Water companies lose Sh7 billion annually to water leakages

By Kaburu Mugambi

Cash shortage faced by water companies could be of their own making as they lose Sh7 billion annually to water leaks. Auditor General has warned the sector is under financial threat due revenue lost. Water services regulator calls for appointment of competent managers who can manage water loss.

Water companies are losing Sh7 billion annually and quantity of water that could serve Nairobi for four months because they are unable to deliver all water they produce to the customer.

Water Services Regulatory Board (Wasreb) says 41 per cent of water is lost before reaching the customer through leaks, theft or metering inaccuracies. The sector’s acceptable water loss (non-revenue water) is 20 per cent. The water services regulator says that “if the business-as-usual approach is maintained in the way water resources are managed, Kenyans will face a 30 per cent gap between available freshwater supply and demand by the year 2030.”

The board says that despite efforts by water companies to contain the water losses, levels have remained relatively stagnant between 41 per cent and 47 per cent for the last 10 years. It quotes Auditor General’s 2016-2017 report that warned that high levels of water losses pose a big threat to the financial sustainability of water sector. Such losses are also a significant risk to the nation’s water security, the report says.

Out of 88 water companies Wasreb assessed in 2018, only Nyeri Water and Sanitation Company and Meru Water and Sewerage Company had a score of “good” on water loss.

Nyeri lost 14 per cent of its water while Meru lost 15 per cent. Only two, Thika and Limuru, had “acceptable” levels of water loss at 23 per cent and 25 per cent, respectively.

The remaining 84 water companies had “not acceptable” levels of water loss. The water services regulator recommendation has been to reduce water loss to 25 per cent.

Wasreb says that reducing water loss to 25 per cent can help close the supply anddemand gap without the need to build costly infrastructure or exploit new water sources, which are dwindling.

“Additionally, reducing water losses increases revenue for utilities while also reducing operating costs linked to producing and pumping water, thus unlocking savings that can be used to expand access and improve service delivery,” the regulator says in its report.

Wasreb calls for tightening of water companies’ governance to comply with its governance guidelines. It says good governance allows for the appointment of competent utility managers who have the capacity to adopt innovations, manage water loss and be accountable to stakeholders.

The regulator cites specific innovations such as performance-based contracts for water loss management—a form of sub-contracting in which the remuneration of the contractor is linked to the achievement of outcomes rather than inputs—are a way for utilities to access the capacity and equipment that they lack. With payments based on results, the incentives to perform are high and the risk of non-performance by the contractor is reduced, it says.

Wasreb and Kenya 2030 Water Resource Group (a public and private partnership supporting sustainable management of water resources) is working towards aligning key partners towards a shared culture of paying for performance.

“It is hoped that the new culture will help address high NRW (non-revenue water) levels which are threatening the survival of future urban centres in Kenya,” Wasreb says. “Strategic partnerships with the private sector, in particular PBCs (performance based contracts), can be explored to manage NRW  by strengthening governance, injecting capital into struggling utilities, expanding access, and improving services.”