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Holding water utilities to a higher standard

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Local water utilities in emerging economies should perform better, act independently and cover their costs. But how? Vitens-Evides International (VEI) has over 15 years of experience in long-term international Water Operator Partnerships. So, if anyone knows how to improve water utilities, it is them! VEI's approach? Benchmarking to structure the performance improvement of drinking water utilities. An example of this is the FDW project PEWAK (Performance Enhancement of Water Utilities in Kenya). This project shows that it is not easy but not impossible to improve.

Good benchmarking

"We do this in the Dutch water sector, too: benchmarking between water companies. We look at Key Performance Indicators (KPIs) to see what we can learn from each other. How are we doing? How are others doing? How can we evolve? Benchmarking helps with peer-to-peer learning," explains Adriaan Mels from VEI. As a lead partner, VEI has implemented more than 10 FDW projects. They noticed that benchmarking helps water utilities learn from each other and work toward a higher standard.

VEI developed the benchmark approach in the Kenyan WASPA project, previously funded by the European Union (EU). That project was relatively successful but did not quite reach the desired result. "We realised we needed a project follow-up for the Kenyan water utilities to have the advantages of peer-to-peer benchmarking," says Lieke Nijk, the former FDW PEWAK project manager in Kenya. The focus of the PEWAK project was to expand the group of Water Service Providers (WSP) engaged in WASPA benchmarking. A second focus was to improve so-called pro-poor water services and reduce non-revenue water (NRW).

Non-revenue water

The percentage of non-revenue water at water utilities in Kenya is high. Losses of more than 50% occur between production facilities and what facilities actually bill their customers. The biggest losses were as high as 77%. These utilities were literally buckets with holes where water flowed out freely. The PEWAK project supported 10 utilities in reducing these losses and sharing best practices on NRW management through the benchmark group that currently has 49 participating WSPs. DMAs, or district metred areas, are the main approach to reducing water leakages and commercial losses. Bernard Mbatia, a non-revenue water expert working with VEI, explains, "With DMAs, we make manageable small water distribution areas. This makes it easier to understand how much water enters the network and who is paying for water. It also makes it easier to identify losses. We created at least 27 DMAs and replaced substandard water meters, among other things. We reduced the average loss from 50 to 43% at the WSP level, with up to 28% reductions in individual DMAs."

Besides administrative losses predominantly caused by metering issues (faulty or broken meters) and human errors (wrong meter readings), physical water losses are mostly caused by leaks from old or low-quality pipes. Most distribution systems date from 30 to 40 years ago and need maintenance or replacement. Bernard explains, "We managed to decrease the average losses by 7%. The systems still need considerable human and financial investments to decrease this percentage further. The biggest challenge remains that until the utilities become more financially healthy, the speed of this process highly depends on new external financing." Benchmarking and NRW reduction can only go so far.

The positive side is that when we lose less water, we can serve more customers and give more citizens access to safe drinking water. Fewer leakages (physical losses) and commercial losses will increase revenues. This makes maintenance and investments easier to cover. 5 of the 10 utilities got a return on investment on the project's NRW hardware investments within the project duration.

'Pro-poor'

Another benchmark focus group deals with serving drinking water per pipeline to low-income areas. Zaituni Kanenje is a low-income consumer coordinator at Nakuru Water and Sanitation Services Company. She is a leading member of this group that started under the PEWAK project and currently has 32 participating WSPs. Zaituni says that Kenyan water utilities would not consider pro-poor services at all in the past. "They rather invest in high-income areas. There has always been a belief that the poor will not be able to pay for water services."

When the project started, it found viable service options for the low-income areas. "Poor people find it difficult to pay a monthly bill in one go. But, they are okay to pay in small amounts over time. WSPs have formalised this practice in their social connection policies. Another good idea is prepaid meters for households (to make small payments) and contracting vendors (to provide water on behalf of the WSP) by water utility companies." As a result, Nakuru WSP started to invest in low-income areas and now has a 76% service coverage in those areas.

Mandatory services

Like in the Netherlands, the water utilities in Kenya are government-owned private companies. However, most water utilities do not cover their entire service area. As a partner of the PEWAK project, the government worked to make water services available to all. Still, the utilities cannot serve everyone because their production and distribution capacity are too low.

"In low-income areas, people usually get water for around 2 or 3 days a week", says Zaituni. The rest of the week, they buy it from private vendors. This is more expensive. Or they get water from private waterholes that mainly produce low-quality water. That is why we also make people aware of storing clean drinking water. We like them to at least know they need this clean water for cooking and drinking. Possibly, they get water from other sources for washing and cleaning."

Zaituni now shares these insights with the fast-growing benchmark group to convince other utilities to start or improve their operation in low-income areas.

Regional director Adriaan Mels is happy with the results. Because of their earlier experience in FDW programmes and elsewhere, VEI could scale up its approach. "This project has shown that benchmarking is a very powerful instrument. It is a circle of learning that goes beyond our involvement." Which is just how he wants it. "Ultimately, our goal is to make ourselves obsolete."

About VEI

VEI is a joint venture company of 2 water companies, Vitens and Evides, with 4 other Dutch water utilities connected as partners. Since 2006, they have worked on long-term engagements to support the professionalisation of local utilities in low-income countries. Together with utilities, VEI defines the areas in which they can provide support. VEI sends experts, mainly from the Dutch drinking water sector, but also works with local experts.

VEI noticed the power of benchmarking, comparing KPIs and group-wide analyses, discussions and learning, and introduced this concept to the WASPA-project. VEI now works in 15 countries. VEI has been a (lead) partner in 13 FDW projects and started a long-term programme called WaterWorX with all 10 Dutch water utilities and the Dutch Ministry of Foreign Affairs.

For more analyses and lessons learnt about NRW-reduction, see the report 'Lessons Learnt in NRW-reduction'.

More information on FDW

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