Transcript Bonny Utility Company A closer look at Sustainable Development in Practice Mario Caenen General Manager BUC 14 December 2006

Bonny Utility Company
A closer look at Sustainable Development in Practice
Mario Caenen
General Manager BUC
14 December 2006
To be Covered
A Closer Look
• BUC Foundation
• The Story Unfolding
• Do’s and Don'ts
Brief History
BUC Foundation
• Started as 5M$ infrastructure community support project:
– Upgrade electrical distribution system
– Replace stand-alone diesel driven generation by gas turbine
generation from oil installations
– Utility Management Committee to oversee operation
• Project technically successful: not a successful project
– New investment idle while fuelling and maintaining old system
– Bad press
– Regular minor incidents, visits by youth to plant gate
– No view on management of operational phase, No acceptable
operator to hand-over
– Management by Committee
Current Concept
BUC Foundation
• Separate Utility Company
– Delegated authority to handle the business
– Clear and agreed deliverables  Contour of supply
– High local content  Employment Bonny Indigenes > 75%
– Front office in town, easy to access with questions, comments,
problems
– Stakeholder involved from day one, carried along in good and
bad times
• Provision of Electricity free up to limit
– Above limit at subsidised rates (70% to 0%)
– Pre-payment meters
– No direct cash transactions
– Non profit Organisation
Current Concept (continued)
BUC Foundation
• World Class Service
– Reliable Power  Availability 95% or above
– Quick response  24*7 emergency response team
– Adhere to global utility standards  High Quality Equipment
– Professional approach  tools, training, procedures, KPI’s
– Firm policy against corruption/fraud
Involved Parties
BUC Foundation
Service Provider
Stake Holders
Customers
Community
Bonny
Kingdom
Support
LGA
U
Ministry Of
Power
Joint
Industries
B
$
Power
C
Reliable &
Safe Electricity
Community
Street lighting,
Good business
environment,
Employment,
Contracts
Naira
Residential Users
Local Businesses
Organisation
BUC Foundation
Board of Directors
1 LGA, 1 MOP, 2 BKDC, 2 JIC
Management
Team BUC
General Manager
BUC
– All stakeholders represented in Board
– GM and Head finance seconded by
shareholders
– Ministry of Power manpower seconded to
supervisory and operational positions
– Some non-core business activities outsourced
to indigenous contractors (security, cleaning)
Deputy Manager
BUC/0
Quality Services
BUC/5
General Services
BUC/6
Finance
BUC/7
Extended Management BUC
Admin
BUC/1
Revenue Protection
BUC/2
Power O&M
BUC/3
Water O&M
BUC/4
future extension
Community Relations
BUC/8
Let there be light
project start 2001
The Story Unfolding
Preliminary Estimate
• 2 years for contour
• 3000 customers
• Capex 5M US$ <=>
$1665/connection
• Load growth 15% per year
• Protest on payment
• Fraud 5% customer base
Actual
• 4 years for contour
• 8500 customers
• Capex 6.48M US$ <=>
$760/connection
• Initial decrease of 20% on
connection, next 12.9% per
year
• Early protest changed to
eagerness to join; people
lining up
• Fraud 1.3% customer base,
yet requires continuous
attention
…and there was light
Substations
The Story Unfolding
Then
Now
…and there was light
Grid
The Story Unfolding
Then
…and there was light
Grid
The Story Unfolding
Now
…and there was light
Connections
The Story Unfolding
Then
Now
Goodbye diesel generators
The Story Unfolding
Immediate Benefits
• To Community:
– Better environment –
clean power
– Higher availability >95%
– Improved power quality
• To Companies:
– Major saving on fuel and
maintenance
– Less community
disturbances
March 2005
Last set removed from contour
Welcome gas turbine grid
The Story Unfolding
Distribution grid
conform global
utility standards
High-end
protection
Staff training
Industry Safety Standard
Quality tools & equipment
New… pre-payment
The Story Unfolding
• Customers pay into designated bank
• On hand-over teller, customer receives 20 digit token only
applicable to specific customer and meter no.
• Customer enters token into meter to upgrade credits
• Central system tracks use and alerts irregularities
• Back-up meter/customer tracks meter by-pass
• BUC inspects connection 2x/year
Model to achieve
sustainability and avoid
immense waste related to
free arrangements
Average Monthly Sales pattern
The Story Unfolding
30,00%
26,48%
25,84%
25,00%
22,79%
20,00%
20,26%
19,89%
19,77%
15,43%
15,08%
Customer%
15,00%
Amount%
12,01%
10,77%
10,00%
5,95%
5,25%
5,00%
0,47%
0,00%
0,00%
BESA ONLY
1 - 150
151 - 300
301 - 500
501 - 900
901 - 5000
> 5000
• 20% of the customers enjoy electricity via the free issue
without buying additional credits
• 60% being small residential customers pay less then $2.50
per month
• 7% being commercial users and large scale consumers are
accountable for 50% of the electricity sales
Average Monthly Sales pattern
The Story Unfolding
• Average Revenue/month
100%
90%
80%
70%
60%
50%
Community;
28,78%
Mobil;
14,24%
SPDC;
21,36%
40%
30%
20%
 US$ 1500
2003  US$ 8000
2004  US$ 18,500
2005  US$ 24,000
2006  US$ 26,000
2002
NLNG;
35,61%
10%
0%
BUC O&M budget contributions 2001 to 2006
• Since project start in
2001 the community
contributed 28.78% to
the O&M budget through
electricity sales
Key Figures 2006
The Story Unfolding
• 7500 + buildings connected, approx. 60,000 people
• 95.2% availability of power in BUC contour of supply
• Peak Load 7.5 MW
• Bonny power consumption 3625 MWh /month,
approx. 725 kWh per capita per annum
• 83% of all BUC positions filled by Bonny Indigenes
• 1,068,337 LTI-free man-hours
• Revenue approx. 26K US$/month, this covers manpower
cost but not yet spares, consumables and electricity charge
Impact
The Story Unfolding
• Public services perform better  hospital doubled operations
• Businesses (small and large) are flourishing
• Higher comfort level to residential users/workers
• Over 150 people direct or indirect employed  BUC provides
training and opportunity for growth
• Boost of general confidence  Elite relocate back
• General safety level increased  Street Lighting
• Image Companies improved  Less Gate Incidents
• Improved environment  No noisy, polluting gensets
Impact (continued)
The Story Unfolding
Numerous Micro Economic Developments
New
Businesses
arise
Outlook
The Story Unfolding
• Challenges
– Power supply in line with demand growth
– Power provision outside BUC contour
• Planned activities 2007/08
– Higher Availability  Added power Supplier
– Improved Power Quality  More substations, smaller areas
– Extension Contour  Services to more Customers
– Upgrade BUC office facilities  Enhanced Technical Services inhouse, Improved Customer Service Centre
– Expansion portfolio  Water production/distribution services
– Rate Review  Cost neutral operation = Full Sustainability
What has gone wrong
Do’s and Don’ts
• Community Support initially approached with Public
Relations mindset
• Utility committee model had no noteworthy effect on
improvement power services,
professional body for actual operation & maintenance is a
must
• Issue of payment controversial on start-up, which caused
significant delays
• Impact underestimated, poor forecast on volume customer
base, rapid growth in town not anticipated
Lessons
Do’s and Don’ts
• Focus on objectives; i.e Community Development is not a
Public Relations activity
• Carry stakeholders along, even if they are slowing down the
project initially
• Be prepared to be in the game for a long time, no fast
results
• Lead times of projects are long, ensure stake-holder’s
understanding for continued commitment
• Do not cluster projects, slice them in stand alone subprojects to deliver tangible milestones
• Split post-handover activities from project deliverables
Lessons (continued)
Do’s and Don’ts
• Ensure Management support for SD activities; a large parts
of the organisation may not necessarily see the need for SD,
while their support is required for success (e.g. logistics).
Declare it “part of the business” and explain why
• Make clear agreements with stakeholders on deliverables.
List also what is NOT included in the scope. Once final be
ready to act without delay
• Apart from obvious culture difference, beware of Babylonian
miscommunications
• Keep all communications formal and in writing, also when
no replies are received