Kenya’s leading telecommunications service provider, Safaricom is eyeing million dollars in annual revenues from installing smart metering systems for public water companies to help them cut leakages and theft.
The State-controlled utility firms suffer from annual system losses, with an average of 47% of the water put into their distribution network not billed due to leakages, metering inaccuracies and theft. Safaricom is offering technology to track water use, leakages, theft and remote reading of meters in exchange for a share of the recovered revenues.
“We do have the technology that we believe can help utility companies of which Kenya Power is one of them and also water companies to be able to reduce the level of losses by creating transparency in distribution,” said Safaricom CEO Peter Ndegwa.
This is part of the telecoms operator’s plan to diversify its incomes from voice, short message services, cash transfers and payments. Safaricom is already talks with Kenya Power to install a US $287M smart metering system for the utility to slash power losses in a deal that could potentially earn the telco US $480M over eight years.
Under a draft agreement, Safaricom is set to earn 75% of the additional sales or US $480M, with Kenya Power taking the remaining US $162M. It has the potential to earn close to US $79M annually if it deploys the smart meters in the water sector and adopt the 75:25 revenue share model. The Water Services Regulatory Board (Wasreb) says utilities lost water worth US $105M in the year to last June due to leakages and theft.
READ:Turning Smart Meters into Water Leak Detectors
Diversification outside core telecoms market
Safaricom will build, operate and then transfer the smart grids to the water firms after an agreed period. It will make the initial investment required. The telecoms operator is a licensed applications provider and it wants to use its extensive fast Internet infrastructure to support the proposed smart grids.
Water companies have been struggling with mounting losses from leakages, theft and ageing network, which are draining almost half of water generated. Wasreb says that 21 counties lost more than 50% of the water they produced, contributing to an increase of US $0.054per unit cost of water billed on average.
This has seen companies pass the cost to consumers, with prices having risen to US $0.84 for every cubic metre consumed last year, up from US $0.79 in 2019. The regulator blames corruption and illegal extraction for the losses and has called for strict enforcement of rules to reduce the leakages to the maximum acceptable levels of 20%.
The volume of water lost is more than twice the allowed limit of 20% and is equivalent to what Nairobi residents and companies use in six and half months, leading to reduced investments, creating a large gap between water supply and demand, leading to chronic water shortages.
Currently over 30% of Kenya’s population do not have access to basic water services, 35 million lack access to a basic sanitation service, and four million have no sanitation facilities at all and practise open defaecation. According to Wasreb report, water service providers served 14.7 million people against a population of 25.7 million people under their service area, across the 47 counties.
Safaricom reckons it can help the water companies collect a significant share of the lost revenues through smart metering for a fee. The firm is seeking to step up its diversification outside its core telecoms market.
