Implementation of Prepayment System in Mozambique E D M PREPAYMENT SYSTEM

Implementation of Prepayment System in Mozambique

E D M

PREPAYMENT SYSTEM


• MOZAMBIQUE – GEOGRAPHIC LOCATIONMOZAMBIQUE – GEOGRAPHIC LOCATION

• MISSIONMISSION

• BACKGROUND OF COMMERCIALIZATIONBACKGROUND OF COMMERCIALIZATION

• REORGANIZATION OF THE COMMERCIAL CYCLEREORGANIZATION OF THE COMMERCIAL CYCLE

• PROCESS CONSTRAINTS PROCESS CONSTRAINTS

• INTRODUCTION OF PREPAYMENT SYSTEM - MOTIVATIONSINTRODUCTION OF PREPAYMENT SYSTEM - MOTIVATIONS

• IMPLEMENTATIONIMPLEMENTATION

• FINANCINGFINANCING

• PREPAYMENT PROJECT REQUIREMENTPREPAYMENT PROJECT REQUIREMENT

• IMPLEMENTATION METHODOLOGYIMPLEMENTATION METHODOLOGY

• SYSTEMS COMPARISONSYSTEMS COMPARISON

• RESULTSRESULTS

• CHALLENGESCHALLENGES

• CONTRAINTSCONTRAINTS

• STRUCTURE AND NUMBER OF CUSTOMERSSTRUCTURE AND NUMBER OF CUSTOMERS


Republic of Congo

Congo Gabon

Luanda

Windhoek

Lusaka

Harare

Lilongwe

Nairobi

Dar es Salaam

Gaborone Pretoria

Cape Town

Maputo Mbabane

Kinshasa Brazaville

Angola

Tanzania

Kenya

Mozambique

South Africa

Lesotho

Namibia

Zambia

Botswana Zimbabwe

Malawi

Rwanda

Burundi

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Area: Area: 799 380 km799 380 km22 Population: Population: 18 Millions18 Millions

Capital: Capital: MaputoMaputo

MOZAMBIQUEMOZAMBIQUE


MISSION:MISSION:

The operation of the public The operation of the public service of Generation, service of Generation, TransmissionTransmission, , DistributionDistribution and and CommercializationCommercialization of of electricity in electricity in Mozambique, in defence of the Mozambique, in defence of the interests and to the benefit of the interests and to the benefit of the consumer.consumer.

VISION:VISION:With Energy we build the FutureWith Energy we build the Future

MISSION:MISSION:

The operation of the public The operation of the public service of Generation, service of Generation, TransmissionTransmission, , DistributionDistribution and and CommercializationCommercialization of of electricity in electricity in Mozambique, in defence of the Mozambique, in defence of the interests and to the benefit of the interests and to the benefit of the consumer.consumer.

VISION:VISION:With Energy we build the FutureWith Energy we build the Future


Structure and Total Number of EDM Customers

Southern Central NorthernTotal per

Region Region Region Tariff

Low Voltage 201,537 78,431 56,066 336,034

Low Voltage High Consumers 800 414 169 1,383

Medium Voltage 867 519 149 1,535

High Voltage 2 - - 2

Total per Region 203,206 79,364 56,384 338,954


Background of Commercialization – Before 1995

• High Total Distribution Losses;

• Bad debt losses;

• Manual billing;

• Billing/collection system;

• No Commercial Procedures Manual;

• Low productivity;

• Low quality of service;

• Huge customers complains;

• high administrative costs.


High Level of Losses - Comments

• Frauds;

• Bad collection ratio;

• Technical losses due to the distribution grid quality;

• Until 2003, some customers without meters;

• Obsolete meters;

• Manual Billing.


Background of Commercialization – After 1995

• More concern about commercial activities;• Creation of the Commercial Department as a Central

institution;• Implementation of the Loss reduction Projects:

-Restructuring of the Commercial activities;

-Prepayment Projects.• Implementation of Marketing activities;• More readings and billing quality;• More concern about inspections and premises

disconnections.


Reorganization of the Commercial Cycle (Post Paid System)

• Readings;

• Billing;

• Invoices Distribution;

• Collection;

• Inspections;

• Disconnections;

• Reconnections.


Process Constraints

• Quality of readings;

• Quality of billing / number of complained Bills;

• Hard to locate customers premises;

• Hard to achieve a good collection Ratio;

• Debt recover difficulties;

• High management cost;

• Non effective for demand side management.


INTRODUCTION OF PREPAYMENT SYSTEM - Motivations

• High Total Distribution Losses (about 43% in 1995);

• Bad debt (from domestic and public institutions);

• Bad readings

• Low quality of service;

• High running costs associated to the customers

management;

• Low income Customers.


Implementation

• Pilot Project in 1995, for 500 customers in Matola city;

• A similar project was carried out in Maputo city, for

5.000 customers, in 1996;

• The huge number of meters have been installed since

2002, in extent of the B.O.T projects;

• Other projects;


The Company adopted the following financing schemes:• Turn key Projects; • Projects financed by own funds;• Projects financed by commercial credits and others (grid

expansion credits).

Financing

Implementation Criteria

• Difficult access installations;

• Low purchasing power customers;

• Seasonal customers.


Requirements of a Prepayment Project

IT:

• Sales and management system (Software);

• System Master Station (SMS Hardware);

• Posts of sale;

• GIS/GPS System;


• Aerial photograph;

• Prepayment meters;

• Ready Boards;

• Communications;

• Private vending posts;

• Training;

• Customers information and advertisement;

• Revision of the commercial procedures;

• Management.

Equipment and Services


• Geographical definition of the implementation area;

• Establishment of the Post of Sales sites;

• Area Mapping;

• Staff training;

• Installation of the hardware and the vending system;

• Installation of the hardware and GIS/GP;

• Customers information and advertisement;

• Meters installation;

• Storage of the meter geographic information.

Implementation Methodology


POSTPAID PREPAID

Readings and bills distributionNo readings and no bills distribution

Every month billing No billing

Necessity of disconnections and reconnections when bills not paid

No disconnections and no reconnections

Inspections to customers installations are required.

Inspections to customers installations are required.

Difficulties to locate installations (Suburbs).

Easy to locate installations through GIS/GPS system.

High management cost Low management cost

SYSTEMS COMPARISON


POSTPAID PREPAID

Penalties for customers who pay their bills after the expire date.

No penalties.

Credits for customers (Between the consumption and payment)

No credit for customers.

Debt recover difficultDebt recover through the system

Difficulties to achieve a good Collection Ratio

Improvement of the Collection Ratio

Huge administrative losses.Reduction of the administrative losses

COLLECTION AND SALES COMPARISON


POSTPAID PREPAID

Non effective for demand side management

Stimulate the demand side management

More complains from customers

More transparency and reduction of complains; better quality of the service

CUSTOMER QUALITY SERVICE COMPARISON


0

5

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1 5

2 0

2 5

3 0

3 5

4 0

4 5

Lo

sses

(%)

1 9 9 5 1 9 9 6 1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5

Y e a r

T o t a l D is t r ib u t io n L o s s e s ( 1 9 9 5 - 2 0 0 5 )

Results

• The total distribution losses decreased from 43%, in 1995 to 18%, in 2005.


Number of Customers Dez/2005 Post payment Prepayment Total

System System

Maputo City 53,298 56,975 110,273

Maputo Province 37,796 16,884 54,680

Macia 4,367 1,922 6,289

Xai-Xai 11,568 2,868 14,436

Chókwé 4,705 2,472 7,177

Inhambane 10,351 - 10,351

Beira 6,037 22,783 28,820

Chimoio 15,925 - 15,925

Tete 10,517 2,610 13,127

Quelimane 12,257 - 12,257

Mocuba 7,199 2,036 9,235

Nampula 13,356 11,407 24,763

Nacala 5,796 6,831 12,627

Lichinga 8,285 - 8,285

Pemba 4,734 3,210 7,944

Angoche 2,765 - 2,765

Total EDM 208,956 129,998 338,954

62% 38%


Results

• The number of customers increased to 130.000, in

2005;

• The quality of service improved;

•The company cash in flow increased;

• The collection Ration improved from 75%, in 1995, to

94%, in 2005;

• Ease to recover debt through the system.


Challenges

• To cover all domestic customers with prepayment

system (this is also EDM Police);

• installation of spit meters;

• To reduce the fraud customers premises vulnerability;

• Implementation of AMR in Beira City to monitor the

losses;

• AMR to cover Maputo and Matola, for the same purpose.


Constraints

• Huge initial investment (management system and meters);

• Meters´ life expectation short;

•High replacement meters cost.


WITH ENERGY WE BUILD FUTURE


THANK YOU FOR THE ATTENTION!

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Implementation of Prepayment System in Mozambique E D M PREPAYMENT SYSTEM