Prepaid water metering: Modern technology meets ancient Egypt
The Luxor Water and Wastewater Utility, facing major shortfalls in collections and mounting arrears, has turned to prepaid water meters for high consumption customers to overcome obstacles to cost recovery.
The city of Luxor was founded more than 5000 years ago as the capital of pharaonic Upper Egypt. Modern Luxor is a small city of 360,000 people, dominated by agriculture and tourism associated with the abundant temples and tombs.
The Luxor Water and Wastewater Utility serves 35,000 customers and supplies 45,000 m3 of water per day. However, the utility faces chronic revenue shortfalls, and collects only 60% of billed revenue, despite an extensive door-to-door collections programme.
Water utilities throughout Egypt face an uphill battle with collections. Despite low tariffs, many customers are delinquent in their payments and utilities find it difficult to compel payment. Water shutoffs, while permitted, require case-specific political consent at the highest levels.
“Cost recovery and high arrears are the most serious challenges facing utilities in Egypt, and prepaid metering systems will help tremendously in solving these problems,” says Dewey Bryant of Chemonics International. “Only with financial self-sufficiency assured will improvements in facilities, services, and management systems be sustainable into the future.” Chemonics was contracted by the US Agency for International Development (USAID) to assist selected water and wastewater utilities in Egypt. The project, called Secondary Cities Project (SCP) because of its focus on smaller cities, includes both capital construction and institutional development – improvement of management, maintenance, and financial systems. Under SCP, Chemonics has helped Luxor and other cities implement cost accounting, deploy a computerised billing system, improve network and plant maintenance and upgrade staff skills.
Even with these improvements, Luxor has struggled with poor collections, especially among large users and hotels. In early 2001, Chemonics recommended that Luxor Water and Wastewater Utility consider prepaid meters.
Priorities in a prepaid system
Chemonics worked closely with utility managers in Luxor to identify some of the key considerations in selecting a prepaid metering system. These included:
- Reliability. Prepaid meters are a significant expense and the system should be durable and trouble-free.
- Flexibility. Utilities would like to see a system that can accommodate not only the complex Egyptian tariff, but instalment payments for arrears and connections.
- Independent operation. In a city like Luxor, telecommunications are limited and electricity can be unreliable. A system must operate with frequent power interruptions and without reliance on phone lines, let alone the Internet.
- Lifeline provisions. There are serious social considerations with water in Egypt. An attractive feature in a system is provision for lifeline supplies even after cutoff, such as limited quantities during certain hours.
- Arabic language. Few utility staff or customers speak English, so it is important that all interfaces, documentation and training are available in Arabic.
- Tamper resistance. Meter tampering is a significant problem in Egypt, so a meter with inherent security from tampering and bypassing is attractive.
- Support capability in Egypt. Utility managers are concerned at a vendor’s ability to support a complex system from abroad. If there is a problem, they would like to be able to access service quickly and easily.
The Luxor prepaid metering pilot
A vendor with expanding sales in the Middle East, Platinum Electronics Company, offered to provide equipment for a demonstration and the Luxor prepaid metering pilot was born. In August 2001, Platinum installed electronic meters for 50 utility customers on a voluntary basis. These included a range of domestic and commercial customers, as well as several influential high profile businesses such as the famous Winter Palace hotel and McDonalds restaurant. According to deputy chairman Abdel Hakeim Khalil, “this metering system will help improve collections, eliminate arrears, and improve our relationship with large customers.” Khalil has been a champion of prepaid electronic meters, and convinced both city officials and customers to support the pilot.
The Platinum prepaid electronic metering system is based on smart card technology. It includes a meter in a sealed box connected to a home control unit. Smart cards are initialised for a particular meter at the utility headquarters, and cash can be added at any pay point in the city. A transmitter in the control unit reports daily readings for consumption monitoring, as well as alarms for tampering or meter failure.
Luxor utility limited the pilot to a technical evaluation. Meters were installed in line with new or recalibrated mechanical meters, which allowed customers to be billed through the traditional system while the accuracy of the electronic meters was verified. Meanwhile, customers received free credit to expose them to charging meters and cutoffs.
The pilot exposed several challenges to adapting the prepaid electronic metering system to Egypt. National regulations mandate a complex tariff, including not only multiple consumption bands – which the meters were designed to handle – but many fixed monthly charges and transaction fees. With Platinum’s engineers working closely with Chemonics and the utility, a slight upgrade to the control unit hardware and modification of the software permitted use of the complex tariff structure.
Ultimately, the Luxor pilot was judged a success. Luxor has decided to install a prepaid metering system on all hotels and high consumption customers – about 200 connections – and to expand the system from there. The initial investment in the system will be financed by USAID through the SCP project.
Following Luxor’s lead
The success in Luxor led Chemonics to recommend a prepaid metering system for the city of Nuweiba in Egypt. Nuweiba, a small but rapidly growing tourist city in the Sinai peninsula, has only about 1200 customers and has just completed a desalinisation plant and water network. With a system financed by USAID, Nuweiba will be the first city in Egypt to meter all customers with prepaid meters.
The projects in Luxor and Nuweiba are probably only the start of prepaid metering in Egypt – the same conditions that make it a good investment there exist in most other Egyptian utilities, especially outside major cities. Chemonics’ experience with utilities in developing countries has illustrated that the same challenges exist worldwide. We expect prepaid metering to become one of the most important tools for utility managers in developing countries in the coming years.