More than a third of all water produced for daily consumption in the North is lost through leaky pipes, according to a report on the Water Service.
An average of 253 million of the 692 million litres produced daily is lost due to leaks in the network of pipes, according to the report from the Auditor General for Northern Ireland, Mr John Dowdall.
He said the Water Service had failed to keep pace with the privatised water companies in England and Wales in reducing leaks. Treating water for public consumption and then losing it was a waste of valuable resources.
However, the North's Region al Development Minister, Mr Gregory Campbell, said the comparison with privatised companies was unfair.
The report, published yesterday, supported "what I have been saying, that the Water Service has been severely under-funded over more than 30 years".
The report accepted that it was not practical to eliminate leakage completely, but recommended that the Water Service aim for an "economic level of leakage".
That meant reducing leakage to the point where it would be more costly to make further leakage reductions than to produce water from a new source.
The Water Service plans to reduce leakage to 177 million litres a day by 2003, a reduction of between 3 and 7 per cent a year. But the report said this was well short of reductions achieved in England and Wales.
"In the opinion of the audit office, this is too conservative, and target reductions of between 12.5 and 15 per cent a year are likely to be economically justified," it said.
Mr Campbell said: "Leakage management and water efficiency are important, but the first priority must be the public health issues of improving and protecting the quality of drinking water." A total of £16 million had been invested in leakage reduction in the last three years, and another £8.4 million would be spent over the next two years, he said.
He was not considering the privatisation of water services in the North, nor the introduction of meters for users.
Privatisation had not proved to be effective, and meters were too costly to install, he said.