The National Water and Sewerage Corporation (NWSC) has reported sh54.9 billion in financial losses arising from Non-Revenue Water (NRW) during the financial year 2023/2024, representing 33.9% of its total water production.
The figures cast a long shadow over the utility’s financial performance and service delivery capabilities, reigniting concerns around operational inefficiencies, infrastructure limitations, and accountability in the public utility sector.
The losses were revealed last week when NWSC officials, led by Managing Director Dr. Silver Mugisha, appeared before the Parliament’s Committee on Environment and Natural Resources to defend the corporation’s budget estimates for FY 2025/2026.
The committee session was chaired by Soroti City East Member of Parliament Herbert Ariko and attended by the State Minister for Environment, Beatrice Atim Anywar, alongside other water and environment ministry entities.
According to the corporation, Non-Revenue Water refers to water that is produced, treated, and distributed into the pipeline system but is not billed for various reasons. These include leakages, burst pipes, unauthorized consumption through illegal connections, meter tampering or bypassing, and technical inaccuracies in billing caused by faulty or outdated meters.
In financial terms, NRW is the silent leak in the corporation’s revenue stream.
With over one-third of its water output unaccounted for, NWSC’s revenue collection efficiency remains deeply compromised. At a loss value of sh54.9 billion, the amount exceeds the annual budgets of some government departments and is equivalent to a substantial investment that could otherwise go into network expansion, improved service delivery, or debt servicing.
“Water losses at this scale impact not only our internal financial stability but also undermine our credibility with lenders, development partners, and the very customers we serve,” Dr. Mugisha told the committee.
Much of NWSC’s pipeline network, especially in Kampala and older urban centers, dates back decades and is prone to frequent leakages and bursts. Ongoing roadworks and civil construction have repeatedly damaged pipelines, leading to unnoticed and prolonged leakages.
Many of the installed meters are outdated, under-register consumption, or develop systematic reading errors, particularly during low-flow conditions at night. Illegal water connections, meter bypassing, and collusion between customers and rogue NWSC staff continue to be reported, especially in high-density informal settlements.
In response, NWSC has outlined several mitigation strategies. These include phased upgrades of the distribution system, replacement of defective meters with newer models, including smart ones, and partnerships with Uganda Police and local councils to identify and penalize illegal connections.
The corporation is also investing in Information and Communication Technology (ICT) solutions such as smart meter development, remote monitoring systems, and customer usage analytics to improve efficiency and detect anomalies faster.
Research into systematic meter errors is ongoing and will inform future billing policies that account for actual consumption versus estimated flows.
However, the financial cost of these interventions remains significant. According to Dr. Mugisha, the transition to smart meters and improved infrastructure requires billions in capital expenditure, which the corporation cannot cover without government subsidies or concessional borrowing.
One of the more controversial solutions discussed in Parliament was the proposal to roll out prepaid water meters to enhance revenue collection and eliminate billing delays. MP Ariko suggested that NWSC emulate the model used by UMEME (now under UEDCL) for electricity supply.
In response, Dr. Mugisha revealed that while prepaid water meters have been piloted in some urban poor areas of Kampala and government ministries with high consumption, the cost-benefit analysis does not currently support mass deployment.
He noted that the unit acquisition cost of a prepaid water meter for small consumers is approximately Sh2 million. This excludes routine maintenance costs, automation-related troubleshooting, and cybersecurity risks. Compared to UMEME meters, which cost significantly less, water meters have a more complex installation and operational model.
He added that several government ministries using prepaid meters have run into operational challenges after failing to replenish credit in time. In such cases, the Ministry of Finance has often directed NWSC to reconnect them, thereby defeating the very purpose of prepaid technology.
This underlines a broader financial governance issue: endemic under-budgeting in government agencies creates systemic arrears in utility payments, which not only affect NWSC but also energy, waste, and telecom service providers.
The Sh54.9 billion in NRW losses effectively represents opportunity cost—revenue that could have been reinvested into service expansion, debt repayment, or operational upgrades. With NWSC operating in a semi-commercial model, such losses increase its dependency on central government bailouts or external funding, particularly from development partners such as the World Bank and African Development Bank.
Assuming an average tariff of sh3,500 per cubic meter, the unbilled water translates to approximately 15.7 million cubic meters, enough to serve nearly 200,000 households for a month. This raises broader concerns about water access, especially in underserved regions, where network expansion is constrained by funding.
Furthermore, persistent NRW challenges erode investor and public confidence in the corporation’s financial discipline. This could complicate future borrowing or infrastructure financing arrangements, particularly under public-private partnership models.
Committee members recommended a more robust policy intervention from the Ministry of Water and Environment, with support from the Ministry of Finance, to prioritize water sector investments. This includes incentives for prepaid meter manufacturing, network upgrade subsidies, and performance-based financing for water utilities.
Minister Anywar urged tighter collaboration between NWSC and other infrastructure stakeholders, especially the Uganda National Roads Authority (UNRA), to coordinate civil works and avoid unnecessary pipeline damage.
