Water Supply and Sanitation Sector Project (RRP LAO 45301-002)
NONREVENUE WATER REDUCTION PROGRAM
A.
Introduction
1.
The Water Supply and Sanitation Sector Project (the Project) will assist participating
provincial water utilities, called provincial nam papas (PNPs) to reduce nonrevenue water (NRW)
in five existing provincial capital water supply systems by implementing an intense,
comprehensive NRW program to reduce and sustain NRW at economic levels. It will also support
a sector approach to NRW management which is outlined in Table 1. The Water Supply
Regulatory Committee (WSRC) Annual PNP Performance Reports highlight excessive energy use
and high nonrevenue water as key issues that adversely affect the PNPs’ technical and financial
performance. The program will assist in reducing the NRW backlog, but it will not lead to
sustainable levels of NRW unless NRW management becomes part of the normal day-to-day
activities of the water utility. This Appendix outlines the proposed approach to the NRW program
based on a review and analysis completed during project preparation.1
B.
Situational Analysis
2.
The high level of water loss or “nonrevenue water” (NRW) in distribution networks is one of
the major challenges facing the Lao water sector. A high level of NRW is often the main reason
that a water utility is unable to improve its performance, especially for those with water supply
systems that have unsatisfied demand and limited coverage. A high rate of NRW is also a cause
of poor energy efficiency because part of the energy used in the production and distribution
processes is embedded in the lost water. Reducing NRW is important to overall efficiency and
financial sustainability, because it provides additional revenues and reduces costs.
3.
In 2011, NRW for the Lao People’s Democratic Republic’s (the Lao PDR) 16 PNPs was
running at levels of about 28%2 on average—well above the Water Supply Regulatory Office’s
(WASRO) target service levels (15% to 20% when systems are pressurized) and substantially
above levels necessary for PNP financial sustainability. The precise figures are unknown because
of the lack of meter calibration and testing and, in some cases, the lack of bulk meters. The main
contributors to sector NRW3 are the water supply systems in the large provincial capitals that were
developed 15 to 40 years ago. Some of these systems were developed using poor quality pipe
materials and inadequate design and construction standards. NRW varies widely between PNPs,
ranging from 17% to 58%.4 However, these figures do not provide a true reflection of the real state
of NRW, because many of the older systems experience low pressures and intermittent supply.
While such conditions can result in low NRW, they are often associated with a high risk of
contamination of water supply by groundwater entering leaky pipes. As water supply systems are
improved, pressures will increase and NRW (real [physical] loss component) will rise
proportionately unless measures are taken to control leakage in the distribution network.
4.
Total NRW for all 16 PNPs was estimated at 11.63 million m3 per year in 20115 or 28% of
overall water production. If current NRW levels for the 16 PNPs could be reduced to around 20%,
an additional 3.3 million m3/year of PNP piped water would be available to customers, sufficient to
1
2
3
4
5
Appendix is based on the TA 8150-LAO consultant draft final report, May 2013.
Water Supply Division. Water Supply Investment Plan. Water supply sector data for 2011 listed in February 2013.
Vientiane: Department of Housing and Urban Planning, Ministry of Public Works and Transport.
The Vientiane Capital water supply system is a major contributor to sector NRW. It has not been included.
See footnote 1.
Water Supply Division data indicates that the volume of NRW for the 16 PNPs increased by 25% between 2009
and 2011.
2
supply an extra 76,000 people (assuming consumption of 120 liters per capita per day)6 and
generate an additional $1.25 million/year in PNP revenues7. Assuming an average NRW
reduction cost of $500 per m3/day it is broadly estimated that a total investment of around $5.3
million8 would be required to reduce NRW by one third of present levels for the 16 PNPs. The
investment needed to reduce NRW to economic and sustainable levels is substantial and is
beyond the financial capacity of the PNPs at present. However, expanding water networks without
addressing water losses will lead to a cycle of waste and inefficiency.
5.
NRW management is one of the most complex and difficult tasks of a water supply utility
and requires coordinated inputs from managerial, technical and commercial departments. The 16
PNPs manage around 72 separate small town water supply systems of varying sizes, ages and
conditions. None of the PNPs has an active NRW management program. Few if any of the PNPs
undertake NRW audits, energy audits or calibration of bulk meters which are essential for NRW
monitoring and water treatment plant process control. PNPs often undertake passive NRW
measures such as fixing visible leaks and pipeline breaks which represent less than 5% of real
(physical) losses; the other 95% are hidden below ground.
C.
Proposed Approach
6.
A common approach is needed to enable all PNPs to improve NRW through an
incremental approach involving five time-bound steps as shown in the Table. Each PNP can
follow some or all of these steps depending on its particular situation and with the support of ADB
or other development partners. These include:
(i)
Raising awareness on the importance of NRW reduction and management;
(ii)
Conducting a study and audit of the NRW situation for each participating PNP;
(iii)
Preparing financial and economic models to determine priority NRW options;
(iv)
Implementing real (physical) loss reduction actions such as leakage; and apparent
(commercial) loss reduction actions such as metering losses and water theft; and
(v)
Sustaining maintenance activities and continuing further training in NRW.
7.
Some steps of the NRW program have been piloted for Luang Namtha PNP. While the
broad steps are applicable to all PNPs; the specific actions should be reviewed and adjusted to
suit the local situation for each PNP.
D.
Implementation and Timing
8.
The NRW program will need to start immediately with awareness raising activities once
the Project is approved. Awareness raising activities will be intensified for the respective PNP
once the two subprojects are confirmed for feasibility study (at subproject screening).
9.
Each participating PNP will need to establish leak detection teams to check all pipes,
valves and meters, and update the asset register. The detection teams will be linked closely to
other related departments such as metering, billing and collection, etc. to ensure that all aspects
6
7
8
3
if NRW is reduced from 28% to 20%, the additional amount of water available is 8*11.63/28 = 3.32 million m . This
represents sufficient water to supply 3.32*1000000*1000/(120*365 = 76,000 people).
3
Based on a typical water tariff of $0.38/m .
3
3
3
NRW reduction = one third of 11.6 million m /year = 10,500m /dayx$500/m /day = $5.3 million.
3
of NRW are addressed. The Project will support the establishment and training of PNP staff in
leak detection and other related areas.
10.
Following completion of the NRW program, ongoing annual audits and NRW reduction
work will be undertaken by external NRW and metering experts to sustain low levels of NRW. The
reliance on external experts will help address the risk posed by low absorptive capacities of PNPs
and the complexity of the task.
11.
The project design will also provide business opportunities for Nam Papa Nakhoneluang
(NPN) and private contractors to develop their skills and receive training on NRW work. They will
also be encouraged to form associations or joint ventures with international experts to provide
continuous technical and management support and expertise. This will enhance sustainability and
retention of NRW skills in the Lao PDR.
E.
Contributing to Sustainable NRW Services
12.
NPN would be an appropriate resource for supplying NRW experts. ADB is currently
supporting ccapacity development activities of NPN in leak detection and NRW management
through an ADB-funded twinning partnership with Phnom Penh Water Supply Authority in
Cambodia. The twinning is expected to be augmented to include a training of trainers (TOTs)
program for the NPN in NRW reduction; this would provide NPN skills for training and assisting
other PNPs further in improving NRW reduction actions for a specific PNP.
13.
The Project could help support the establishment of an Efficiency and Audit Business Unit
in NPN subject to the agreement between NPN and the Department of Housing and Urban
Planning in the Ministry of Public Works and Transport. The ongoing role of this Business Unit
would be to provide specialized services for annual NRW audits, regular energy audits, and
annual meter calibration and meter testing for PNPs. NPN already has an experienced metering
section and relevant hardware including a portable ultrasonic meter for measuring flows in large
pipes, a portable calibration meter for testing customer meters, pressure gauges and associated
tools. NPN services were tested during project preparation for Luang Namtha PNP.
14.
The Project will provide training and work experience for concerned NPN staff during
project implementation. The NPN staff will be seconded to the PIA consultants, work within the
PNP leak detection teams and also assist the project implementation assistance consultants to
undertake energy audits. The NPN’s existing metering team would assist with meter calibration
and testing. The cost of annual audits and meter calibrations would be factored into the tariff
calculations of the PNPs that participate in the Project, to ensure that the benefits of the
investments in NRW reduction and energy management are sustained. Regular audits and meter
calibration will a precondition for inclusion in any subsequent ADB-funded projects.
15.
This proposed initiative aims to: (i) develop expertise in NRW reduction and energy
management in Lao PDR, and provide PNPs with cost effective contract services in these key
areas; (ii) institutionalize NRW audits, energy audits and meter calibration for the PNPs, and; (iii)
assist the PNPs to identify necessary improvements and their cost-effectiveness. The findings of
the audits would feed into WSRC’s Annual Performance Reviews and into PNP Corporate Plans.
It is envisioned that the project implementation assistance consultants would subcontract the
initial engagement of NPN. PNPs would need to conduct subsequent annual audits through
individual contracts with PWA.
4
Table: Proposed Approach to NRW Reduction
Step
Description
Actions
Process
Timing
1
Awareness
Raising on
NRW



National workshops;
Provincial workshops.
PNP workshops, staff training and raising
awareness.
ADB (WSSP), JICA
and NORAD funded
capacity development
and corporate planning
activities.
Project
start to end
2
Study and
audit of NRW


Undertake bulk flow measurements;
Undertake field surveys and investigations to
confirm the magnitude and sources of NRW;
Prepare water balance for each system;
Prepare asset register;
Update water supply system records & drawings;
Undertake asset condition assessments
ADB (WSSP), JICA
and NORAD funded
capacity development
and corporate planning
activities.
After subproject
screening
Identify options for NRW reduction and assess
financial and economic costs and benefits.
Prioritize the options based on cost effectiveness,
time for implementation and implementation cost.
Obtain PNP management and Board support and
commitment for the NRW reduction measures.
ADB (WSSP), JICA
and NORAD funded
capacity development
and corporate planning
activities.
Feasibility




3
Prepare
financial and
economic
models



4a
Implement
apparent
(commercial)
loss reduction
Prepare and implement apparent (commercial) loss
reduction measures including:
 Improve customer registration;
 Undertake surveys of unauthorized connections;
 Improve meter management;
 Enforce disconnection policy;
 Improve customer relations and complaints
register;
 Improve leak repair register and response times;
 Raise customer awareness of NRW through
messages on water bills and meetings;
 Provide staff incentives for NRW reduction.
ADB (WSSP), JICA
and NORAD funded
capacity development
and corporate planning
activities.
Feasibility
4b
Implement
real
(physical)
loss reduction
Undertake comprehensive, intense leak detection,
repair and replacement program, including:
 Develop computer hydraulic model of the network;
 Establish, equipment and train permanent leak
detection and repair teams;
 Install meters and valves;
 Create physical hydraulic zones;
 Manage pressures;
 Undertake leak detection, repair or replace pipes,
valves and meters zone by zone.
ADB WSSP.
Other sources of funds,
including PNPs’
internally generated
funds.
Feasibility


PNP action and PNP’s
Ongoing
Undertake active leak detection by PNP staff;
internally generated
Implement annual audits and training of PNP staff
funds.
by leak detection experts.
 Establish and train zone caretakers.
ADB=Asian Development Bank, JICA=Japan International Cooperation Agency, NORAD=Norwegian Agency for
Development Cooperation, NRW=nonrevenue water, PNP=provincial nam papa (provincial water utility), WSSP=water
supply and sanitation sector project.
Source: Asian Development Bank.
5
Maintenance
and Training