18 July 2011

Miya Water's quest to plug leaks

While in Jerusalem, I had the opportunity to speak with Tami Gaoni Feldman of Miya Water.

Her company is in the business of reducing non-revenue water (NRW), or water that goes into pipes but never reaches a customer's meter gets paid for.

Well-managed water systems might have a NRW rate of 5 percent (due to fire hydrants, flushing the system, minor leaks, etc.). In a poorly-managed and maintained system, NRW rates range from 40 to 90 percent. The most common causes of high NRW rates are theft of water, non-payment of bills, leaking pipes and miscalibrated meters.

IBNET tracks NRW rates for about 2,000 utilities.

Tami told me that Miya is working with one of two utilities in Manila, where the 300 staffers in the NRW division tackle 100 leaks per day and overall system losses of 300 ML per day (about 240 acre feet per day). Miya has had some success so far in reducing NRW from 67 to 50 percent.

Miya uses three main tools to reduce NRW: monitor and fix leaks, manage system pressure to reduce leaks in low-demand periods (middle of the night), and increase payment for services. As a first step, Miya makes sure there are water meters at big junctions, to make it easier to track down branches with high 24/7 baseline use.

These technical details were interesting, but Miya faces an additional problem: water managers and politicians facing water shortages prefer to increase supply (via desalination, reclamation, groundwater pumping, etc.) instead of reducing NRW losses.

This behavior does not make sense from a cost-benefit perspective. A decent NRW program will increase revenue per unit of treated water pumped into the system. Those revenues mean that NRW programs "pay for themselves."

I hate to say it, but this feature is even more attractive than my "raise prices" recommendation: it's an engineering solution (water managers like those) that will not increase prices (politicians like those).

So why is it hard for Miya to sell its services?

I see two main reasons. First, a good NRW program requires up-front financing to pay for staff, software, meters, and so on. For most cash-strapped utilities, additional money is hard to come by. So why not get a loan from a bank or development agency? Because (according to Tami, but within my understanding) bankers are not familiar with NRW programs. They are more comfortable with making loans on physical assets like desalination plants that can be pledged as collateral.

Now stop and think about this for a second. What happens if a water utility fails to repay a loan on a NRW program? There's no collateral to grab. What happens if it fails to repay a loan on a plant? Yes, there's collateral, but then what? Are the bankers going to drag a plant from Dhaka back to Geneva? So the "collateral excuse" is hollow.

That leaves conservatism and one other excuse: managers and politicians like new facilities that they can pose in front of, cut ribbons for, etc. There's no photo opportunity at a non-leaking pipe.

We couldn't think of any other reasons, but maybe you can.

Until then, I will conclude that NRW reduction programs are an underutilized method of improving utility performance.

Bottom Line: Every water utility should have a program to track, report and reduce its NRW rate -- for its financial stability, environmental stability, and the good of its customers.

1 comment:

CRG said...

Fascinating, and sad that Miya has trouble selling its services. Increased efficiency, particularly in districts where NRW (I've heard it referred to as System Loss) is a big problem (90% ?!?!?!), should be a priority.

I do, however, think that increasing supply should also be a priority. These are not mutually exclusive options and districts that are in need of water should look at both.