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

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3. 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. 4  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. Sector Reform (on-going)

5. 5 PHCN’s Benchmarking & Performance Monitoring Initiatives

6. 6 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 Target Setting

7. 7 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 Target Setting………………………cont’d

8. 8 Some KPIs for the Generation NBUs  Generation Unit Cost - Total Expenditure (Naira) Total Energy Delivered (KWH)  Generation Utilization Index - Actual Generation (MW) Available Capacity (MW)  Capacity Utilization Index - Available Capacity (MW) Installed Capacity (MW)  Fuel Cost per Unit Gen.- Total Cost of Fuel (Naira) Total Energy Generated (MWH)

9. 9 Staff Cost Index - Total Expenditure (Naira) Number of Employees Staff Productivity Index - Total Energy Delivered (MWH) Number of Employees Breakdown Mtce. Index- No of Breakdown defects rectified No of Breakdown defects reported Plant Reliability Index - Time of Reporting Period Total Down time of unavailable Units KPIs for the Generation NBUs …………cont’d

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

11. 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. 12 Some KPIs for Transmission…………………..cont’d Dispatch Unit Cost - Total Operation Expenditure (Naira) Energy Delivered to Distribution Transmission Losses - Energy sent out from PS (MW) – Energy delivered Energy sent out from P.S (MW)

13. 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. 14  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 Impact of Performance Monitoring / Benchmarking

15. 15  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 More About the CREST Programme

16. 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. 17 High Voltage Distribution System in Other Distribution Business Units (DBUs) (iv) HVDS – Substation Kano DBU ( ii) HVDS – Substation Eko DBU(iii) HVDS – Substation Ikeja DBU(i) HVDS – Substation Ibadan DBU (v) HVDS – LV Distribution using insulated cables + LV Distribution Board Kano DBU

18. 18 HVDS – SUCCESS STORY ACROSS THE BUSINESS UNITS BENEFITSBEFORE-HVDSAFTER-HVDS Improved Reliability3 Days ON 1 Day OFF Unit load Shedding All customers ON 24/7 Reduction in LV Reticulation Route Length 1200m (16 spans) max/Upriser200m(4 spans) max/Upriser Improved Voltage Profile200V maximum 140V minimum 223V maximum 213 minimum Customers satisfactionRegular complaints from the areas where the HVDS was implemented Near Zero complaints from the areas after implementation Technical Loss Reduction achieved in one of the Business unit 40.19KW0.05KW (negligible)

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

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

21. 21 Split Pre-Payment Meters – Mambolo Abuja

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

23. 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. 24 TYPICAL CASH COLLECTION PERFORMANCE REPORT ABUJA ZONE: JAN 2003 TO DECEMBER 2005

25. 25 Rapid Response Vehicle - Abuja

26. 26 Customer Care Center Garki - Abuja

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

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30. 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. 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. 32 Thank you for your attention