KUALA LUMPUR: Selangor, Kuala Lumpur and Putrajaya have collectively recorded the highest loss in revenue from non-revenue water (NRW) at RM718.8 million last year, an 8% increase from RM667.1 million in 2012.

Labuan recorded the lowest loss in revenue amounting to RM5.3 million last year and RM3.9 milllion in 2012, according to data from the Association of Water and Energy Research Malaysia (Awer).

The association said in a statement yesterday the total loss in revenue due to NRW between 2008 and 2013 was RM10.81 billion.

“The estimated financial loss due to NRW is more than one-third of revenue collected by the water services industry annually. If a full-cost recovery is implemented in the water services sector, the loss in revenue due to NRW is also set to increase in tandem with a hike in water tariff,” said Awer president Piarapakaran S.

He said this wastage will only burden businesses and the people more as operational expenditure from producing treated water is passed on through the tariff.

Selangor inclusive of Kuala Lumpur and Putrajaya recorded the highest NRW loss in volume of 1,575 million litres per day (MLD) last year, up from 1,429 MLD in 2012.

National NRW levels increased from 36.4% in 2012 to 36.6% in 2013, the association added.

Piarapakaran said the Cabinet had instructed the National Water Services Commission (Span) to form a National NRW Reduction Taskforce to include suggestions from Awer in carrying out the National NRW Reduction Action Plan.

However, the discussions never took off on the terms of agreement in order to “review the status of NRW periodically and recommend the necessary corrective action to reduce NRW further”, according to Piarapakaran.

“Awer’s modelling of estimated loss of revenue due to NRW is a very conservative figure. The actual economic value is definitely higher. In the wake of this year’s water crisis and rise in cost of construction as well as water services infrastructures, it is a smart move to reduce NRW,” he said.

Piarapakaran stressed that the Cabinet should introduce a key performance index (KPI) for the water services industry and Span.

“Similarly, the NRW reduction must be made an important KPI for the water services industry in a transparent tariff-setting process for water tariff review. States that fail to reduce NRW targets must be penalised by rejecting or reducing the quantum of tariff review,” he added.

This article first appeared in The Edge Financial Daily, on October 8, 2014.