ENGLISH VERSION

NON-REVENUE WATER, IMPACT TO THE SERVICE, ENVIRONMENT AND

FINANCIAL

By
Ir. Dr. Hasnul Mohammad Salleh1, Normayasuria Abd. Malek2

Keywords: Non Revenue Water, Physical Loss, Commercial Loss, Holistic, District
Monitoring Zone, District Metering Area, Water Balance, Production
Meter, Comprehensive Leakage Repair, Water Pressure Management,
Hydraulic Modelling, Nett Present Value (NPV), Customer Service
Centre.

Abstract
This paper intends to broaden the knowledge of the readers on the effect and impact of Non-
Revenue Water (NRW) on the water supply services, environment and financial of the country.
Non-Revenue Water is currently being one of the issues heatedly discussed globally. The NRW
issue reflects the performance of water supply management in a country. Malaysia has taken
the initiative on NRW since 80s. Now, the Government has urged the State Water Supply
agencies to focus more on the NRW problems because it gives huge impact on the revenue
collection to the country generally, and to the state particularly. Under the Amendment of Ninth
Schedule of Federal Constitution, water resources, water catchment area and river basin are
under the jurisdiction of State Governments. The Federal Government will regulate the water
service industry in terms of licensing and regulating the service operator. Federal Government
through National Water Resources Council has the authority on water when the river crosses
two-state boundaries and agreement on the usage and control of that river could not be reached
by the relevant states.

1.0 Background

Under the Amendment of Ninth Schedule of Federal Constitution, water sources,

water catchment area and river basin are under the jurisdiction of State
Governments. The Federal Government will regulate the water service industry in
terms of licensing and regulating service operator. The Federal Government
through National Water Resources Council has the authority on water when the
river crosses the two- state boundaries and those states could not reach an
agreement on the usage and control of that river.

1
Director General, Water Supply Branch, Ministry of Energy, Green Technology and Water
2
Civil Engineer, Planning Division and Coordination Division, Water Supply Branch, Ministry of Energy,
Green Technology and Water
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Currently, West Malaysia is in the transition period whereby the water supply
services will be managed by the corporate sector or private sector. The
organizations which are responsible on managing the water supply service are as
follows:-

i. Kementerian Tenaga, Teknologi Hijau dan Air

Bekalan Air Labuan
ii. Public Service Department/Water Supply Department
Pahang, Perlis and Sarawak (except Kuching and Sibu)
iii. State Water Board (Statutory Body)
Perak, Kuching & Sibu (Sarawak)
iv. Private Sector
Pulau Pinang, Johor, Selangor, LAKU (Lembaga Air Kawasan Utara,
Sarawak), Terengganu, Melaka, Negeri Sembilan, Kedah and
Kelantan

2.0 Non Revenue Water (NRW)

Non Revenue Water (NRW) is defined as the difference between supplied water
from water treatment plant and metered quantity to the consumers. NRW
components consist of physical and commercial losses (water consumed but gives
no revenue).

i. Commercial Loss
Inaccurate meter reading (quantity showed by the old meters is less than
the actual);
Water theft by illegal tappings;
Maintenance of the water supply system through pipe flushing after leakage
repair works, reservoirs cleaning and fire brigade usage.

If physical loss could be solved, then operation cost could be reduced. However,
for commercial reduction, it will only recover back all the unbilled quantity and this

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will give immediate impact on the revenue due to increase on collection from
consumers.

Currently, the average NRW level recorded nationwide is 36.63% and from this
figure, it is estimated that 21.93% is due to the physical loss and 14.70% is caused
by commercial loss. The reasonable NRW level and expected to be achieved
realistically in 5 years period (if special allocation is approved by Government) is
26.90% of which 17.00% is estimated due to physical loss and 9.90% by
commercial loss (See Table 1).

From the observations, many states recorded a high NRW level exceeding
40.00%, such as Pahang(59.9%), Sabah (49.41%), Negeri Sembilan (49.16%),
Kelantan (48%), Kedah (44.97%) and Perlis (44.67%). These states are also
recording high physical loss which is more than 20.00%.

2.1 Source to the NRW Problems

It is commonly known that the Non Revenue Water is divided into two (2) main
components, namely physical and commercial losses.

2.1.1 Physical Loss

Physical loss is due to the following factors:-

a) Pipe burst;
b) Leakage (particularly the old asbestos cement pipe);

From the factors stated above, main reason of high physical loss in the whole
country is identified to be caused by leakage of old and dilapidated AC pipes.

Currently, there is about 127,275km in length of water pipe of various types in

the whole country (See Table 2). These pipes are of asbestos cement type
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(AC) of 44,282 km (34.80%), mild steel pipe (MS) of 29,372 km (23.10%),
HDPE pipe of 22,111 km (17.37%), unplasticised polyvinyl chlorine (uPVC) of
18,683km (14.70%), ductile iron pipe (DI) /CI of 9,885 km (7.70%) and other
types with total length of 2942 km (2.30%).
2.1.2
2.1.3 Commercial Loss

Among the factors that contribute to the commercial loss are as follows:-
a) Inaccurate meter reading (quantity showed by the old meters is less
than the actual);
b) Water theft by illegal tappings;
c) Maintenance of the water supply system through pipe flushing after
leakage repair works, reservoirs cleaning and fire brigade use.

From commercial aspect, most of the states recorded a high level (Refer
Table 1) of loss except Selangor, Pulau Pinang and Malacca where these
states recorded a commercial loss of less that 12.00%. However, other states
such as Pahang, Perlis, Negeri Sembilan, Sabah, Kelantan and Kedah
recorded high level of commercial loss of more than 16.00%.

3.0 Impact of Non-Revenue Water on Water Supply Services and

Environment

3.1 Service
Non-Revenue Water gives negative impact on the quality of the national water
supply services. It reflects the problem of instability of water supply infrastructure.

Damaged pipes network, water supply interruption to the consumers and quality
of treated water supplied are among the subject that shall be given attention in
ensuring high quality of water supply service.

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In view of that, Malaysia as a developing country has to take a more proactive
step in the water supply services by taking the developed country such as Japan
which has succeeded in this field as a role model in the attempt to improve the
quality of water supply services in Malaysia.

3.2 Environment

Non-Revenue Water is very synonym to leakage problems. Leakage in the pipe

distribution system not only caused financial loss to the country, but, it also bring
other associated losses such as damaging the soil structure in the vicinity of the
leakage area, which indirectly cause the slope failure.

Among other things that could jeopardize the environment due to Non-Revenue
Water problems are water ponding on the metalled road which damages the
structure and road components.

4.0 Control of Existing NRW

Under RMK9, Federal Government has allocated RM 1.092 billion to implement
various NRW programmes. From the allocation, RM1.082 billion has been spent
specifically to upgrade the water piping system. However, there are still few states
with high NRW level because the implementation of NRW programme via holistic
approaches has yet to take place. Those states are Pahang, Perlis, Sabah dan
Sarawak.

Among the reasons why the NRW programme via holistic approaches is yet to be
implemented in these states are due to insufficient manpower and
expertise/qualified personnel. Therefore, the allocated amounts were spent for
replacement of old pipes and consumer meters only. Besides that, most of states
are having problems to identify the routing of pipes to be changed due to
incomplete data on existing pipes and incomplete mapping system.

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For those states which implement the holistic control programme, main problem
faced is failure in developing DMZ due to incomplete pressure control. As such,
new DMZ has to be re-designed to solve problems related to NRW management.

5.0 Holistic Approach to Address NRW Problems

There are five (5) subjects as follows that need to pay attention in the effort to
address the NRW problems holistically:-

1. Comprehensive leakage repair works;

2. Replacement of production meters;
3. Creating District Metering Zones(DMZ);
4. Proper water pressure control;
5. Replacement of dilapidated pipes; and
6. Training and implementation of audit on Water Balance formula.

5.1 Comprehensive Leakage Repair

This activity is crucial for water loss reduction, in addition, it will improve the
quality of water supply services and restore the consumer confidence level. The
frequency of repair works can be achieved through the following methods:

a) Increase of manpower in the repair works;

b) Improve on supervision and monitoring;
c) Incentive for Contractor with high productivity;
d) Impose penalty if the contractor fails to achieve the targeted
NRW reduction ; and
e) Accurate information and comprehensive reports.

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As such, two (2) main subjects which shall be emphasized in the effort to achieve
the objectives stated above are through improvement of the quality of Customer
Service Centre and forming manpower team for leakage repair works.

i. Improvement of Customer Service Centre

Forming of customer service centre at each state and its function is best to
receive complaints from customer which includes speeding up on leakage
repair works on reported cases. For example, customer service centre in
Selangor (PUSPEL).

Subsequently, it is expected that to improve the customer service centre at

those states with high NRW level, cost required is estimated at
RM4,700,000.00 (Refer Table 3).

ii. Forming manpower team for leakage repair

Besides that, skilled and educated manpower for leakage repair are
required at each Customer Service Centre particularly at the states with
high NRW level such as Pahang, Sabah, Kedah, Kelantan, Negeri
Sembilan, Perlis and Terengganu.

Manpower and estimated cost required for repair works for the period of 5
years is expected to be RM49,792,320.00 (Refer Table 4)

Effort on improvement of Customer Service Centre and to increase the

manpower for leakage repair is expected to reduce the NRW level by 202
million litre per day (MLD).

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Accuracy of production flowmeter reading (plant output)

Most of treatment plants installed the production flowmeters. Private water

treatment plants normally install electromagnetic type of flowmeter which is
always calibrated.

Number of water treatment plants and the respective production capacity at each
state are as follows:

No. of Water Design Capacity 2009 Production

State Treatment Plant (Mld) (Mld)
Johor 42 1,612 1,466
Kedah 32 1,185 1,173
Kelantan 32 360 343
Melaka 6 489 443
N. Sembilan 22 747 659
Pahang 77 1,197 915
Perak 46 1,726 1,039
Perlis 3 110 109
Pulau Pinang 10 1,273 913
Selangor 33 4,483 3,926
Terengganu 14 761 567
Sabah 49 1,076 877
Sarawak 85 1,202 1,015
Labuan 3 60 48
NATIONAL 454 16,283 13,495

Audit has to be conducted on the existing flowmeters installed at the water

treatment plants to ensure functionality of the meters. It is expected that some
meters have failed to give accurate readings and have to be replaced. Most of
them are at the old plants. Estimated cost involved to ensure the accuracy of the
flowmeters reading are as follows:-

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No. of Water
State Estimated Cost (RM)
Treatment Plant
Kedah 32 2,500,000
Kelantan 32 3,000,000
N. Sembilan 22 2,000,000
Pahang 77 3,500,000
Perlis 3 500,000
Terengganu 14 2,000,000
Sabah 49 4,000,000
Sarawak 85 3,500,000
Labuan 3 400,000
Total (RM) 21,400,000

5.2 District Metering Zones(DMZ) / Water Pressure Control

DMZ is the best method to manage the NRW in a distribution area which is
based on the water flow after the inlet point to the water distribution area. Each
zone is designed to cover 500-2000 consumers. Several states have already built
few DMZ, however, without the proper control, DMZ could not be functional
tested cause by boundary valve which is open; and unmaintained DMZ causes
increase of leakage level. Failure in DMZ design is also due to improper leakage
control which in turns causes shortage of water supply to the consumers.

Therefore, each DMZ shall be monitored and maintained. Development of new

DMZ is also required when there is additional or change in water demand on the
distribution system. Estimated cost for developing and managing DMZ is
expected to require an allocation of RM386,054,640.00 (See Table 5).

5.3 Replacement of Old Pipe

Pipe replacement involved high cost with very return period. In Malaysia, AC pipe
has been used widely based on the expected lifespan of 70 years. However, due
to environmental factors and surrounding development factors, the pipe strength

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may have decreased. Therefore, it is expected that the estimated cost of
RM1.328 billion for period of 5 years programme is needed for replacement of
4,460km AC pipe. (See Table 6).

5.4 Training and Implementation of Audit on Water Balance Formula

Water Balance formula created by International Water Association (IWA) is a very

useful guideline in the Water Balance calculation for each state. However, each
component in the Water Balance schedule has been given different interpretation
by difference parties and understanding in using the said schedule is lacking. Too
many assumptions being made when using the Water Balance schedule, which
causes inaccuracy of information furnished.

Therefore, an approach has to be fixed in ensuring the standardization on the

definition and calculation method for each component in the Water Balance
schedule apart from the holistic NRW programme activities stated above in the
effort to reduce the NRW levels nationwide.

Training and implementation of water supply audit is among the techniques

required to standardize the use of the Water Balance schedule.

Based on the analysis carried out by this department, the cost needed to ensure
the standardization of the use of Water Balance schedule through the training
and water supply audit is estimated at RM 4,750,000.00.

5.5 Advantage of NRW Programme

In long term, the implementation of NRW programme is expected to give high

return. If the discount level is assumed at 7.00%, increase of water tariff and

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production cost is estimated at 3.00%, thus, the nett benefit –NPV obtained for
the period of 5 years is projected to be RM 147.32 million.

5.6 NRW Control Management (Handling Physical and Commercial

Problems)

Replacement of AC pipes and old/dilapidated water meters without the

implementation of active NRW control management activities do not guarantee
the reduction of NRW level. The works will involve developing the leakage control
zones, detection and leakage repair works particularly on the communication
pipes and its connections. Communication pipes and connections of Galvanised
Iron (GI) which are old and leaking shall be replaced. Balancing and service
reservoirs which form part of the water supply system components shall also be
repaired and system to manage and control the water overflow and wastage such
as SCADA System (Supervisory Control and Data Acquisition) shall be
implemented to manage and control the water supply system. Apart from that, to
obtain accurate data to facilitate DMA design and pressure management,
Hydraulic Modelling software shall be used.

5.7 Methods of Implementation

Based on previous experience, it was found that if the appointment of consultants

and the tender documents were carried out by the state water supply department,
it would take longer time and was not carried out holistically. To ensure the
implementation process of holistic NRW programme nationwide, it is proposed
that the appointment of consultant and tender documents preparation be carried
out by the Federal Government. Documents prepared by the Federal
Government will then be handed over to the State Government for calling of
tender and supervision works.

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It is proposed that the holistic NRW programme be implemented by focusing on
the states with high NRW level which exceeds 40% such as Pahang (59.90%),
Sabah (49.41%), N. Sembilan (49.16%), Kelantan (48.32%), Kedah (44.97%) and
Perlis (44.67%). Through this approach, the NRW level across the country will
directly be reduced to a more reasonable and profitable levels.

5.8 Financial Implication

Generally, implementation of holistic NRW programme nationwide needs

substantial fund. It is proposed that this programme be implemented in few
phases in which the first phase starts with appointment of the consultants, design
and tender documents preparation which shall be carried out by the Federal
Government. Based on the analysis, it is expected that the estimated cost for the
implementation of holistic NRW programme in the nationwide for the period of
first 5 years is RM 1.795 billion.

6.0 Conclusion

Water supply service level nationwide could be enhanced if the implementation of

holistic non revenue water reduction programme could be expedite.

Currently, the national NRW level is 36.63%. The NRW reduction programme will
give a return (nett benefit-NPV) of RM147.32 million in 5 years time.

Most effective ways in handling the NRW problems nationwide is through holistic
approaches which involve the following scope of works:-

1. Comprehensive leakage repair.

2. Replacement of production meter;
3. Establishment of District Metering Zones(DMZ);
4. Proper Water Pressure Control; and

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5. Replacement of dilapidated pipes

In addition, focus shall be given on complains (Customer Service Centre) and also
provision on special training to the NRW officials in making sure the holistic NRW
programme could be implemented aggressively and comprehensively.

Table 1 : Current and Projected NRW Level for Year 2020

PHYSICAL LOSS COMMERCIAL LOSS

NRW
STATE
CURRENT PROJECTION PROJECTION
CURRENT CURRENT
(%) 2015 2015
% % % %
Johor 31.95 19.00 17.00 12.95 9.90

Kedah 44.97 28.00 17.00 16.97 9.90

Kelantan 48.32 30.00 17.00 18.32 9.90

Melaka 29.71 20.00 17.00 9.71 9.00

N.Sembilan 49.16 27.00 17.00 22.16 9.90

Pahang 59.90 27.00 17.00 32.90 9.90

Perak 30.68 24.00 17.00 17.68 9.90

Perlis 44.67 22.00 17.00 22.67 9.90

Pulau Pinang 19.08 11.00 10.00 8.08 8.00

Sabah 49.41 30.00 17.00 19.41 9.90

Sarawak 29.52 18.00 17.00 11.52 9.90

Selangor 32.49 23.00 17.00 9.49 9.00

Terengganu 37.85 22.00 17.00 15.85 9.90

NATIONWIDE 36.63 21.93 17.00 14.70 9.90

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Table 2 : Pipe Length and Type

Pipe Pipe Length (Based on Pipe Type (km))

STATE Length
(km) AC MS uPVC HDPE DI/CI Others

Johor 18,781 7,861 3,427 4,942 849 1,681 21

Kedah 14,644 5,816 2,104 1,958 3,798 964 3

Kelantan 4,982 3,632 194 276 401 175 305

Melaka 5,687 1,826 976 810 1,724 131 219

N Sembilan 7,480 4,710 1,522 159 423 301 364

Pahang 8,853 3,450 1,622 780 1,957 200 844

Perak 10,659 2,764 1,306 1,707 4,322 556 3

Perlis 1,806 948 219 3 628 8 0

Pulau Pinang 3,916 1,402 736 94 998 674 11

Selangor 24,893 5,652 12,875 3,527 1,195 845 799

Terengganu 7,138 1,531 1,421 2,804 596 760 25

Sabah 8,376 2,345 2,622 1,620 796 687 306

Sarawak 9,590 2,121 311 1 4,253 2,861 43

Labuan 471 225 37 0 170 39 0

NATIONAL 127,275 44,282 29,372 18,683 22,111 9,885 2,942

Table 3 : Customer Service Centre

No. State Location Estimated Cost (RM)

1 Pahang Kuantan 500,000

2 Sabah Kota Kinabalu 700,000
3 Kelantan Kota Bharu 500,000
4 Negeri Sembilan Seremban 500,000
5 Perlis Kangar 400,000
6 Terengganu Kuala Terengganu 500,000
7 Sarawak Kuching 700,000
8 Labuan Labuan 400,000
9 Kedah Alor Setar 500,000
TOTAL 4,700,000

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Table 4 : Manpower Required for Leakage Repair

Total Estimated Cost

No. State
Manpower (RM)
1 Pahang 12 3,905,280
2 Sabah 10 14,644,800
3 Kelantan 10 4,881,600
4 Negeri Sembilan 8 3,905,280
5 Perlis 2 976,320
6 Terengganu 6 2,928,960
7 Sarawak 8 11,715,840
8 Labuan 2 976,320
9 Kedah 8 3,905,280
TOTAL 66 49,792,320

Table 5 : Estimated Cost for DMZ Works

Estimated Cost
State Total Connections
(RM)
Kedah 518,734 45,389,225
Kelantan 180,557 9,479,243
N Sembilan 337,924 29,568,350
Pahang 338,146 44,381,663
Perlis 64,882 13,625,220
Terengganu 225,798 29,635,988
Sabah 215,258 18,835,075
Sarawak 421,635 36,893,063
Labuan 14,225 746,813
Selangor 1,648,946 157,500,000
TOTAL 386,054,638

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Table 6 : Proposed AC Pipe Replacement

Pipe Replacement
Pipe Length
State Estimated Cost
(km) Length (km)
(RM million)
Johor 18,781 786 238.83
Kedah 14,644 582 174.48
Kelantan 4,982 363 108.96
Melaka 5,687 183 54.78
N Sembilan 7,480 471 141.30
Pahang 8,853 345 103.50
Perak 10,659 277 82.92
Perlis 1,806 95 28.44
Pulau Pinang 3,916 140 42.06
Selangor 24,893 565 169.56
Terengganu 7,138 153 45.93
Sabah 8,376 235 70.35
Sarawak 9,590 212 63.63
Labuan 471 23 6.75
National 127,275 4,430 1,328.49

Table 7 : Estimated Required Total Budget

NRW PROGRAMME

YEAR Customer Repair Production DMA / Selective Water

Service Leaks Meter PMA Pipe Change Audits TOTAL
Centre (Mil) (Mil) (Mil) (Mil) (Mil) (Mil) (Mil)

2011-
4.700 49.792 21.400 386.054 1,328.49 4.750 1,795.19
2015

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