Water firms losing millions due to inefficient billing system, audit says

Water flowing from tap

Water service companies are losing millions of shillings in uncollected revenue due to inefficiencies in their billing systems, the Auditor General's report says.

Most water firms in the country have low revenues and depend on the Government for funding following years of loss-making.

The 2015-16 audit report shows that the Nairobi Water and Sanitation Company (NWSC) lost an estimated Sh3.1 billion in non-revenue water.

The firm reported Sh9.1 billion income in the 2015-16 financial year, which it attributed to an increase in water tariffs in November 2015, when it recorded a decline in the volume of water billed to consumers.

The Auditor General noted that the decline in water billed from 124 million cubic metres to 121 million cubic metres was an indication of inefficiency in the billing system adopted by the water company, which serves millions of households in the capital.

“The increase is attributed to tariff review effected in November 2015 as non-revenue water increased by three per cent...," says the report.

According to the report, though the water company produced 200,352,109 cubic metres of water, it only earned Sh4.7 billion from 121 million cubic metres during the financial year under review.

According to water services regulatory board guidelines, the non-revenue water is 15 per cent over and above the allowable loss threshold of 25 per cent. The audit says various parcels of land earmarked for the expansion of water storage for Nairobi residents have been taken over by private developers, affecting the improvement of the water supply system and infrastructure.

The report shows that NWSC, which supplies water to over five million residents, has a negative operating capital of Sh1.2 billion.