Estimating Opportunity Cost as A Tool to Evaluate Water Loss Management of Non-Revenue Water at PDAM Tirta Khatulistiwa

Abstract

Water loss or Non-Revenue Water (NRW) is a national problem PDAMs, including PDAM Tirta Khatulistiwa. In fact, with a high level of water loss, there is a significant potential loss of income. This study aims to implement opportunity cost calculation as a managerial tool for PDAM Tirta Khatulistiwa in making investment decisions to improve water loss management. This research was conducted by collecting information from financial, managerial, and local government equity participation reports. Then the data reduction is carried out and calculated based on the gross margin, net profit margin, and the opportunity cost. This study indicates that the capital investment provided by the Pontianak City's government has increased, followed by an increase in the number of consumers. However, it was not followed by an increase in the company's profit. This is due to the opportunity cost or lost income during the business process amounting to Rp31,218,673,384.64 in 2019 with a potential income to Rp222,663,258,365.00 if it manages to suppress distribution leakage to the level of 20%. This potential income is worthy of consideration for PDAM Tirta Khatulistiwa to start water loss management in the NRW reduction program.