E D M

1
E D M PREPAYMENT SYSTEM
2

• MOZAMBIQUE GEOGRAPHIC LOCATION
• MISSION
• BACKGROUND OF COMMERCIALIZATION
• REORGANIZATION OF THE COMMERCIAL CYCLE
• PROCESS CONSTRAINTS
• INTRODUCTION OF PREPAYMENT SYSTEM - MOTIVATIONS
• IMPLEMENTATION
• FINANCING
• PREPAYMENT PROJECT REQUIREMENT
• IMPLEMENTATION METHODOLOGY
• SYSTEMS COMPARISON
• RESULTS
• CHALLENGES
• CONTRAINTS
• STRUCTURE AND NUMBER OF CUSTOMERS

3
Area 799 380 km2 Population 18 Millions
Capital Maputo
4
MISSIONThe operation of the public service of
Generation, Transmission, Distribution and
Commercialization of electricity in Mozambique,
in defence of the interests and to the benefit of
the consumer. VISIONWith Energy we build the
Future
5
Structure and Total Number of EDM Customers
  Southern Central Northern Total 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
6
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.

7
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.

8
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.

9
Reorganization of the Commercial Cycle (Post Paid
System)

• Readings
• Billing
• Invoices Distribution
• Collection
• Inspections
• Disconnections
• Reconnections.

10
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.

11
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.

12
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

13
Financing

• 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).

Implementation Criteria

• Difficult access installations
• Low purchasing power customers
• Seasonal customers.

14
Requirements of a Prepayment Project

• IT
• Sales and management system (Software)
• System Master Station (SMS Hardware)
• Posts of sale
• GIS/GPS System

15
Equipment and Services

• Aerial photograph
• Prepayment meters
• Ready Boards
• Communications
• Private vending posts
• Training
• Customers information and advertisement
• Revision of the commercial procedures
• Management.

16
Implementation Methodology

• 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.

17
SYSTEMS COMPARISON
POSTPAID PREPAID
Readings and bills distribution No 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
18
COLLECTION AND SALES 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 difficult Debt recover through the system
Difficulties to achieve a good Collection Ratio Improvement of the Collection Ratio
Huge administrative losses. Reduction of the administrative losses
19
CUSTOMER QUALITY SERVICE 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
20
Results

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

21
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  
22
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.

23
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.

24
Constraints

• Huge initial investment (management system and
  meters)
• Meters life expectation short
• High replacement meters cost.

25
WITH ENERGY WE BUILD FUTURE
26
THANK YOU FOR THE ATTENTION!
Questions/suggestions?