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ESTRITAMENTE CONFIDENCIAL
EDEL Experience on managing Prepayment System in Luanda
Engª Clara Sanches
EDEL - Member of the Board
Este documento é de circulação restrita à sua audiência
Dr. Jorge Costa AReis
Partner
sua transcrição noLimits
ou reprodução- não
é permitida sem a
prévia autorização escrita da noLimits Business Technology
Luanda, September 10th, 2014
AGENDA
• Prepayment in EDEL
• Case study – Mártires de Kifangondo
• Lessons learned
• Vision towards the future
• Key success factors
• Some Recommendations
ASEA presentation
1
INTRODUCTION
EDEL motivation to implement prepayment take into consideration the benefits for the client
(electricity consumer) and for the sustainability of the company.
EDEL
• Debt recovery and revenue increase
• Fraud reduction (split metering and more fraud
detection methods)
Client
• “Pay what you consume” (no more estimated
consumption)
• Greater control on electricity consumption
• Better supply quality and decrease of grid
overload
• Possibility to pay previous debt on each
prepaid charge
• Decrease of billing complaints
• No more Debt and surtaxes for
disconnections and reconnections
ASEA presentation
2
LUANDA PREPAYMENT OVERVIEW
EDEL began the prepayment installation through a pilot project in 2003 and in 2011 start to roll out
through Luanda.
Today there are over 83.000 clients buying electricity through the prepayment system.
LUANDA DISTRICTS
8
7
93%
26%
9
1%
0%
15%
DISTRICT
11
SAMBA
0
0%
22
VIANA
14.821
23%
33
KILAMBA KIAXI
26.356
21%
44
MAIANGA
11.555
15%
55
CAZENGA
0
0%
5
66
RANGEL
19.239
93%
77
INGOMBOTA
7.930
26%
88
SAMBIZANGA
3.266
7%
99
CACUACO
179
1%
10
10
BENGO
0
0%
21%
3
1
0%
2
23%
10
0%
TOTAL
ASEA presentation
(31/08/2014)
7%
6
4
PREPAYMENT CLIENTS
#
83.346
3
CASE STUDY – MÁRTIRES DE KIFANGONDO
THE PROJECT
LUANDA
Location:
Prepaid meter installation:
Prepaid clients:
Project participants :
Mártires de Kifangondo, Maianga District
began in 2011
3.916 (until 31/08/2014)
Management & Operation
Installation
EDEL
• Management
• Commercial operation
• Technical Support
Supplier
• Contractor
• Installer
• Guaranty support
Consultant
• Management support
• Technical advisory
Inspector
• Work inspection and
approval
SAMPLE OF PREPAID CLIENTS FOR ANALYSIS
Type of Client
CLIENTS SAMPLE
(low voltage)
1.260
BT
(Domestic)
BTE
(Comm. & Ind.)
...that have Debt
1.169 (93%)
276 (24%)
91 (7%)
20 (22%)
Assumptions for selecting sample of clients:
• Clients with a prepaid meter installed until December 2012
• Clients with a 2011 year Billing over 1.000 Kwanzas
ASEA presentation
4
CASE STUDY – FINANTIAL ANALYSIS
Postpaid 2011
Billing and Collection
Analysis by comparing the
same subset of clients
70.310
25.552 (88%)
3.629 (12%)
34.104
2.556 (7%)
54%
decrease
5%
300%
275%
250%
>300%
RATIO
225%
0%
200%
300%
275%
250%
225%
>300%
RATIO
200%
175%
100%
75%
0%
10%
175%
5%
15%
150%
% OF CLIENTS
10%
increase
20%
25%
increase
15%
50%
(6%)
34%
20%
25%
% OF CLIENTS
decrease
ASEA presentation
3.729
125%
% OF CLIENTS WHO
SPENT MORE ON PREPAID
On average, Commerce
and Industry Clients
spent less 9% with
prepayment than with
the previous post paid.
60.322 (94%)
100%
DEBT RECOVERY
- 9%
(4%)
64.052
On average, Domestic
Clients spent more 17%
on prepayment than
with the previous post
paid.
31.548 (93%)
ELECTRICITY
2.750
75%
DEBT
67.559 (96%)
+17%
50%
COLLECTION
RATIO
ELECTRICITY SALES ON
PREPAID / BILLING ON
POST PAID
per BTE CLIENTS (Comm. & Ind.)
29.181
150%
PREPAID SALES
with
per BT CLIENTS (Domestic)
125%
POST PAID
BILLING
PREPAID
2013
2011
Average yearly values per
client in Kwanzas
Prepaid 2013
Sales and Debt recovery
5
LESSONS LEARNED
Based on the case study, it is possible to identify a
series of challenges that were overcome with the
prepayment, contributing to a financial
sustainability of the company.
O
O
O
Debt increase continuously
Estimated consumption unrealistic
(only 30% of the subset clients had a
conventional meter)
Difficulty on fraud detection
ASEA presentation
P
P
P
Debt recovery at a rate of 35% of each prepaid
sale
BT Clients (Domestic) spent more with
prepayment (30% of the subset clients increase more
than 50% on electricity)
Prepaid management system can detect
remotely possible fraud (2% of BT clients and 5%
of BTE Clients spent less than 10% of the average
prepaid sales of the subset)
6
VISION TOWARDS THE FUTURE
Reaching more than 90% of Luanda Clients with prepayment meters
Increase the installation of prepayment meters; Expedite procurement (turnkey tenders).
Expand Prepayment selling channels reaching closer to the client
Implement more prepayment point of sale; Develop new technologies to ease
electricity purchase.
Improve client’s trust on electricity supply
Faster response of complaints; Less outages.
ASEA presentation
7
Este documento éde circulação restrita àsua audiência
A sua transcrição ou reprodução não épermit da sem a
prévia autorização escrita da noLimits Consulting
ESTRITAMENTE CONFIDENCIAL
EDEL Experience on managing Prepayment System in Luanda
Engª Clara Sanches
EDEL - Member of the Board
Este documento é de circulação restrita à sua audiência
Dr. Jorge Costa AReis
Partner
sua transcrição noLimits
ou reprodução- não
é permitida sem a
prévia autorização escrita da noLimits Business Technology
Luanda, Setember 10th, 2014
PILLARS OF SUCCESS
There are several critical success factors in a massive installation process as well as in the ongoing
operational business.
Perform a previous VIABILITY ANALYSIS
Define an INTEGRATED PREPAYMENT SOLUTION
Find the right MODEL FOR WORKS CONTRACTS
Execute PROCESS REENGINEERING
Define the COMERCIAL STRATEGY
Develop a COMMUNICATION PLAN
ASEA presentation
9
VIABILITY ANALYSIS
Prior to any implementation, it is important to understand the impacts of prepayment on the
business so it can be defined and planned a strategy to maximize the benefits.
The Viability study calculated the investments necessary and operational costs for the prepaid
infrastructure and estimated the worth benefits that represent real savings or revenues for the
company.
COSTS
NPV (10 Years)
CAPEX
• Equipment installation (meters, boxes,
etc.)
• Work on the grid for prepayment
adequacy
• Inspection and Consultancy
• Commercial system and channels
CAPEX
ASEA presentation
OPEX
NPV
NET PROFIT over 10 years (1)
500
Accumulated
Millions USD
400
300
200
Payback
100
Yearly
0
-100 1
Nota:
(1) Values at current prices
REVENUES
45%
• Maintenance costs
• Communication and other costs
• Electricity sales increase
• Debt recovery
47%
8%
OPEX
BENEFITS
100%
-200
2
3
4
5
Peak Funding
6
7
8
9
10
Year
10
INTEGRATED PREPAYMENT SOLUTION
Information Systems
Prepaid Management
System
Sales Channels
The definition of an
integrated prepayment
solution is crucial for the
correct functioning of the
infrastructure.
Other
Systems
Mobile
Telecommunications
Network
Data Network
Point of Sale
+
Website MPOS
Online
Prepaid
"Scratch"
3rd Party
ATM
Consumption zone
Consumption area
Meter
PLC
Display
User interface
Client
ASEA presentation
Meter
RF
Display
Meter
Comm. wire
Display
Purchase credit
recharge
Remote Metering
It is important to consider:
• interoperable solution
(supported in standards)
• scalable (allowing
evolution)
• competitive (balance
between price paid and the
expected return)
• high tech (take into
account emerging
technologies)
• Appropriate to reality
(can merge into the social
and technical environment)
11
MODEL FOR WORKS CONTRACTS
It is important to establish the right model balancing:
• Project management complexity
• Rink transfer (to the supplier)
• Local suppliers capacity
Supplier’s responsibilities
Compliances – EDEL Requirements
Equipment Supply
• Prepaid meters requirements
• Meter Boxes requirements
• Cables requirements
Equipment Installation
• Underground grid installation
• Aerial grid installation
• Buildings installation
Installation management
• Planning and preparing installation
• Project communication to the client previous to meter
installation
Project Support
• Troubleshooting, equipment repair
• Equipment and installation warranty
Training
• Comprehensiveness of training
• Documentation format
ASEA presentation
12
PROCESS REENGINEERING
The prepaid will introduce a different paradigm in the company, therefore is crucial to develop a
process reengineering initiative in an early stage
COMMERCIAL CYCLE
POST PAID
CONTRACTING
METER
INSTALLATION
METER
READING
Adaptation
BILLING
COLLECTION
TECHNICAL
SUPPORT
Substitution
INSPECTION
Adaptation
PREPAID
CONTRACTING
METER
INSTALLATION
ENERGY SELLING
TECHNICAL
SUPPORT
INSPECTION
EDEL’S APPROACH FOR PROCESS REENGINEERING
Process reengineering
was conducted
through 4 phases
ASEA presentation
PHASE I
PHASE II
PHASE III
PHASE IV
Post Paid Processes
assessment
Impact analysis on
business operations
Processes design
and adaptations
Training and change
management
13
COMMERCIAL MODEL
COMMERCIAL NETWORK – PREPAID CHALLENGES
POST
The different nature of
the prepayment brings
new challenges for the
commercial network. It
is therefore important
to complement the
existing sale channels
with new ones, taking
in consideration:
• Availability
PREPAID
PAID
Extended Hours for
Customer Service
Customer
proximity
Appropriate sales
channels for different
segments of customers
EXAMPLE OF COMMERCIAL MODELS
1
2
3
EDEL
4
ASEA presentation
Agent
Third Party
Agent
Third Party
Client
•
Proximity
•
Universality
To support the
deployment of new sale
channels for
prepayment, it was
defined a specific
commercial model for
each type of channel
(players and business
model)
14
COMMUNICATION STRATEGY
It is important to define a strategy to communicate the prepayment to the clients, so that the changes
can be effective and complaints can be reduced.
COMMUNICATION OBJECTIVES
EDEL developed a communication
strategy aiming to:
•
Counteract resistance to
prepaid
•
Educate about the new
operating model
•
Breaking myths of pre-paid
(more expensive, less reliable, etc.)
•
Discourage fraud
ASEA presentation
COMMUNICATION CONTENTS
•
NEW SPECIFIC “BRAND”
•
BROCHURES
•
SPECIFIC WEBSITE
•
SOUND VEHICLE
•
MEDIA COMMERCIALS
•
RADIO PROGRAMS
15
RECOMMENDATIONS
Toward the success of Prepayment...
P
Start with a viability study to evaluate the business impact, and to know the real
costs of the project (CAPEX & OPEX)
P
Define an integrated prepayment solution (interoperable, scalable, etc.. but cost
effective)
P
P
P
P
Establish a model for works contracts that reduces the risk to the company and
the management complexity
Support the prepayment deployment with a process reengineering
Complement existing sale channels with new ones to assure availability,
proximity and universality.
Invest in a communication strategy targeting the prepayment customers
ASEA presentation
16
Este documento éde circulação restrita àsua audiência
A sua transcrição ou reprodução não épermit da sem a
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ESTRITAMENTE CONFIDENCIAL
Thank you
Engª Clara Sanches
EDEL – Member of the Board
[email protected]
Dr. Jorge Costa Reis
noLimits - Partner
[email protected]
Este documento é de circulação restrita à sua audiência
A sua transcrição ou reprodução não é permitida sem a
prévia autorização escrita da noLimits Business Technology
Luanda, September 10th, 2014