REVENUE PROTECTION MISSION POSSIBLE

Transcription

1 REVENUE PROTECTION MISSION POSSIBLE The Journey So Far 18 February, 2016 PHED Loss Reduction Theft Prevention Revenue Protection 1

2 Introduction Any revenue protection project should be a self funding operation and regular assessment of cost vs. results should point towards optimal investment levels.

3 Nigeria s Revenue Loss Challenge The biggest threat to Revenue Generation and Service Delivery in the Nigerian Electricity Supply Industry (NESI) is LOSSES. N24bn Expected Monthly Revenue (Discos) N12bn 45% ATC&C Loss (Industry Average) 28% Actual Monthly Collections (Discos) Commercial Losses (Industry Average) These losses undermine the performance of utilities, discourage investments and stunts economic growth. 3 PHED Loss Reduction Theft Prevention Revenue Protection

4 PHED RPD Results Key Statistics (9 months) 11,458 Customers Visited 2,846 Violations & Disconnections 852 MD Meter Installations Recertified 300 Whole Current Meters Installed Electricity Offences: Tamper (63%), Illegal Consumption (37%) 40 Arrests of Chronic Electricity Theft Offenders N73.1m in Lost Revenues Recovered N19.45m in Penalties Recovered N30m Increase in Monthly MD Billing 4 Armese Loss Reduction Theft Prevention Revenue Protection

5 Losses Impact Dwindling Company & shareholder value Restrict network investments Dwindling company & shareholder value High Electricity tariffs Restricts network investments Curtails growth in access to electricity High electricity tariffs Impacts Curtails operational growth in efficiently access to electricity and service quality Impacts operational efficiency and service quality Inability to attract and retain top talent Inability to attract and retain top talent Lack of control increases the culture of theft and fraud Lack of control increases the culture of theft & fraud 5 PHED Loss Reduction Theft Prevention Revenue Protection

6 Pathway to Success Revenue Protection & Loss Reduction Training & Capacity Building Data Analysis Field Audits Remedial Actions Revenue Recovery Field Solutions Technology Solutions Theft Detection Technology DTR Metering Din Rail Metering Meter Enclosures Condition Monitoring Engage and Educate (Behaviour Change Communications) 6 PHED Loss Reduction Theft Prevention Revenue Protection

7 Our Approach Strategic Objective A Arrest Upward Losses Trend B Reduce Losses to an Acceptable Level C Ensure Sustainability of Losses at an Acceptable Level Focus Areas 1 2 Audit Data & Meter Installations Execute Remedial & Recovery Actions 5 3 Implement Best Fit Technology Solutions Develop And Deploy Sustainability Framework Communicate and Educate Behaviour Change Communications 4 7 PHED Loss Reduction Theft Prevention Revenue Protection

8 Process Optimization & Quick Win Strategies Commercial Efficiency Losses Reduction Collections Ramp Up Data Analytics Customer Segments Programs Customer Profiling Meter Accuracy Industrial Customers Key Account Management Disconnection Efficiency Meter Reading Billing & Bill Distribution Payments Theft Monitoring Customer Service Commercial Customers Residential Customers Rural Customers Government Accounts 100% MD Metering 100% Billing on AMR Reading Collection from Government DTR Metering Prepayment metering Debt Recovery Strategies Demand Side Management 8 PHED Loss Reduction Theft Prevention Revenue Protection

9 RPD in Pictures 9 PHED Loss Reduction Theft Prevention Revenue Protection

10 Losses Impact Dwindling Company & shareholder value Restrict network investments and maintenance Dwindling company & shareholder value Resistance against Electricity tariffs Restricts network investments Impacts operational efficiently and service quality High electricity tariffs Inability Curtails to attract growth and in access retain to electricity top talent Impacts operational efficiency and service quality Lack of control increases the culture of theft and fraud Inability to attract and retain top talent Hijacking of Revenue Protection teams Lack of control increases the culture of theft & fraud 10 PHED Loss Reduction Theft Prevention Revenue Protection

11 Challenges 1) Finding the correct mix of personnel to be utilized in RP 2) Data management issues and mining of data. 3) Deployment of suitable technology to support field operations early warning system 4) Establish logistical support in the form of response units to address alarms and other risk issues as reported 5) Effectively analysing Consumer consumption data to identify irregularities and sending RP staff to investigate 6) Placing processes in place to ensure closing the loop with regard to processes that can cause revenue losses

12 Revenue Recovery Opportunities Identify Low hanging fruit (e.g. MD) Establish Revenue Loss Forum (RLF) Focus on recovery rather than discovery Drive processes all the way (closing the loop) Declare findings / make recommendations Sensitizing other departments / mentoring seniors Constantly update Management on issues Urgency to address prepaid and faulty meter issues

13 LPU (MD) recertification project Analysis of 716 out of 952 MD meters recertified by various vendors and RPD A sharp increase in revenue shown. The following charts illustrate the trends of Consumption, Amount billed and Cash Flows on the recertified and rectified MD Meters. 13

14 LPU (MD) Inactive metering project A total of 1202 Accounts have been checked. Outstanding customers have Duplicated accounts. 161 have are active in the field (13 % of No. Verified so far) Assumption: 356 ( ) accounts are active in the field Debt Recovered: N14,289, as at date, in which debt collected from the IBCs sum up to N 7,884,

15 Business Case PHED had projected losses of 98,987,849 KWH between January 2014 to September 2015 on MD customers alone. Since these losses continue Month after Month, it is important for RPD to identify their specific causes and locations, to reduce them. 15

16 Millions (=N=) Recertified MD results PAYMENT TREND ON RECERTIFIED & CORRECTED MD CUSTOMERS Oct-14 Nov-14 Dec-14 3Monsth Ave B4 Recert. Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15

17 Millions (KWH) Recertified MD results 11 Consumption Trend of Recertified & Corrected MD Customers Oct-14 Nov-14 Dec-14 3Months Prior Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 17

18 Amount Billed (=N=) Millions Recertified MD results BILLING (=N=) TREND OF RECERTIFIED &CORRECTED MD CUSTOMERS Oct-14 Nov-14 Dec -14 3Months AveB4 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 18

19 MILLIONS (=N=) Recertified MD results PAYMENT TREND ON RECERTIFIED & CORRECTED MD CUSTOMERS 50 Oct-14 Nov-14 Dec-14 3Monsth Ave B4 Recert. Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 19

20 After Recertification Increase % Increase Average Monthly Before Recertification KWH 7,452,422 9,374,160 1,921,738 26% Bills (=N=) 218,148, ,268, ,120,438 58% Payment 123,822, ,697,422 79,874,955 65% NB: Analysis done only on 716 Corrected Customers 20

21 Inactive MD audit results

22 Inactive MD audit results

23 Revenue Protection results

24 BUDGET FOR OUTSTANDING RECERTIFICATION WORKS S/N VENDORS NO. OF RECERTIFICATIONS TO BE DONE ESTIMATED BUDGET FOR OUTSTANDING RECERTIFICATIONS 1 ORTECH 96 2,880, MBH 164 4,920, MTS 76 2,280, RPD , TOTAL ,710, BUDGET FOR CORRECTIVE RECERTIFICATON ISSUES DESCRIPTION OF WORK QUANTITY RATE TOTAL 1 METERS TO BE REPLACEMENTS ,400, CT s TO BE REPLACED , INSTALLATIONS TO BE REWIRED , TOTAL 577 2,291,

25 Projected Revenue Gain From In-Active MD Verification & Reactivation No IBC Revenue Gain / Month Annual Projections (=N=) 1 Garden City Central Total 39,271, ,262,147 2 Garden City East Total 73,265, ,190,881 3 Garden City Industrial Total 28,640, ,685,445 4 Garden City Main Total 20,927, ,131,649 5 Garden City New Total 27,097, ,166,526 6 Glory City Main Total 28,478, ,747,726 7 Paradise City Main Total 25,862, ,353,836 8 Paradise City North Total 6,802,194 81,626,331 9 Promise City Main Total 23,898, ,779, Promise City South Total 9,750, ,008,882 Grand Toal 283,996,111 3,407,953,

26 Projected Revenue Gain From In-Active MD Verification & Reactivation No IBC Revenue Gain / Month Annual Projections (=N=) 1 Garden City Central Total 39,271, ,262,147 2 Garden City East Total 73,265, ,190,881 3 Garden City Industrial Total 28,640, ,685,445 4 Garden City Main Total 20,927, ,131,649 5 Garden City New Total 27,097, ,166,526 6 Glory City Main Total 28,478, ,747,726 7 Paradise City Main Total 25,862, ,353,836 8 Paradise City North Total 6,802,194 81,626,331 9 Promise City Main Total 23,898, ,779, Promise City South Total 9,750, ,008,882 Grand Toal 283,996,111 3,407,953,

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28 Background A Comprehensive Revenue Loss Management program is designed to: 1. Minimise Losses 2. Maximize revenues 3. Optimize the recovery of lost revenues 28 PHED Loss Reduction Theft Prevention Revenue Protection

29 Key Performance Areas 1. Ensuring a workable and cost effective Revenue Loss management model that could be used by Utilities to reduce losses effectively 2. Identify and Investigate all illegal, fraudulent, negligent or lack of actions from staff that could lead to the loss of revenue 3. Assisting the Legal Department with regard to criminal issues, attacks on personnel and the analysing of data 4. Update management on an ongoing basis regarding all findings during field operations and investigations and providing recommendations on how to deal with such issues 5. Identifying new technology that could be used to identify losses and enhance revenue.

30 Our Challenges 1) Placing processes and standards in place to ensure closing the loop with regard to processes that can cause revenue losses 2) Assisting with data management issues and mining of data for Management regarding losses and other key issues. 3) Assist in the deployment of suitable technology to support field operations which would act as an early warning system of illegal acts been performed. 4) Establish logistical support in the form of response units to address alarms and other risk issues as reported by this system 5) Effectively analysing Consumer consumption data to identify irregularities and sending RPD staff out to investigate 6) Finding the correct mix of personnel to be utilized to effectively reduce losses in the shortest period of time 30 PHED Loss Reduction Theft Prevention Revenue Protection

31 Focus areas - Developments 1. Develop a Revenue Protection Project plan to ensure the unit is effective 2. Identify and train RPD staff in various disciplines to assist in all issues that is leading to revenue losses in the Distributor 3. Establish and Coordinate a Revenue Loss Forum (RLF) to ensure a combined effort by all Departments to minimize revenue losses effectively 4. Initiate and assist in developing new Policies and Procedures to address challenges in the metering, credit control and data management systems which add to revenue losses.

32 Piloting Energy Theft Detection Solution Armese Alpha is a unique pole top mounted energy audit and control device with the ability to detect and stop electricity theft. The key element for success in efficient power distribution is to achieve round the clock monitoring of the Low Tension network elements. 32 PHED Loss Reduction Theft Prevention Revenue Protection

33 Solution Offerings Employee Field Alerts Remote Pole Top Audit Metering No Meter Bypass Conducts real time energy audit of the home meter and checks if the meter is bypassed or not Checks the overhead line span between poles for any imbalance Zero Overhead Theft CWG Alpha Remote Disconnect/ Reconnect Remote connect/disconnect of power whenever a tamper is detected and isolates location for immediate response by revenue protection personnel. Real Time Network Data Integrated Metering, Billing & Analytics Utilize its remote control systems to assist in recovery of late payments and arrears as well as systematic load shedding 33 PHED Loss Reduction Theft Prevention Revenue Protection

34 Closing the Loop Technology Vs Man Aligning field operations with data analytics and technology solutions will improve collections performance and operational efficiency for utilities while addressing the loss challenge. 30% Field Operations 50% Data Analytics 85% Technology Solutions 34 PHED Loss Reduction Theft Prevention Revenue Protection

35 Focus areas - Operational 1) Introduce Operational best practices in RPD to ensure losses are detected, addressed and revenue recovered effectively 2) Focus on fast gains first by addressing MD metering issues like faulty meters, AMR communication errors and data errors. 3) Assist to develop a consumer education strategy to address the issue of illegal acts been performed by consumers. 4) Finding solutions for the prepaid metering issues by analyzing field findings and addressing it with the necessary role players 5) Performing a quality control service in new metering projects by checking and reporting any dangerous or bad workmanship issues

36 2016 Revenue Protection Projected Expenses SN DESCRIPTION ( 12 MONTHS) AMOUNT ( ) 1. Salary (Total) 74,674, Vehicles ( Fuel & Diesel) 63,033, Other cost (Stationary, clothing, tools) 7,529, T&S & Training 5,319, Equipment 1,200, Incentive 15% of the Loss income 58,616, Total 210,372,298.00

37 2016 RP generated projection SN INCOME AMOUNT ( ) 1. Meter Auditing non MD 771,648, Meter Auditing MD 761,741, Total 1,533,309, Gains to PHED (Income minus Expenses) 1,322,937,296.00

38 Budget Proposal Target for income should be set at least 3 times the expenditure of the RP unit. Projected Expenditure N 2 Million Proposed Income N 1 Billion If the total is calculated at 10 times (which will include the increase in income as well) the amount that could be reached will be at N 5 Billion.

39 THANK YOU 39 PHED Loss Reduction Theft Prevention Revenue Protection