The Mandalay City Development Committee (MCDC) is facing severe challenges in improving its water service coverage. It is also facing mounting financial losses. In this context, MCDC called for actionable insights on improving its coverage and the potential for tariff hikes to ensure financial sustainability. In this context, Athena Infonomics won an International Growth Centre-funded grant to look at the demand for water service across six townships.
Mandalay's Water Challenges
The biggest challenge in improving water service coverage is the capital cost of laying pipes, which is required to expand the piped-water supply network. Water supply service reaches only a fraction of the population, lacks water and sewage treatment capacity, and faces exorbitant financial losses (> K3700 million in 2016-17). This problem is compounded by the fact that the tariffs are currently low in Mandalay to ensure that low-income population can afford water. According to Athena Infonomics' survey findings, about 38% of the population in Mandalay city is connected to the water supply network (thus 62% are not connected). For the year 2019, it is estimated that non-revenue water represents around 75% of the water currently supplied at the source by MCDC (figure obtained from MCDC Water Revenue Department).
About the Study
Athena Infonomics' study adopted a
Through the study, Athena Infonomics designed a tariff rate and mechanism that addresses the issue of equity and sustainability. A tariff revision must increase revenue for MCDC to reduce its
Finding Solutions: Assess and Reduce Non-Revenue Water
The study found that water lost to breakages, billing errors, and theft represents both environmental costs and economic inefficiency. Reducing non-revenue water can increase cash flow for utilities, which may then expand the supply network without squandering water resources. The assessment and reduction of non-revenue water in Mandalay can
- Measuring the water consumed by unbilled
authorisedusers can help the city understand the opportunity cost such 100% subsidy represents in the budget.
- Monitoring accurate meter readings using benchmarks and
formalisingpayment schedules for users unable to afford their bill can go a long way in streamlining the Water Revenue Department's bi-monthly billing.
- Incentivising meter readers and users to report damaged meters, and technician teams to repair broken meters can also reduce non-revenue water by significantly reducing unmetered piped-water consumption.
- Additionally, gradually switching to reliable automatic meter readers for large users, particularly businesses, and for areas where there is lower substitutability between piped and ground-water could efficiently decrease commercial losses.
The Need to Raise Water Revenue
In parallel to reducing non-water revenue, raising water revenue is critical to
- Metering all businesses and using graduated tariffs for those using large amounts of water can significantly increase water revenue. As Mandalay grows and attracts more businesses it is critical that their use of all water sources be regulated. Unregulated tube-well drilling is likely to lead to groundwater depletion and future water access problems.
- Raising household tariff levels up to 385 kyats ($0.25) per unit at current income levels to generate around MMK 720 million ($473,000) additional water revenue, an increase of 27%.