KPLC’s pre-paid power meters to create new jobs

Electricity distributor Kenya Power and Lighting Company is looking for agents to sell scratch cards for its pre-paid metering system in a move that could create thousands of jobs countrywide.

The move is also expected to boost the earnings of micro-entrepreneurs, who are already acting as agents of the country’s top telecoms operators Safaricom and Zain, which have opened negotiations with KPLC to enable the agents help sell the cards.

There are close to 17,000 agents in the mobile phone money transfer business in the country.

KPLC is also planning to recruit its own agents, a move that should open new employment and business opportunities for thousands of Kenyans adding to the more than 100,000 jobs that mobile telephony is estimated to have created in the past eight years.

Official data shows that airtime vendors last year earned Sh4.6 billion in commissions a figure that could significantly improve with the sale of electricity scratch cards.

KPLC has transferred 7,000 electricity consumers to the pre-paid meters and the number is set to grow to 25,000 by the end of the year, rising to 250, 000 in the next 12 months.

“Negotiations with third party vendors such as Safaricom and Zain are ongoing. We expect to have them on board before long,” said a progress report on the pre-paid metering system.

Under the new payment system, electricity consumers will buy cards before hand to top up their meters before expiry of their credit to avoid automatic disconnection.

The new meters that use smart cards are bought from KPLC and loaded with the amount of credit purchased.

The card is then inserted in the new meters, which subtracts the points according to consumption.

Just like the prepaid mobile phone system, the prepaid electricity meter will switch off power immediately a consumer has exhausted his credit and on reloading the card automatically reconnect.

Currently, consumers can only access the cards from KPLC banking halls and three Uchumi Supermarkets, making that addition of more access points a critical plank in the success of the pre-paid metering now that the power firm is planning a massive rollout.

The power firm is yet to release details on the amount of commission the agents would earn or the criteria it used to pick the agents since one might be required to deposit some money.

It is also not clear whether the power firm would follow the model of mobile phone providers where dealers get products — top-up cards and handsets — at a discount and sell them at the fixed retail price, or by purchasing starter packs at the retail price and then receiving a connection commission once an initial top-up is made by a new subscriber.

But given that the revenues generated from the pre-paid system run into billions of shillings, the agency deal is expected to generate a high stake battle for the business as investors look for the handsome pay-offs.

The GSM Association reckons that the dealership sub-sector employs just under 100,000 Kenyans directly.

Safaricom dealers’ network comprises about 300 independent dealers who distribute products to approximately 1,200 branded retail outlets.

Dealers and sub-dealers distribute Safaricom products and services to a retail network of over 100,000 small outlets or kiosks spread across the country.

Consumers will soon start paying for electricity using scratch cards as the power distributor rolls out the pre-payment metering project, whose first stage is set to be completed in December.

The new meters show consumption rates enabling consumers to manage their expenditure and spare them disconnection or reconnection costs.

The firm yesterday said it is targeting some 25,000 customers by year end after which the phased project will be rolled out to other parts of the country.

Mr Migwi Theuri, the KPLC’s deputy manager for communications, said the new system is part of the customer service reforms the company has been implementing to improve metering, billing processes and reduction of system losses.

He said they will speed up the installations beyond the 25,000 existing ordinary customers within Nairobi in the areas of Kasarani, Fedha Estate, Imara Daima, Villa Franca, Nyayo Embakasi Estate, Nyayo Highrise, Kibera, Woodley, Mountain View, Muguga Green, Hirani, and Kahawa Sukari.

KPLC has an estimated 980,000 consumers who will be hooked onto the system on a gradual basis.

On Wednesday, consumer watchdog, Kenya Alliance Residents Association says, the new system will minimise the incidence of wrongful billing.

“Inflated bills will be a thing of the past. They should fast-track the process to benefit many consumers,” said Stephen Mutoro, the association chief executive.

KPLC also stands to benefit from the project since it can dispense with meter readers, compiling, printing and posting bills monthly and tellers who receive money from customers.

“Prepaid metering will also help to decongest the KPLC banking halls and enable the company to collect its revenues upfront,” said the official in a statement.

Industry regulator-the Energy Regulatory Commission (ERC) has approved the system, which is widely used throughout the world because of the convenience it offers both to service providers and consumers.

When fully implemented, it will enable the power utility firm to save more than Sh1 billion in operational costs and save consumers from having to spend time on long queues paying bills and reconnection fees.

KPLC estimates that about 15 per cent of total electricity is lost because of failure by consumers to implement saving measures, adding that the prepayment system would slow down the demand for power.

Consumers will be able to access electricity on a need-to-basis and therefore control their costs.

They will not have to pay reconnection fees, which averages Sh580 in case of a default and will save time from the bureaucracy associated with seeking reconnection.

KPLC’s financial statement for 2007/08 indicates that the company spent Sh3.9 billion in distribution and customer service, a segment where expenses related to metering, billing and disconnections fall in.

The company, however, made Sh194 million in the same year from connection and reconnection charges.

With a postage cost of about Sh20, it means the company uses about Sh200 million to send bill statements every month.

The new metering system is also expected to reduce electricity theft. Especially in the slum areas where consumers tamper with meters.

KPLC said the cost associated with re-billing consumers when meter tampering has occurred averaged Sh1.9 billion in the last financial year.

A South African company Actaris Measurements & Systems (PTY) has been contracted to roll out the project having beat six other firms for the contract to supply the pre-payment meters and software .The firm is the world-leader in prepayment metering technology, associated systems and services.

“Actaris has conducted skills transfer training for our staff in preparation of the eventual handover of the project to KPLC. Losing bidders in the February 2009 tender were Saabgintec PTY Ltd, Landis Gyr, Krishna Enterprises UAE, Conolog SA and Chidhya K Ltd representing Insyte Instalaciones of Spain.