The Dreampipe Challenge closed in May 2018 with the announcement of four winners. They have delivered demonstration projects to tackle non-revenue water (NRW), which is the difference between water supplied by utilities and water billed to customers (more here).
Today we talk to Nyananso Ekanem, Managing Director of third place winner, Nigerian management consultancy Weircapacity, about his experience of participating in Dreampipe.
Lorenza Geronimo (LG): Hello Nyananso and thank you for being with us today. Why don’t you start by telling us about Weircapacity and how you took an interest in NRW?
Nyananso Ekanem (NE): Hello Lorenza and thank you! Weircapacity, as part of its consultancy and advisory services, provides training and innovative solutions across the areas of water, environment, infrastructure and reform to improve the performance of utilities. Within a project that we implemented a couple of years ago, we assessed utility performance based on some KPIs, including NRW. That’s where our interest started. Many utilities in Nigeria lose up to 75% of the water they supply and we felt we could do more to improve their performance. As part of our innovation portfolio, we think of something innovative and try to make it happen, and Dreampipe came to our rescue to make NRW reduction happen.
LG: Can you tell us more about your demonstration project which won the Dreampipe third prize of £30,000?
NE: We delivered the pilot project in Kaduna, northern Nigeria, with the Kaduna State Water Corporation (KADSWAC). Unlike other utilities we had approached, KADSWAC was responsive and ready to reduce NRW. During our reconnaissance survey, we realised the situation on the ground was different from what was described in the documents and there was no data. We also found that the biggest cost for KADSWAC was represented by commercial losses. KADSWAC was only billing 118 customers while there were 426 connections. So some users weren’t billed and others were using water but not paying the fees or less than what they should have because there were no metres to calculate consumption. Physical losses, such as broken pipes and water overflow from reservoirs, are the most visible and easier to fix, so utilities focus on them, but they only account for 30% to 40% of losses.
Our biggest interventions included data collection and analysis and introducing a decision-making process based on data. We also installed metres to measure flow of water to a particular zone, which is key to identifying and quantifying commercial losses. Moreover, we trained KADSWAC staff on how to take customers’ data and have built a database to manage users efficiently.
LG: What were you hoping to get out of Dreampipe?
NE: Dreampipe was the opportunity we were waiting for. To reduce NRW you need investments but you also need to convince utilities that your idea is good, and better than the one they might already have. Dreampipe was the opportunity to say ‘Look, we have a different approach to solve your problem and we can put it into practice without you investing a dime. We can show you how it works and if you think it’s good, you can take it from there’.
Dreampipe was so aligned with our interests that for the first time we took the bold step to participate in a competition. Dreampipe’s innovative focus on attracting private sector finance to solve NRW was so pertinent as utilities often lament lacking funding to reduce NRW. We are trying to prove you can attract private investment in this field. We want to show utilities that they can obtain loans because banks are more and more confident that they will be repaid as NRW reduction results in increased revenues for water companies.
LG: What has the biggest impact of Dreampipe been?
NE: We couldn’t have run this initiative without Dreampipe, although we would had loved to. Firstly, UK Aid/DFID opened doors as a brand. Although we had the skills to help utilities reduce NRW, they would think we only wanted to make money out of them. If we had approached a utility alone, as a private firm, it might have taken two weeks just to see the managing director of the water board.
Secondly, the funding provided as prize money, which we invested in the demonstration project, allowed us to procure the equipment needed, install the bulk metres, get the right people to take data, develop contracts, conduct training, carry out a GIS study, map the network. Now everyone has confidence in what can be done and might decide to invest – but we needed seed funding from UK Aid to get to this point.
LG: What are the next steps?
NE: We are negotiating a performance-based contract for NRW management with other utilities. To reassure banks, we are thinking of setting up a system through which the revenue collected by the utility is automatically shared. Water is a risky sector that can be instrumentalised by politicians to win elections and this is a first-of-its-kind initiative so investors are treading carefully. We are discussing with utilities to understand how we can mitigate these risks.
Some development banks seem interested in providing a risk guarantee to reduce exposure of potential investors. We are also looking at the African Development Bank, USAID and the World Bank, which could finance large budget items, for example pipes rehabilitation and construction. Private financiers could focus on interventions which generate a more immediate return on investment such as installing water metres, measuring systems and collection points.
Our demonstration project targeted an area with 500 connections and 3,000 people at the least. The expansion project would target over 15,000 users and then 2 million by the time we complete it. We aim to not only improve services but also expand them to low-income areas which are often neglected by utilities because users might not be able to pay. We think that if we reduce utilities losses, they can use their increased revenue to invest in expansion projects. I am happy that KADSWAC is already discussing this. It is a great sign.
Cover photo: Ahemd Jibrin-Ahmed, Weircapacity's Project Engineer for Dreampipe.