Utility Strengthening Report for Kenya and Ethiopia

As part of this program, EAEP placed utility advisory teams within two key East African utilities: the Kenya Power and Light Company Ltd (KPLC) and the Ethiopian Electric Utility (EEU). The EAEP teams conducted a lengthy process of discovery and diagnosis, understanding existing systems, databases, procedures, team composition, and lines of reporting and oversight authority related to metering, billing, and collections. The diagnostic phase identified several areas that need to be addressed, including lack of energy accounting, ineffective commercial cycle, absence of analysis and proper reporting, mismatches in the organizational structure, overlaps in employee responsibilities, and ineffective individual performance evaluation. The EAEP team presented the Diagnostic Report to EEU's top management, who provided feedback and expressed commitment to addressing the findings. The EEU Chief Executive Officer reiterated the utility's commitment to addressing the shortcomings and expressed appreciation for EAEP's efforts and support. EEU is responsible for the distribution and sale of electricity across Ethiopia, organized into 11 regions, 28 districts, and 464 service centers. The EAEP team conducted analyses, working side-by-side with EEU management and field staff, which led to the following observations and recommendations. The lack of energy accounting infrastructure at EEU prevents the calculation of aggregate technical, commercial, or collection losses. Most feeders in Addis Ababa Region and Finfinnee District are metered, but no meters are installed at distribution transformers, hindering the establishment of energy accounting processes at the feeder level. The commercial cycle at EEU is ineffective, with customers divided into four groups and meter readings conducted at different times of the month. Meter reading errors are not corrected on time, causing bills to be issued for enormous amounts or with negative figures. No meter readings or consumption inspections are conducted for pre-paid meter customers, and the billing process is time-consuming. The EAEP team proposed a turnaround plan to address these issues, which includes the implementation of energy accounting infrastructure, optimization of the commercial cycle, and establishment of an analytics team to provide analysis and reporting. The turnaround plan also includes the formation of a revenue protection team to address revenue losses and the development of performance-driven regulations to improve employee discipline. The plan aims to improve the financial and operational health of EEU and KPLC, with lessons learned serving as a basis for future analyses and improvements in other utilities. The EAEP team will continue to support EEU in rolling out the initiatives to other regions, with a focus on improving energy accounting, commercial cycle efficiency, and revenue protection.