Tuesday, October 23, 2007

From E[lectricity] C[ompany of] G[hana], With Love...

It's been quite a while since I went to ECG to buy electricity for our pre-paid meter. It was interesting to have gone there, to have demanded a sheet of the rates--only to be told that the list would be, in a few days, "archaic". I guess the ECG worker meant the rates would be obsolete, or redundant--but that's another story!

The real truth about ECG and all is that despite the fact that electricity has "stabilised" to a very large extent, rates have increased a good 35%. At least that's what Kwame Pianim--Chairman of Ghana's Public Utilities Regulatory Commission says.

Fred Sarpong, ICT correspondent and Senior writer for Business Week (who is also Public Relations Officer for the Ghana Association of Journalists in ICT maintains:

The Public Utilities Regulatory Commission (PURC) has passed judgment and, surprisingly, tariffs for both electricity and water usage are going up again, this time by a steep 35%.

To be sure, both the Electricity Company of Ghana and the Ghana Water Company must have presented strong arguments to the PURC; the Commission’s boss, Kwame Pianim had earlier declared that it would not approve increases of more than 20%.

The rising cost of oil must have played a part in the PURC’s change of mind. With the world market price for crude oil now at well over US$80 a barrel, the continuation of an inexorable upward rise started in 2005, the cost of producing and distributing utility services is certainly going up. Electricity generation in particular will be affected, especially as Ghana now relies more on oil-driven thermal power than at any other time in the country’s history.

Indeed, oil has a role to play--as does the "need" to pay "realistic prices". As someone who is not an economist, I still marvel at how government can claim that maintaining subsidies are untenable.

If people do not pay, I guess the utility providers ought to find stringent ways of "revenue mobilisation". Forget the fact that people want to have air-conditioners and use them to full capacity when there is little need, just make sure people pay for what they consume.

And now to prepaid electricity:

  • started it in 2000, and this is what one report wrote of the scheme:

    Some 25 000 homes in Botswana are using the pre-payment metering system which was introduced by the Botswana Power Corporation (BPC) in 1995


    As there is no meter reading, the risk of human error on meter reading and the risk of estimated readings being used for billing are non-existent.

    He said that there was no need to wait for an unknown bill from BPC, therefore, uncertainty was written off completely. Moreover, the system was comfortable and gives customers time to budget.

    "The system involves the community in the selling of the tokens. It is aimed to be 24 hours facility in villages to enable people to buy the tokens at any time of the day.


  • --they started it in 2003, and this is what one article said about the usage:

    The country's largest private sector power utility, Tata Power Company, and the Madhya Pradesh State Electricity Board are thinking of introducing pre-paid cards for buying power modeled on similar cards in the telecom industry.

    Says F A Vandrevala, managing director of Tata Power, "We are evaluating the issue internally but have not made any formal presentations to anyone on this. It is something we could look at on a national basis."


    Home > Business > Business Headline > Report

    Now, pre-paid electricity cards

    Sunil Raj & S Ravindran in Mumbai | October 13, 2003 08:53 IST

    The next time someone says pre-paid, don't just think of your mobile phone. Incredible as it may sound, the day may not be far off when pre-paid could be the lingua franca of power consumers as well.

    The country's largest private sector power utility, Tata Power Company, and the Madhya Pradesh State Electricity Board are thinking of introducing pre-paid cards for buying power modeled on similar cards in the telecom industry.

    Says F A Vandrevala, managing director of Tata Power, "We are evaluating the issue internally but have not made any formal presentations to anyone on this. It is something we could look at on a national basis."

    The Madhya Pradesh State Electricity Board could, however, be the first utility off the block. The chief engineer of the board, K C Jain, told Business Standard in Indore: "We are looking at introducing a pilot project and the state government is considering the proposal. Once, the clearances come through we will launch the scheme."

    The Rs 200-250 crore (Rs 2-2.5 billion) project being contemplated by the MPSEB entails installing a pre-paid card in the consumers' meter board. The consumer will insert the pre-paid card in it like a floppy.

    He will then be able to buy pre-paid cards from private power companies in three denominations: Rs 100, Rs 500 and Rs 1,000. This is proposed to be introduced first in Indore, a city that has the maximum domestic consumption of electricity in the state.

    And how does the consumer know when his power supply is going to end? Once 95 per cent of the electricity that has been paid for is used up, the meter will begin to emit signals, so that the consumer can buy a new pre-paid card.

    The meter will expel the used card immediately after it is fully used. The new card has to be inserted simultaneously if electricity supply is to continue.

    But how does the consumer benefit? Instead of his earlier complaints of high electricity bills, he can now keep a tighter reign.

    Second, consumers won't have to stand in serpentine queues to pay their bills. The pre-paid cards will be sold by private power companies to consumers. Then, of course, on the introduction of this system, consumers won't have to put down a security deposit.


    India has witnessed huge power theft (transmission and distribution losses). A couple of years back state electricity boards recorded transmission and distribution losses of Rs 33,000 crore (Rs 330 billion). This could be one small way of combating the problem.

    Pre-paid electricity cards have been around in Europe since the early 1990s


    Finally, there is an article from a Philippines website, in which both the Nigerian/South African experiences of pre-paid are referred to--and the virtues thereof extolled.

    I think the writer sums it in one when he/she writes:

    A financial manager worth his salt will see the advantages of a prepaid system a kilometer away: just imagine the cash flow benefits it brings, where payments for its service will be made up front, instead of being at the mercy of the traditional billings system. And we haven’t even considered the operational savings it will generate: from the manhours spent in printing the individual statements and distributing these to customers, to disconnecting lines when accounts are not paid by due date

    To conclude, the evidence is out there--you only need to go and look. Far be it for me to trump Kwami Pianim, whom, in my view, is too neo-liberal a boss for a regulatory agency. This is what I wrote of him in November 2006:

    However – and in Ghana, there is always a challenge to grapple with – utility tariffs have gone up.

    I cannot for the life of me understand the underpinning logic of the Public Utilities Regulatory Commission (PURC) Chairman, Mr.Pianim, claiming that “tariff adjustments will help ease the intense pressure on the national kitty.”

    Check this: Pianim is Chairman of a regulatory utilities commission and he speaks like a free-market man, who believes that competition in the industry is the best way for Ghana’s water and electricity. Just because the government allowed themselves to be hood-winked by the over-balance of perceived "efficiency" of the private sector in water[Rand, water], he believes the same can be applied for electricity?

    What type of vision is this by a CHAIRMAN of a utilities regulator?

    Besides, the logic is flawed: multinational companies are more interested in the efficiency of service delivery than the raising of tariffs, for the sake of it. You can raise the rates all you want, yet when the capital—not to mention the country—experiences sporadic electricity supply as evidenced by my rant last week, when I opined last week that Accra is "in the dark ages", which company is going to be interested in investing in that sort of shoddy and egregious service?

    At least, you've gotta give it to him that he's consistent!

    On a more serious note, we know the evidence: there's a lot of pre-paid metred houses in the country, and to that end, ECG is getting a lot of money. Why not make pre-paid metres de rigeur, and avoid having to raise tariffs by a good 35%? I'll end with what I wrote way back in February this year, because I cannot think of any appropriate manner to end this sordid tale:

    Finally, it just struck my little brain that there are a number of pre-paid electricity meters in estates all over the country. Now, in order to avoid MDAs taking advantage and wasting precious ECG service, might it not be a good idea to remove them from metred electricity onto pre-paid ones, where they would pay upfront?

    Whilst we are ruminating over those questions, might we not think about encouraging ECG to move away from a pitiful page on the Ministry of Energy website to a fully-fledged one like the PURC?!!!
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