ELECTRICITY LOSSES IN DISTRIBUTION COMPANIES IN KYRGYZSTAN

NIKOLAY KRAVTSOVNGO "USTIN"

KYRGYZ REPUBLIC

BISHKEK,26-27 SEPTEMBER, 2011

Structure of the Power Sector of the Kyrgyz Republic

COMMON PROBLEMS OF POWER COMPANIES IN THE KYRGYZ REPUBLIC

• WEAK AND NON-TRANSPARENT CONTROL OF POWER FLOWS• CURRENT REGULATORY FRAMEWORK ESTABLISHES FOR

COMPANIES A HIGH LEVEL OF POWER LOSSES, WHICH ARE INCLUDED INTO THE TARIFF

• FINANCIAL PLANNING AND INTERNAL AUDIT ARE FORMAL• WAGE AND REMUNERATION SYSTEMS ARE IMPERFECT AND

PROVOKE THE EMPLOYEES TO COMMIT OFFENCES• CURRENT POWER RECORD KEEPING SYSTEMS ARE

UNRELIABLE AND RESULT TO SCALE ERRORS IN DATA• CURENT ACCOUNTING PRACTICE DOES NOT HELP TO IDENTIFY

POWER THEFTS

POWER DISTRIBUTION COMPANIES IN KYRGYZSTAN

COMPANY NAME Number of PDS, units

Stuff number, persons

Power output,

%

«SEVERELECTRO» 17 3,215 52.0

«VOSTOKELECTRO» 14 1,641 14.7

«OSHELECTRO» 15 2,200 19.3

«JALALABADELECTRO» 12 1,640 14.0

TOTAL 58 8,696 100

POWER RECEIVED BY DISTRIBUTION COMPANIESJanuary-June, 2008-2011

Company 2008 2009 2010 2011

«Severelectro» 2,722,159 2,159,567 2,245,859 2,779,665

«Vostokelectro» 872,231 663,288 684,520 786,240

«Oshelectro» 1,163,450 879,325 870,835 1,027,222

«Jalalabadelectro» 750,317 595,431 669,700 746,637

Total 5,508,157 4,297,611 4,470,914 5,339,764

STRUCTURE OF ENERGY CONSUMPTIONFOR JANUARY-JUNE, 2011

PROBLEMS IN KYRGYZ DISTRIBUTION COMPANIES

• EVIDENT OVER-REPORTING OF THE STATED POWER TECHNICAL LOSSES (ALMOST 20%)

• IMPERFECT SYSTEMS FOR DATA READING AND PROCESSING, BILLING AND COLLECTION OF PAYMENTS

• OUTDATED DATABASE ON POWER NETWORKS AND CONSUMERS

• LACK OF POSSIBILITIES TO PREVENT, IDENTIFY AND COMPENSATE POWER LOSSES

• MANIPULATIONS WITH POWER CONSUMPTION FOR OWN NEEDS

• COLLUSION BETWEEN CONSUMERS AND DISHONEST STAFF OD POWER COMPANIES

• MANIPULATIONS WITH POWER METER READINGS

FINDINGS OF THE REVIEW OF COMPANIES' TECHNICAL LOSSES

THE FOLLOWING HAS BEEN ESTABLISHED:

• REAL LOSSES IN 10/04 KV NETWORKS ARE BELOW 10% OF THE RECEIVED ELECTRICITY VOLUME

• CURRENT LOAD ON 04KV FEEDER PHASES ARE DISTRIBUTED WITH DISTORTIONS (SEVERAL TIMES) RESULTING IN SIGNIFICANT INCREASED POWER LOSSES

• AT SOME TRANSFORMER SUBSTATIONS THE LOADING IS BELOW 50% OF THEIR CAPACITY, WHICH RESULTS IN UNJUSTIFIED CONTINUOUS POWER LOSSES (OFF-LOAD)

• A HIGH LEVEL OF ADMISSIBLE TECHNICAL LOSSES ALLOWS TO MASK A PART OF COMMERCIAL POWER LOSSES (THEFTS AND FRAUDS)

TECHNICAL LOSSES OF POWER COMPANIES FOR 2008-2011 (1st half)

Technical losses of power companies totaled to almost 976 mln. kWh, or more than 18% of total power they received.

thous. kWh

Indicator 2008 2009 2010 2011

Received power 5,508,157 4,297,611 4,470,914 5,339,764

Power losses 1,048,874 709,338 670,918 975,894

Losses, % 19.1 16.5 15.0 18.3

FINDINGS OF THE REVIEW OF COMMERCIAL LOSSES IN POWER COMPANIES

THE FOLLOWING HAS BEEN IDENTIFIED: COMMERCIAL POWER LOSSES (THEFTS AND FRAUDS)

RESULT FROM:• POWER CONSUMPTION AVOIDING THE USE OF ELECTRICITY

METERS• CAUSING INTENTIONAL DAMAGE TO METERS• DECREASING METER READINGS UNDER COLLUSION BETWEEN

THE CONSUMER AND THE COMPANY'S REPRESENTATIVE• ABSENCE OF METERS AT CONSUMERS'• PRESENCE OF NON-REGISTERED CONSUMERS• POWER THEFTS ARE RECORDED AS USED BY GHOST

CONSUMERS• CREATING CONSUMERS' ARREARS, WHICH ACTUALLY DO NOT

EXIST

COMMERCIAL LOSSES OF POWER COMPANIES FOR 2010-2011 (1st half)

• The volume of companies' commercial power losses totaled 210 mln. kWh

• The data is considered to be unreliable due to negative absolute values of losses

thous. kWh

Company 2010 2011 Decrease %

«Severelectro» 274,440 110,394 164,046 59.8

«Vostokelectro» 116,116 68,514 47,602 41.0

«Oshelectro» 95,800 30,816 64,984 67.8

«Jalalabadelectro» 168,030 -196 168,226 100.1

Total 654,386 209,528 444,858 68.0

Power losses of companies for January-June, 2010-2011

26,6% 27,9%24,1%

21,1% 20,5%22,2%

25,3%

34,7%

30,9%

22,5%

Северэлектро Востокэлектро Ошэлектро Жалалабатэлектро РЭКи

2010 2011

Severelectro Vostokelectro Oshelectro Jalalabadelectro Total

Power losses of companies for January-June, 2008-2009

Vostokelectro JalalabadelectroSeverelectro TotalOshelectro

POWER CONSUMPTION FOR COMPANIES' OWN NEEDS

IDENTIFIED THAT:• IN THE 1ST HALF OF 2011 MORE THAN 15 MLN. KWH WAS

USED FOR OWN NEEDS, WHICH IS ALMOST 1.7 TIMES MORE THAN IN 2010

• POWER CONSUMPTION HAS INCREASED DRASTICALLY IN ALL COMPANIES, EXCEPT FOR «OSHELECTRO»

thous. kWh

Company 2010 2011 Increase Growth in %

«Severelectro» 3,891 5,458 1,567 40.2

«Vostokelectro» 2,965 3,958 993 33.5

«Oshelectro» 1,600 1,814 214 13.3

«Jalalabadelectro» 464 3,788 3,324 716

Total 8,920 15,018 6,098 68,4

ACCOUNTS RECEIVABLE OF DISTRIBUTION COMPANIES

• COMPANIES FACE PROBLEMS WITH ACCOUNTS RECEIVABLE DUE TO:

• THE PRESENCE OF UNVERIFIED (FAKE) DEBTS• BUILDING UP OF BAD DEBT BY CONSUMERS• INEFFECTIVE MEASURES TAKEN BY COMPANIES TO COLLECT ARREARS

Increased companies' accounts receivable in 2011

thous. soms

Company Beginning of2010

Beginning of 2011

End-half a year

Half-a-year growth

%

«Severelectro» 1,060,503 295,143 347,943 52,800 17.9

«Vostokelectro» 414,509 278,023 357,942 79,919 28.7

«Oshelectro» 766,349 480,625 569,954 89,329 18.6

«Jalalabadelectro» 137,617 114,598 170,326 55,728 48.6

Total 2,378,978 1,168,389 1,446,165 277,776 23.8

COMPENSATION OF LOSSES CAUSED TO DISTRIBUTION COMPANIES

• PROBLEMS WITH LOSSES CAUSED TO COMPANIES RESULT FROM:

• EXISTING PROCEDURES AND THE QUALITY OF DOCUMENTS PREPARED TO COMPENSATE LOSSES, THEIR POOR ORGANIZATION AND THEY ARE NOT PROTECTED FROM CORRUPTION

• OPPORTUNITIES FOR COLLUSION BETWEEN CONSUMERS AND COMPANY REPRESENTATIVES

• COMMON CASES OF FAKED REPORTS ON CONSUMPTION OF ELECTRICITY BY CONSUMERS AVOIDING THE USE OF METERS

• LOW SKILLS OF COMPANIES' LAWYERS

• COMPANIES' LAWYERS LACK PERSONAL ECONOMIC MOTIVATION TO SEEK FOR COMPENSATION OF COMPANIES' LOSSES

CONCLUSIONS AND RECOMMENDATIONS

• HIGH POWER LOSSES IN DISTRIBUTION COMPANIES, INCLUDING TECHNICAL, COMMERCIAL (THEFTS AND FRAUDS) LOSSES AND UNJUSTIFIED POWER CONSUMPTION FOR OWN NEEDS, AS WELL AS ARREARS ON FICTITIOUS AND BAD DEBTS AS A FORM OF CONCEALING ELECTRICITY THEFTS, ARE FIRST OF ALL PRECONDITIONED BY INEFFECTIVE (NON-TRANSPARENT AND IRRESPONSIBLE) MANAGEMENT

• INTRODUCTION OF GOOD GOVERNANCE PRINCIPLES IN COMPANIES (OPENNESS, TRANSPARENCY, ACCOUNTABILITY AND RESPONSIBILITY) CAN PROVIDE FOR A SIGNIFICANT REDUCTION IN POWER LOSSES (UP TO 1 BILLION KWH IN 2011)

THANK YOU FOR YOUR ATTENTION