How EasyPay is helping Discos win fight against electricity revenue loss
Recovering revenue from electricity customers in Nigeria has been described as the hardest segment of the electricity value chain.
This seems worst in the Niger Delta area where consumers for years saw electricity as a social service or entitlement from government and oil companies.
Privatisation meant that communities and individuals as well as government agencies must pay for power. Leaving the Discos to convince the public and going ahead to break the palms of the pampered populace in the region has been a difficult task.
The difficulty has been very deep in the Port Harcourt zone where the Port Harcourt Electricity Distribution Company (PHED) rules. It was said that the collection was so poor that the investors that bought the energy rights in the zone saw red and pains. They collected far less than one-third of the bills they generated per month.
The first method they inherited was the cash office system where customers were expected to walk in and pay. The returns were said to be paltry, causing PHED to have little or nothing to remit to the up lines (Gencos and Transmission Company). They later outsourced the payment collection to a third party but disputes and discrepancies allegedly crept in to make a mess of the expectations.
EasyPay is said to have helped the Port Harcourt Electricity Distribution Company (PHED) in collecting bills from customers. This is said to have created a seamless method that has boosted revenue generation from the abysmal levels years ago to something worthy to look at right now.
According to a top manager in the company, Lucky Omonedo, who spoke on behalf of his Chief Operating Officer (COO), EasyPay, which is regarded as a child of necessity, started operations on March 13, 2019. It came as a realization that the Discos cannot invest energy, skill and resources in perfecting collection of revenue when they have huge maintenance calls, distribution of power, and other efficiency demands on their hands. It was reasoned that collection is a sensitive but non-core areas, and must be outsourced.
EasyPay thus started to collect in the Port Harcourt zone (Rivers, Bayelsa, Akwa Ibom and Cross River) in March 2018 and the collection was not huge due to many difficulties and few persons willing to walk in and pay. The firm did its research and found that wresting money from the pockets of Nigerians looks difficult and waiting for consumers to walk in and pay could be slow.
They thus worked out ways of motivating customers into taking proactive steps to pay up. The first motivation is to make payment very easy. This came by way of effective manning of the cash offices, creating agents everywhere to make customers walk less and pay more. The other is rollout of online payment platform to make people pay from the comfort of their homes, day or night.
When this was done, they saw revenue surge to almost 300 percent, thus reducing tension for the Disco. Any business that sends out product but does not get the revenue back fast is bound to crash. Thus, EasyPay operates in that critical segment of a product value chain that decides the survival or otherwise of the producer or seller.
Omonedo said apart from the Covid-19 pandemic period that collection dipped, the revenue performance in PHED has been only surging. He, however, refused to disclose figures without authorisation.
Mission to Jos
Omonedo said EasyPay has entered Jos to support the Jos Electricity Distribution Company (JEDEC) with collection strategies and initiatives. He said: “Going to Jos was like seeking to do something differently. The contract was signed at about May 2021. We deployed resources there in June 2021. Now, our operation is resuming in earnest.”
The revenue collection in the middle-belt zone seems to be concentrated in Jos but EasyPay is working hard to push into the states of Benue, Gombe, and Bauchi in addition to Plateau. He said they are deploying their Port Harcourt zone experience to conquer the new territory. The difference is that whereas PHED handed off entire collection duty including the cash offices, JEDEC holds onto management of their cash offices, at least at the moment.
Electricity management experts say this may mean deploying costs on personnel, logistics, and creating efforts to monitor discrepancies instead of handing off all of these to a third party. It may become a duplication of efforts with not much revenue from the cash offices.
Omonedo said the agents get fat commissions which motivate them. The new stream of income adds to the income they make from other businesses they do. They also know their environments and localities so well in terms of insecurity and threats rather than outsiders.
Two key services that motivate customers to pay promptly are the realisation that if you pay (recharge) regularly you attract more steady power supply. The locations have been designated into Grades according to payments. Those on regular power supply are graded as ‘A’ and down to lower grades. They also pay higher per unit. By this, most customers are encouraged to pay regularly and are pleased to pay something higher per unit. The other is the services rendered during disconnection exercises. Omonedo said: “Our agents or staff follow the disconnection teams to fieldwork and those who are being disconnected have a chance to pay right there and retain the light or reconnect if already disconnected. This helps boost customer service relations.”
What is uppermost in the minds of the PHED and EasyPay is customer satisfaction and motivation to pay for bills or recharge promptly. Explaining how the agent system works, Omonedo said EasyPay sells certain units to an agent who resells tokens to customers to recover his/her funds (investment) with commission or profit. This provides more income to the agent but boosts revenue to the Disco and creates easy power supply to the electricity customer.
Omonedo says: “Any Disco that hands over collection to EasyPay will no longer worry about running costs on cash collection or logistics or use of security to collect money. They only pay commission on what is collected which covers all of these costs they would have borne.
“In EasyPay, we have structure on ground to track collections from the point of the customer to bank. There is no gap anywhere. Internal audit section is on ground to do daily call-over of all collections done in the company real-time. We see every collection any staff has made. There is accountability and transparency. EasyPay is known for integrity and in the past three years, PHED can testify that all their money goes to them every day. At the end of the month, we do reconciliation. In Jos, we are planning to implement the model we have in PHED by going to agent locations very close to customers.”
When EasyPay started with PHED, they were said to have just over 100 agents but now they have about 1200 agents in different locations. “Our commission is also attractive which gives us an edge. We are known for transparency. We do not hold down anybody’s money. Any energy they give to us, we avail them their money. We tolerate zero fraud. We also try to ensure that customers are happy. If a customer gets energy supply but cannot have payment convenience, we come in. For instance, it is of no benefit for a customer to spend N200 to go and pay N1000. This increases the bill to N1200. By paying through our platforms or agents, you pay only the bill. That is how far we have improved the system.”
For the Jos District, he said: “We already have agents in as far as Gombe. We have our business development manager now in Jos who will oversee our operations in the four states. From our experience, it is better for Discos to encourage total payment outsourcing. It is observed that some areas are shielded from paying bills. We as a middle company do not have any interest. In fact, our interest is in collecting every kobo.”
The future belongs to outsourced payment systems
He went on: “Outsourced payment system is the future. We have challenges in some areas of the country about embracing it. They still want to pay at cash offices. They think if they paid to an agent, it may not reflect in their bills. We have been teaching them to try it first. If it reflects, would you have further doubt? The confidence has been built in the customers.
“We are training our agents so they can imbibe the integrity aspect of our business so the customers can trust us and embrace the system. The future is all about outsourced payment. The customer will get used to paying from home or walking across the street to make payment. Energy today is still a monopoly. Only one source still supplies power. As long as the Discos are able to deliver electricity to the people, customers will have to make payments.”
This specialised service is being offered to many distribution locations including the Enugu zone and Ikeja. The firm is also creating other payment systems and revenue streams that would boost the revenue of the agents.
He said EasyPay also helps customers to get attention from Discos to boost power supply and achieve customer satisfaction.