Non-revenue water (NRW) is one of the biggest challenges faced by urban local bodies (ULBs). The factors that contribute to this are tampered or damaged meters, worn-out pipes, water theft, unmetered water connections, etc. These lead to high NRW levels, which are currently at an average of 40-45 per cent. Further, most of the ULBs in the country lack an automated billing mechanism to levy and collect user charges for water supply and sewerage services. Even in bigger cities such as Delhi, Mumbai, Kolkata, Bengaluru and Chennai, ULBs are facing the issue of inadequate cost recovery. Lower revenue collection puts the creditworthiness of municipal agencies at risk, thus affecting their bankability and ability to tap financial markets.
However, the situation is changing slowly, with several ULBs adopting advanced automated mechanisms to levy and collect user charges. A case in point is the Delhi Jal Board (DJB), which deployed a revenue management system (RMS) in 2012 to improve its revenue collection. The aim was to replace the manual billing process with advanced digitalised metering, billing and collection processes.
Containing NRW levels
Of the total water demand of 1,150 million gallons per day (mgd), DJB has the capacity to supply 935 mgd. The utility’s current revenue collection is around Rs 18.6 billion per annum. This low figure is mostly due to a large number of unmetered water connections in the city, while the sanctioned water connections stand at 2.5 million.
DJB has been taking a plethora of initiatives to reduce NRW levels. In 2012, it awarded the contract for distribution and revenue collection in three areas (Malviya Nagar, Vasant Vihar and Nangloi) to private contractors on a pilot basis. As a result, the NRW level in Malviya Nagar dropped from 45 per cent to 30 per cent. With assistance from the Asian Development Bank and the Japan International Cooperation Agency, DJB divided the entire city into 1,010 district metered areas (DMAs) to reduce NRW levels. Of these, work on 160 DMAs has already started. Besides, consultancy work for another 598 DMAs has been awarded and is expected to be completed by the end of 2020. The board aims to bring down the NRW level from the current 45 per cent to 10-15 per cent. It also plans to install smart meters in DMAs and integrate them with a centralised monitoring system, within a span of two years.
Prior to the deployment of the RMS, DJB’s revenue collection was highly inefficient due to issues such as inconsistent billing cycles, limited collection centres, incomplete records of properties and customers, and an obsolete grievance redressal system. Other challenges faced by the civic agency included complex and time-consuming processes, and the lack of an updated data collection system. After the adoption of the RMS, water meters are now read through digital machines and not manually. There are about 900 meter readers who provide door-to-door billing facility with the help of handheld machines. Consumers can now pay their water bills through an online portal, payment kiosks or mobile wallets.
The RMS has helped DJB improve its billing accuracy considerably. Earlier, only 40 per cent of the consumers were billed on the basis of actual consumption, while the rest were billed on an ad hoc basis. Today, about 90 per cent of the consumers are billed on their actual consumption and the remaining 10 per cent are charged on the basis of the average of their actual consumption. Further, the civic agency’s consumer base has also expanded from 2.25 million to more than 2.6 million customers after deployment of the RMS.
Greater automation and adoption of smart technologies is of utmost importance for reducing NRW levels. This will not only bring down physical losses but also ensure accurate water billing and reduce unmetered and illegal water connections. Accurate billing based on actual consumption will, in turn, ensure transparency and enhance the revenue generation capacity of ULBs.
The digitalisation of different municipal functions through the adoption of the RMS has been one of the key revenue enhancement strategies adopted by DJB. The system has helped not only the board but also consumers by offering them a seamless online experience. However, DJB faced several issues and challenges in the implementation of the RMS. These include data migration of a large legacy system, data cleansing, staff training and unavailability of certain Oracle modules. However, its successful implementation has helped the board strengthen municipal finances and facilitate effective delivery of services.
Going forward, DJB’s experience is expected to encourage other utilities to take similar initiatives for improving their financial performance.