Post on 14-Dec-2015
Implementation of Prepayment System in Mozambique
E D M
PREPAYMENT SYSTEM
Implementation of Prepayment System in Mozambique
• 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
Implementation of Prepayment System in Mozambique
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
Implementation of Prepayment System in Mozambique
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
Implementation of Prepayment System in Mozambique
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
Implementation of Prepayment System in Mozambique
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.
Implementation of Prepayment System in Mozambique
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.
Implementation of Prepayment System in Mozambique
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.
Implementation of Prepayment System in Mozambique
Reorganization of the Commercial Cycle (Post Paid System)
• Readings;
• Billing;
• Invoices Distribution;
• Collection;
• Inspections;
• Disconnections;
• Reconnections.
Implementation of Prepayment System in Mozambique
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.
Implementation of Prepayment System in Mozambique
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 of Prepayment System in Mozambique
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;
Implementation of Prepayment System in Mozambique
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.
Implementation of Prepayment System in Mozambique
Requirements of a Prepayment Project
IT:
• Sales and management system (Software);
• System Master Station (SMS Hardware);
• Posts of sale;
• GIS/GPS System;
Implementation of Prepayment System in Mozambique
• Aerial photograph;
• Prepayment meters;
• Ready Boards;
• Communications;
• Private vending posts;
• Training;
• Customers information and advertisement;
• Revision of the commercial procedures;
• Management.
Equipment and Services
Implementation of Prepayment System in Mozambique
• 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
Implementation of Prepayment System in Mozambique
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
Implementation of Prepayment System in Mozambique
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
Implementation of Prepayment System in Mozambique
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
Implementation of Prepayment System in Mozambique
0
5
1 0
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.
Implementation of Prepayment System in Mozambique
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%
Implementation of Prepayment System in Mozambique
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.
Implementation of Prepayment System in Mozambique
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.
Implementation of Prepayment System in Mozambique
Constraints
• Huge initial investment (management system and meters);
• Meters´ life expectation short;
•High replacement meters cost.
Implementation of Prepayment System in Mozambique
WITH ENERGY WE BUILD FUTURE
Implementation of Prepayment System in Mozambique
THANK YOU FOR THE ATTENTION!
Questions/suggestions?