Bonny Utility Company

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Bonny Utility Company
A closer look at Sustainable Development in
Practice

• Mario CaenenGeneral Manager BUC
• 14 December 2006

2
To be Covered
A Closer Look

• BUC Foundation
• The Story Unfolding
• Dos and Don'ts

3
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

4
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 gt
  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

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Current Concept (continued)
BUC Foundation

• World Class Service
• Reliable Power ? Availability 95 or above
• Quick response ? 247 emergency response team
• Adhere to global utility standards ? High Quality
  Equipment
• Professional approach ? tools, training,
  procedures, KPIs
• Firm policy against corruption/fraud

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Involved Parties
BUC Foundation
Customers
Service Provider
Stake Holders
B U C
Community Residential Users Local Businesses
Community
Reliable Safe Electricity
Bonny Kingdom
Support
LGA
Street lighting, Good business environment,
Employment, Contracts
Ministry Of Power
Joint Industries

Naira
Power
7
Organisation
BUC Foundation

• 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)

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Let there be light project start 2001
The Story Unfolding

• Preliminary Estimate
• 2 years for contour
• 3000 customers
• Capex 5M US ltgt 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 ltgt 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

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and there was light Substations
The Story Unfolding
Now
Then
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and there was light Grid
The Story Unfolding
Then
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and there was light Grid
The Story Unfolding
Now
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and there was light Connections
The Story Unfolding
Then
Now
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Goodbye diesel generators
The Story Unfolding

• Immediate Benefits
• To Community
• Better environment clean power
• Higher availability gt95
• Improved power quality

• To Companies
• Major saving on fuel and maintenance
• Less community disturbances

March 2005 Last set removed from contour
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Welcome gas turbine grid
The Story Unfolding
Distribution grid conform global utility standards
High-end protection
Staff training Industry Safety Standard Quality
tools equipment
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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
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Average Monthly Sales pattern
The Story Unfolding

• 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

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Average Monthly Sales pattern
The Story Unfolding

• Average Revenue/month
• 2002 ? US 1500
• 2003 ? US 8000
• 2004 ? US 18,500
• 2005 ? US 24,000
• 2006 ? US 26,000
• Since project start in 2001 the community
  contributed 28.78 to the OM budget through
  electricity sales

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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

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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

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Impact (continued)
The Story Unfolding
Numerous Micro Economic Developments
New Businesses arise
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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 in-house, Improved Customer
  Service Centre
• Expansion portfolio ? Water production/distributio
  n services
• Rate Review ? Cost neutral operation Full
  Sustainability

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What has gone wrong
Dos and Donts

• 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

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Lessons
Dos and Donts

• 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-holders understanding for continued
  commitment
• Do not cluster projects, slice them in stand
  alone sub-projects to deliver tangible milestones
  
• Split post-handover activities from project
  deliverables

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Lessons (continued)
Dos and Donts

• 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

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