THE Outsourcing of Revenue Cycle Management:PROGRESS ON THE NIGERIA EXPERIENCE

ENGR. U.D. ACHINANYA

ABSTRACT

National Electric Power Authority (NEPA) – the Electricity Utility Industry in Nigeria outsourced the Management of the revenue cycle processes of part of its network in Dec., 2001 to eight private Management Contractors.

The Revenue Cycle Management (RCM) contracts are all about risk sharing in the NEPA Distribution system losses. The risk of the non-technical losses are assigned to the Management Contractors while the Utility assumes the risk for the technical losses. The performance of the Contracts are bench-marked on the efficiency with which the energy delivered to the Contract Areas is processed into cash in the banks.

Whereas the Contractors commenced mobilisation in Jan., 2002, most of the Contracts became effective in May 2002.

At the Metering Africa 2002 Conference in Maputo, this author presented a paper on the subject dealing with issues like:-

  • The reasons for the outsourcing initiative
  • The outsourcing processes up to the award of Contracts and
  • The initial implementation problems of the programme.

Most of the Contracts are in their second year of operation now. Conscious of the fact that most African countries are waiting patiently for the outcome of the Nigerian experiment, operators of the programme are working tirelessly to ensure that the programme succeeds. This paper, therefore, tries to assess the impact of the RCM programme in the Nigerian environment to ascertain the extent to which it has addressed the issues that necessitated the initiative. The paper will be looking at the programme’s progress from the point of view of:-

  • Non-technical loss reduction for improved revenue generation and collection
  • Skill transfer from the Contractors to the Utility’s staff for sustainable improvement in Revenue Cycle Management
  • Introduction of International best practices to go along with the global standard practice in Revenue cycle management.
  • Enhancement and protection of the integrity of the Utility’s billing database for improved and sustainable customer satisfaction.

The first year of the programme was spent on the initial specific tasks such as:-

  • Development of new processes and procedures for improved efficiency
  • Database sanitization
  • Debtors book compilation
  • Investments on operational resources
  • Staff training, etc

The effects of such tasks are expected to manifest from the second year of the programme.

Finally, this paper will endeavour to show where the Nigerian Utility is after one year of the RCM Contracts operation, as well as givinga clear indication of where the programme will take the Utility to at the expiry of the Contracts, after three years.

BIOGRAPHY

Speaker-Uzoma D. Achinanya

PositionAsst. Gen. Manager, (Marketing) CHQ/National Co-ordinator, Revenue Cycle

Management Programme

Company-National Electric Power Authority (NEPA)

Country-Nigeria

Uzoma D. Achinanya graduated with a B.Sc (Hons) in Electrical/Electronic Engineering from the University of Ife, Ile-Ife, Nigeria.

He did his one year mandatory National Service with the Water Utility of Borno State of Nigeria, between 1980 and 1981.

In 1981, he joined the services of the Nation’s Electricity Utility Industry (NEPA) where he has worked from the upstream sector of Generation to the downstream sector of Customer Relations Management (CRM).

Engr. Achinanya was in the team that commissioned the Nigeria’s second hydro Plant in Jebba along the river Niger. He was a Protection Engineer in the Transmission Sector of the Industry for six years, during which time he participated in the Co-ordination of the Distance Protection on the 132KV Transmission line between

Birnin-Kebbi (Nigeria) and Niamey (NigerRepublic).

Engr. Achinanya served as a District Manager in the Nigeria’s capital city of Abuja for ten years, when infrastructural construction in the new capital city was at its peak. He has served as an Asst. Gen. Manager (Distribution), Asst. Gen. Manager (Meter & Instruments/Grid Metering).

Engr. Achinanya is currently the Asst. Gen. Manager (Marketing) for the NEPA’s Corporate Headquarters as well as the National Co-ordinator of the Utility’s initiative on private sector participation on Revenue Cycle Management (RCM).

He has driven the RCM project right from the drawing board.

Engr. Achinanya has attended a number of courses on Power Sector Reforms. He has presented papers on various aspects of Utility Management.

He is married with two daughters and a son.

COMPANY BACKGROUND INFORAMTION

Company:National Electric Power Authority (NEPA)

Country:Nigeria

The Company was established by Decree No 24 of 1st April 1972 with

the amalgamation of Electricity Corporation of Nigeria (ECN) and

Niger Dams Authority (NDA). NEPA was empowered to maintain an

efficient coordinated and economic system of electricity supply to al

the nooks and crannies of the nation.

It started with four major power stations namely Ijora, Delta and

Afam Thermal Power Stations, and Kainji Hydro Power Station.

There are at present 7 Power Stations, 4 thermal and 3 hydro

Electricity supply system as at 2000

Total installed generating capacity5,938MW

NationalPeak Demand2,446MW

Length of 330kV Lines5,000 KM

Length of 132 kV6,000KM

Length of 33 kV Feeders37, 000KM

Length 11kV Feeders29,000KM

The Company is responsible for the generation, transmission,

distribution and marketing of electricity in Nigeria. It also supplies

electricity to NigerRepublic and arrangements are in advance stage

for supplying Togo and BeninRepublic.