1. TSX: PURglobal innovative sustainable infrastructure management solutions NRW – What can we learn from South East Asia? Hugh Chapman - Regional Director, Asia Pacific TSX: PURglobal innovative sustainable infrastructure management solutions

2. www.puretechltd.com Non-revenue water (NRW) is a global problem and one which many Pacific water utilities are familiar with. It is not uncommon for water utilities in the Pacific region to lose over 50% of their treated water due to ageing infrastructure and leakage. This lost water is also lost revenue. Water utilities are investing their limited financial resources into capturing, treating and distributing water for half of it to be lost before it reaches the end consumer. What other business can sustain losing 50% of their product before they sell it? Why do water utilities not address this problem to provide water for future generations and assist in the strengthening of their balance sheets. NRW issues have plagued South East Asia for decades and most are now actively involved in programs to reduce NRW. This paper discusses case studies where water utilities have made significant inroads into their massive water loss problems and provides a blueprint for utilities in the Pacific to learn from. In particular, we will focus on Malaysia and the Philippines and discuss the proactive strategies and technologies both countries are utilising to secure water supplies for future generations. Abstract 2

3. www.puretechltd.com Non-revenue water (NRW) is a global problem Many of the issues facing Pacific Water Utilities have been addressed in South East Asia Key learnings are available regarding methodologies, techniques and procedures Let’s apply key learnings Introduction 3

4. www.puretechltd.com NRW is a Global Problem 4

5. www.puretechltd.com World Bank notes that a cutting NRW in half in developing countries would: –Provide 11 billion m 3 of treated water pear year –Provide an additional 130 million people with water –Provide water utilities with US $4 billion in self-generated cash flow –Provide fairness amount users by stopping illegal connections –Improved customer service – more efficient utilities NRW is a Global Problem 5

6. www.puretechltd.com The extent of the NRW problem is not well understood and water utilities are not aware that they are sitting on a “pot of gold” Basic information needs to be known (e.g.: total system input), the organisation needs to be set up correctly, and reduction of NRW needs to be a focus of all water utility staff For change to occur, information needs to be made available to all stakeholders Underestimating the NRW Problem – Change Is Needed 6

7. www.puretechltd.com Government –No ribbon cutting and unpopular decisions CEO’s –Time, money and dedication required (easier ways to bridge the gap) Engineers –Fixing pipes isn’t “fun” and prefer to design and build things Technicians and Field Staff –Night work, monotonous tasks Lack of Management Focus 7

8. www.puretechltd.com First step to developing an NRW strategy is to ask some hard questions: –How much water is being lost? –Where is it being lost? –Why has been it being lost? –What can be done to improve performance? –Who will manage the efforts and ensure the program continues? Creating an NRW Strategy 8

9. www.puretechltd.com Creating an NRW Strategy 9

10. www.puretechltd.com CASE STUDY Malaysia 10

11. www.puretechltd.com Land Area:8250 sq km Population:6.4 million State of Selangor and Federal Territory of Kuala Lumpur 11

12. www.puretechltd.com Largest water utility in Malaysia 26,000km of pipes (incl. 6,500km of >300mm) Water supply is 100% privatized Purchases 100% of water (cost USD $0.30/m 3 ) 1.95 million customers (using 3,200 MLD) High demand growth 3.5% Background 12

13. www.puretechltd.com Currently have 2% reserve margin with all WTP’s at full capacity Some areas experience low pressure/intermittent supply Expensive new WTP under construction NRW reduction is the best (and cheapest) alternative water source Current Supply Situation 13

14. www.puretechltd.com In 2005 NRW was 43% –Reduced to 32% in 2011 –But slowly increased to 35% by 2014 NRW efforts were focused inside DMAs –But NRW outside DMAs was increasing at a faster rate Developed a 5 Year Master Plan –Reduce NRW to 26% by 2018 (performance based) –Holistic program from WTP to customer Current Supply Situation 14

15. www.puretechltd.com Devised a strategy for the NRW Master Plan Table above indicates that NRW outside the DMAs is 2.3 times higher than NRW inside the DMAs The NRW Master Plan 15 NoDescriptionTotal DMA Pipe Length (km) % pipe length Total customers % accounts coverage SIV (m3/d) NRW (m3/d) NRW (%) 1Inside DMZ1,18214,905.657.3%1,262,61665.0%1,778,504484,33427.2% 2Outside DMZ 11,094.442.7%680,29335.0%2,882,9501,124,53139.0% 3SYABAS overall 26,000100.0%1,942,909100.0%4,661,4531,608,86634.5%

16. www.puretechltd.com An aggressive plan to reduce NRW in four years! The NRW Master Plan 16

17. www.puretechltd.com Commercial loss (apparent) reduction activities completed by water utility Physical loss (real) reduction activities complete by specialist NRW Consultant Phase 1 (Implementation) –Two year implementation (Sept 2014 to Sept 2016) –Target Net Physical Loss Reduction of 154 MLD –Monthly NRW measurements from overall utility –NRR 6.8 MLD/month in Y1; 7.0 MLD/month in Y2 Performance based (30% of contract value) Summary of NRW Master Plan Implementation 17

18. www.puretechltd.com 1.Established 120 DMAs 2.Established 160 WBAs (now 100% coverage) 3.Repaired 1,300 DMAs and WBAs 4.Installed 65 advanced pressure mgmt. systems 5.Installed 900 storage tank sensors to prevent o/f 6.Repaired 135,000 leaks 7.Replaced 15,000 service pipes Physical Loss Reduction – Scope of Works 18

19. www.puretechltd.com 8.Repaired 3000 large pipes (>300 mm) 9.SmartBall Leak Detection on 2,400 km of pipe 10.Sahara Leak Detection on 240 km of pipe 11.Implemented and updated GIS 12.Updated all NRW software 13.Provisional sum for pipe replacement Physical Loss Reduction – Scope of Works 19

20. www.puretechltd.com Water Balance Area (WBA) Concept 20

21. www.puretechltd.com A performance based contract for the reduction of NRW NRW project over entire water network NRW = SIV for Month – Monthly Billings Measurement on three month rolling average Baseline determine in three months before project kick off Deductions for Commercial Loss Reduction and other works focused on NRW that are not part of the exact contract Key Terms of the Contract 21

22. www.puretechltd.com Previous NRW studies indicated that 420 MLD (35%) of Total Physical Losses are ‘upstream’ of DMAs Therefore, a greater focus on previously neglected large diameter pipes –Pilot large diameter leak detection project found 135 leaks in 217 km of large diameter pipe –Saved 6.1 MLD –Justified significant expansion of the large diameter program Water utility has 6,000 km of large diameter pipe –SmartBall has inspected 2,400 km –Sahara has inspected 240 km A Focus on Large Diameter Leak Detection 22

23. www.puretechltd.com Find leaks down to 0.1 l/min (repair or replace before a large failure) Material type doesn’t impact capabilities Accuracy is +/- 1 meter Limitations: –>300mm pipe –>0.25 m/sec flow velocity Find 1 leak every 2km Reducing NRW by 29 m 3 /day/km Based on results, if they inspect all 6,000 km of large diameter pipe they will save a further 143 MLD The Results of Large Diameter Focus 23

24. www.puretechltd.com You are not alone –Many utilities have tried strategies for decades and you can benefit from their knowledge (and mistakes) Get serious about NRW –Results are only achieved through comprehensive commitment from all stakeholders (government to field technicians) Utilise the private sector –Outsourcing isn’t new - but performance based NRW is. World Bank has financed PBCs in Brazil, Malaysia, Vietnam and Thailand…. Why not the Pacific? Should the PWWA act as an advocate to get World Bank/ADB funding? NRW is your cheapest new water source –Water is critical to life and 50% is being lost in the Pacific Conclusions 24