auditing, externalize reading to various contractors Importance of allowing for local practices / culture when reducing commercial losses Water Week Session 24 19
20 Need for capacity building Lack of understanding of NRW components prevents efficient supervision of water utilities performance. Utility executive board / owners fail to get adequate indicators to assess performance, and evaluate what improvements are achievable. Water Week Session 24 20
21 Thank you Water Week Session 24 21
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