Performance Monitoring & Benchmarking in an Electricity Sector in Transition

1. Performance Monitoring & Benchmarking in an Electricity Sector in Transition Being presentation made by Engr. (Dr.) J. O. Makoju – MD/CE PHCN Plc at the World Bank 2006 Energy Week in Washington DC 6th – 10th March, 2006

3. About Nigeria • Located in West Africa • Total area of ~ 923,770 sq km (about the same territory as France & Germany combined). • Climate varies from equatorial (in the south), tropical (in the central area) and arid (up north). • Population of over 130 million people (multiethnic, multicultural, secular society) with an average pop. growth rate of ~3% p.a.

4. Sector Reform (on-going) • Perhaps the single most profound step taken under the reform process has been the internal unbundling & decentralization of PHCN’s operations • NBUs have been operating as semi autonomous units over the past 2yrs (while they await full corporatization in April 2006). • With increased autonomy came the need for greater accountability; performance monitoring & benchmarking.

5. PHCN’s Benchmarking & Performance Monitoring Initiatives

6. Target Setting • Based on realistic expectations rather than international benchmarks • Challenges in the local environment taken into account (Weak/ fragile electricity infrastructure; Network limitations etc) • Customer Service Charter also taken into consideration

7. Target Setting………………………cont’d • A consultative approach is adopted in target setting (Targets are agreed with the NBUs not “handed down”). • Adjustments are made where necessary based on the peculiar situation of an NBU. • Targets are monitored by the Planning & Strategy Dept./ Market Operator • Ranking circulated at the end of each month

8. Some KPIs for the Generation NBUs • Generation Unit Cost - Total Expenditure (Naira) TotalEnergyDelivered(KWH) • Generation Utilization Index -Actual Generation (MW) Available Capacity (MW) • Capacity Utilization Index - AvailableCapacity(MW) Installed Capacity (MW) • Fuel Cost per Unit Gen.-Total Cost of Fuel (Naira) Total EnergyGenerated (MWH)

9. KPIs for the Generation NBUs …………cont’d • Staff Cost Index - Total Expenditure (Naira) Number ofEmployees • Staff Productivity Index - Total Energy Delivered (MWH) Number ofEmployees • Breakdown Mtce. Index-No of Breakdown defects rectified No of Breakdown defects reported • Plant Reliability Index -TimeofReporting Period Total DowntimeofunavailableUnits

10. Some Performance Monitoring Charts Target Reliability Index Chart (Jan – Dec 2005) Maintenance Index Chart (Jan – Dec 2005)

11. Some KPIs for Transmission • Grid Loss Ratio - Energy dispatched to distribution Energy Received from Generation • Transformer Cap. Utilization -Transformer Max. Load Installed Capacity • Transmission Cost Index - Total Monthly Expenditure Energy Received from Generation • Staff Productivity -Energy Received from Generation Ave. no. of employees

12. Some KPIs for Transmission…………………..cont’d • Dispatch Unit Cost - Total OperationExpenditure (Naira) Energy Delivered to Distribution • Transmission Losses - Energy sent out from PS (MW) – Energy delivered Energy sent out from P.S (MW)

13. Some KPIs for the Distribution NBUs • Fault Clearance Index - Total faults Cleared Total faults reported • Collection Efficiency -Total Monthly Cash Collection (Naira) Monthly Billing Revenue (Naira) • Capacity Utilization Index - Maximum Monthly Load (MW) Installed Capacity (MW) • Metering Ratio -Total no. of Customers metered Total number of customers • Customer Response Time -Time from customer enquiries/complaints To time of resolution

14. Impact of Performance Monitoring / Benchmarking • Has triggered various innovations by the NBUs • Helped to build up managerial capacity • More efficient resource allocation • NBUs have a foretaste of “full blown” reform (as the now “compete” against each other) • Now more willing to embrace new ideas eg: innovations under CREST

15. More About the CREST Programme • Commercial Reorientation for Electricity Sector Tool Kit (CREST) • Designed to address some of the downstream issues of the Industry (metering, billing, revenue collection, customer care etc). • Commenced in 2003

16. Distribution Efficiency Enhancement Initiatives under CREST • High Voltage Distribution System (HVDS) • High Voltage Panel Metering • Customer Care Centres • Rapid Response Vehicle • Spot Billing • Scratch Card system • Split pre prepayment meters. • Performance rewarding initiative

17. High Voltage Distribution System in Other Distribution Business Units (DBUs) (i) HVDS – Substation Ibadan DBU (ii) HVDS – Substation Eko DBU (iii) HVDS – Substation Ikeja DBU (iv) HVDS – Substation Kano DBU (v) HVDS – LV Distribution using insulated cables + LV Distribution Board Kano DBU

18. HVDS – SUCCESS STORYACROSS THE BUSINESS UNITS

19. High Voltage Metering In-door HT Panel Meter Out Door HT Panel Meter

20. HT Panel Metering Success storymonthly revenue improvement across the business units

21. Split Pre-Payment Meters – Mambolo Abuja

22. Scratch Card Initiative Telephone vending possible Internet vending possible More care of customer is not required 20 Digit Codes

23. Pre-Payment Meters Success Story at Mambolo Abuja • No more unbalanced load due to disconnection and re-connection of customer • No more bills and debt accumulation • Commercial Losses reduced • Improved relationship with customers (no bad reading, no disconnection and re-connection fees) • Customer manages his consumption • Up-front payment

24. TYPICAL CASH COLLECTION PERFORMANCE REPORT ABUJA ZONE: JAN 2003 TO DECEMBER 2005

25. Rapid Response Vehicle - Abuja

26. Customer Care Center Garki - Abuja

28. Naira Yield 2005: N3.23/Kwh Naira Yield 2001: N1.87/Kwh

30. Consolidating on the Gains • Sector reform leading to privatisation will ensure that the gains made are improved upon (Privatization to commence in 2006—2GenCos and 2 DisCos) • PPP initiatives being introduced with the corporatization of PHCN in April, 2006 • The outsourcing programme will run parallel to the privatization programme and is designed to add value to the DisCos and significantly improve their financial positions

31. Conclusion • The Nigerian power sector is gradually recovering from two decades of neglect (the pace may be slow but a consistent upward trend has clearly emerged) • Target Setting, Performance Monitoring & Benchmarking have been key tools in this transformation process • Finally, we must commend the WB for the support/ assistance of the on-going power sector reform programme through projects such as the NTDP; CREST and more recently the NEDP.

32. Thank you for your attention