Revenue Protection Initiatives to Reduce Losses and

Improve Municipal Cash Flow

Presented by: Rens Bindeman Technical Advisor (SARPA)

SOUTHERN AFRICAN REVENUE PROTECTION ASSOCIATION

GOAL OF PRESENTATION

•  IntroductiontotheAssociation-SARPA

•  FocusonBestPracticesandChallenges

• ProposalonNonTechnicalLossreduction

• CallforAssistancefromSALGA

REVENUE PROTECTION ASSOCIATIONS

Ø  IURPA - International Revenue Protection Association

Ø  SARPA - Southern African Revenue Protection Association

Ø  ARPA - Proposed African Revenue Protection Association

SARPA was established in 1997 by Eskom, AMEU and IMFO (SALGA on Exec)

SHORTFALLS

•  Smaller Munics do not have dedicated Revenue Protection trained staff

•  Municipalities / Metros do not have Revenue Protection Operational budget

•  Estimated R9.2 billion electricity losses for 2017/18 !

•  NOTE: Dedicated RP Sections can recover billions

ILLEGALCONSUMPTION

IllegalConnectionsbyUnknownConsumers

FRAUDULANTACTSMeterTamperingUnsafeLeadsDatafraudCorruption

ERRORSInaccuraterecordingofconsumptionInaccuratecustomeraccountdataMeteringfaults

FACTORS THAT IMPACT NON TECHNICAL LOSSES

•  Lackofpunitiveaction-Bylaws

•  Syndicateactivities

•  Indigenttariff•  Norevenueprotectionsection/budget

•  Lackofspecialization

InfluenceFactors

Our Approach

6

ArrestUpwardLossesTrend

ReduceLosses

EnsureSustainability

ExecuteRemedial&RecoveryActions

AuditDataMeter

Installations

DeployMaintain

ImplementBestFit

TechnologySolutions

Communicate / Educate / Behaviour Change Communications

Strategic Objective

Focus Areas 1 2

5

43

IMPORTANT BEST PRACTICES

•  StartingandTrainingupaRPunit•  Auditingofmeters•  RemedialActions•  DataAnalysis•  RevenueRecoveryProcesses• MDMeterRecertificationprocesses•  RevenueLossForum

CHALLENGES

•  Notamperproofmeterkiosks•  Staffareendangered•  Enemywithin-“doitrightthefirsttime”•  Dealingwith80/20principle•  Automaticswitch-offsolutionsneeded•  Culturalandbehaviouralchangesarerequired•  Politicalbuy-inwithawarenesscampaigns•  Lackofexpertizetokeepabreastoftechnologyandnewtamper/theftmethods

RISKS OF OUTSOURCING SERVICES

Thequestionis“shouldweoutsourcecertainaspects

ofourrevenuelossprocessesornot?

Wethinkthetimehascometotakebackthecontrolsofourrevenuegenerationprocessesandratherteachandenableourownemployeestoperformsuchtasks

SELF FUNDING INITIATIVE

ExperiencehasshownthatUtilitieswhoinitiatededicatedRevenueProtectionSectionssoonfindthattheseunitsbecomeself-fundingandwithinaperiodofaslittleas2yearscanclawbacksignificantlostrevenuefortheUtility.Furthermore,oneshouldnotforgetthatauditedandreinstatedinstallationareonceagainthecashregisteroftheutility.

REVENUE PROTECTION UNIT

Importantissuesareasfollows:-

1.  Sizeoftheunit(1staffper5000consumers)2.  KnowledgeLevelsofindividuals(thinkoutofbox)3.  Specializedmembers(RR,Data,Investigations)4.  IntegrationwithotherDepartments(RLF)5.  Rapidresponseteams(resourcedandtrained)6.  ExcellentliaisonwithLawEnforcement7.  NeedforaChampion

FOCUS POINTS

•  AllactionstoreducelossesshouldbeDataDrivenOperations

•  TopLevelManagementsupportandinvolvementisalsoveryimportant,asRevenueProtectionOfficialsneedallthesupporttheycanget

•  FocusonLargePowerUsersfirst

•  Trainingofstaffveryimportant

Courseswasspecificallydesignedtofocusonelectricity,waterfinanceorlawenforcementissuesandcanbe

presentedalsoinworkshopformat

v  Revenue Protection Basic Course v  Revenue Protection Management Course

v  Revenue Protection Sensitizing Course

v  Revenue Protection Advance Corse

v  Infrastructure Theft and Vandalism course

SARPAmembersget2daysfreefacilitation

MEMBERSHIP TRAINING

Ø  TheSARPARevenueRecoveryProjecthasbeenrelaunchedtoaidailingMunicipalities

Ø  Duringseveralsuccessfulinteractionswiththerole-playersandPilotSitesitbecameclearthatwewouldneedthefullsupportoftheCFO’stomakethiswork

Ø  DuringinteractionswithCIGFARO.Executivemembersindicatedsupportforsuchaninitiative.

Ø  “SelfAssessmentToolkit”forthewebisunderdevelopment.andtheprocesswillbeincludedintoNRS055(RevenueProtectionGuideline)

REVENUE RECOVERY INITIATIVES

Ø  NationalOperationalCommittee(NOC)chairedbytheHawksarewellunderway.SARPAtoassistingincallingameetingtogetprivatecompaniestoshareintelligence.

Ø  ProvincialOperationalCommittees(POC)SARPArecentlykickstartedforumsinFreestate,KZNandWesternCape.

Ø  InfrastructureCrimeForum(ICF)(Externalroleplayers)isrequiredtosignNFMCCCTermsofReferenceSARPAincluded

Ø  CriminalMattersAmendmentAct18of2015Allocationofa“SAPSCrimeCode”.(3200)

INFRASTRUCTURE CRIMES

NERSA LICENCE AGREEMENT PROPOSAL

•  6%ofoperationalincometobeusedtoreducetechnicallosses–nothingfornon-technicallosses

•  MunicipalitiesmustprovidebudgetforRPactivitytoreducenon-technicallosses

•  NotalicencerequirementandCFO’smustprovidebudgetwithreducedincomeandcashflow

•  SARPArecommendsthataminimumof1-2%ofoperationalelectricityincomebeusedtofundRPoperationsuntiltheNationalstandardof9%electricitylossesisachieved

REMINDER - NEXT STEPS

1)  Managementtobecomeknowledgeableaboutthenontechnical

lossproblemandstartaRPUnit/LossReductionForum

2)  ParticipationofMunicipalstaffinSARPAmeetings/training/revenuerecoverysessions.

3)  TakepartinInfrastructureCrimeForumsbetweenLEAandIndustryroleplayersandsupplystatisticsonlossestoSAPS

4)  “Roadshow”bykeyroleplayerstosensitizeMunicipalities

CONCLUSION •  InconclusionitmustbementionedhowtheentireRevenueProtectionconcepthasdevelopedinthepast20yearsandhasnowreachedanewlevelofexpertise,whichhasresultedintheneedforthoseinvolvedinsuchactionstogotothenextlevelofspecialization.

•  Thishascomeaboutduetothefasttrackingofthetechnologydevelopmentprocessofmeteringworldwide.ThishastriggeredtheServiceproviderstocapturethemarketandofferallkindofpackagesandwonderfulsolutions.