Lecture Notes in Electrical Engineering 759

Njabulo Kambule
Nnamdi Nwulu

The Deployment
of Prepaid
Electricity Meters
in Sub-Saharan
Africa
Riding the Fourth Industrial Wave
Lecture Notes in Electrical Engineering

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Njabulo Kambule · Nnamdi Nwulu

The Deployment of Prepaid

Electricity Meters
in Sub-Saharan Africa
Riding the Fourth Industrial Wave
Njabulo Kambule Nnamdi Nwulu
Department of Geography, Environmental Department of Electrical and Electronic
Management and Energy Studies Engineering Science
University of Johannesburg University of Johannesburg
Johannesburg, South Africa Johannesburg, South Africa

ISSN 1876-1100 ISSN 1876-1119 (electronic)

Lecture Notes in Electrical Engineering
ISBN 978-3-030-71216-7 ISBN 978-3-030-71217-4 (eBook)
https://doi.org/10.1007/978-3-030-71217-4

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature
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Contents

1 Introduction: Electrical-Energy Revolutions and Smart Grids . . . . . . 1

1.1 Industrial Electrical-Energy Revolutions Era . . . . . . . . . . . . . . . . . . . 3
1.1.1 Era 1: Steam-Based Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.1.2 Era 2: Industrial Electric-Energy . . . . . . . . . . . . . . . . . . . . . . . 3
1.1.3 Era 3 and 4: Modern Clean Electrical-Energy . . . . . . . . . . . . 4
1.2 Household Electricity in Sub-Saharan Africa . . . . . . . . . . . . . . . . . . . 5
1.3 Rural Electrification, Smart Grid Development,
and Decentralisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
1.4 Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
1.5 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Part I Smart Prepaid Electricity Meters

2 Rationale Part I: Historical Development and Market
Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.2 From Conventional to Prepaid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Prepaid Electricity Meters: Technology Characterisation . . . . . . . . . 24
2.4 Historical Development and Market Expansion . . . . . . . . . . . . . . . . . 27
2.5 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3 Rationale Part II: A Misdiagnosis of Non-payment
and Electricity Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
3.1 Arrearage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
3.2 Disconnection: An Ignored Alternative? . . . . . . . . . . . . . . . . . . . . . . . 36
3.3 Power System Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
3.4 Electricity Theft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.5 Mechanisms to Curb Electricity Theft—Is a SPEM
the Solution? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3.6 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
v
vi Contents

4 Prepaid Electricity Meters and Energy Poverty—Lessons

from South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
4.1 Pro-poor Electrification Regulatory and Incentives
Framework—Developing Countries . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4.2 Pro-poor Electrification Regulatory and Incentives
Framework—South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.2.1 Electricity Basic Service Support Tariff (Free Basic
Electricity) (2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
4.2.2 Demand Side Management (DSM) . . . . . . . . . . . . . . . . . . . . . 61
4.2.3 Efficient Lighting Programme (2007) . . . . . . . . . . . . . . . . . . . 63
4.2.4 Solar Water Heater Programme (2008) . . . . . . . . . . . . . . . . . . 64
4.3 Energy Poverty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.1 Increasing Electricity Tariffs . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
4.3.2 Energy Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
4.4 Prepaid Electricity Meters and Energy Poverty . . . . . . . . . . . . . . . . . . 66
4.5 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Part II Sub-Saharan Region: Adoption and Experiences

5 Western Africa Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.1 Ghana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.1.1 Geographical Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.1.2 Energy Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
5.1.3 Prepaid Electricity History and Current Status . . . . . . . . . . . . 84
5.1.4 Challenges of Prepaid Metering . . . . . . . . . . . . . . . . . . . . . . . . 85
5.1.5 Future Prognosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
5.2 Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.2.1 Geographical Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.2.2 Energy Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
5.2.3 Prepaid Electricity History and Current Status . . . . . . . . . . . . 93
5.2.4 Challenges of Prepaid Metering in Nigeria . . . . . . . . . . . . . . . 95
5.2.5 Future Prognosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
5.2.6 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
6 Eastern Africa Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
6.1 Tanzania . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
6.1.1 Geographical Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
6.1.2 Energy Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
6.1.3 Prepaid Electricity History and Current Status . . . . . . . . . . . . 107
6.1.4 Challenges of Prepaid Metering . . . . . . . . . . . . . . . . . . . . . . . . 109
6.1.5 Future Prognosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
6.2 Kenya . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
6.2.1 Geographical Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
6.2.2 Energy Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Contents vii

6.2.3 Prepaid Electricity History and Current Status . . . . . . . . . . . . 113

6.2.4 Challenges of Prepaid Metering . . . . . . . . . . . . . . . . . . . . . . . . 114
6.2.5 Future Prognosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
6.3 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
7 Southern African Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
7.1 South Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
7.1.1 Geographical Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
7.1.2 Energy Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
7.1.3 Prepaid Electricity History and Current Status . . . . . . . . . . . . 122
7.1.4 Challenges of Prepaid Metering . . . . . . . . . . . . . . . . . . . . . . . . 123
7.1.5 Future Prognosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
7.2 Mozambique . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
7.2.1 Geographical Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
7.2.2 Energy Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
7.2.3 Prepaid Electricity History and Current Status . . . . . . . . . . . . 129
7.2.4 Challenges of Prepaid Metering . . . . . . . . . . . . . . . . . . . . . . . . 130
7.2.5 Future Prognosis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
7.3 Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131

Part III Policy Implications

8 Conclusion: Lessons Learnt and Policy Recommendations . . . . . . . . . 137
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Acronyms

AMI Advanced Metering Infrastructure

AMP Ampere
ANC African National Congress
C Cent
c/kWh Cent per kilowatt hour
CESS Collective Energy Switching Scheme
CFL Compact Fluorescent Lamp
CIU Customer Interface Unit
DEA Department of Environmental Affairs
DME Department of Minerals and Energy
DoE Department of Energy
DSM Demand Side Management
E East
ED Electric dispensers
EDM Electricidade de Moçambique
EPBS Electricity Prepaid Billing System
EPC Energy Performance Certificates
Eskom Electricity Supplying Commission
FBE Free Basic Electricity
GW Giga Watt
IBT Inclined Block Tariff
INEP Integrated National Electrification Programme
Kv Kilo volt
Kw Kilowatt
kWh Kilowatt hour
LED Light emitting-diode
M Meter
N North
NEP National Electrification Programme
NERSA National Electricity Regulator of South Africa
NTLs Non-Technical Losses
PEH Prepaid Energy Hub
ix
x Acronyms

PHCN Power Holding Corporation of Nigeria

PURC Public Utilities Regulatory Commission
RSA Republic of South Africa
S South
SABC South African Broadcasting Commission
SECC Soweto Electricity Crisis Committee
SMS Short Message Service
SOWETO South Western Townships
StatsSA Statistics South Africa
ToU Time of Use
TRA Tembisa Residents Association
TV Television
UBPL Upper-Bound Poverty Line
UK United Kingdom
UNIDO United Nations Industrial Development Organisation
USA United States of America
USD United States Dollar
VAT Value Added Tax
W West
WB World Back
WEC World Energy council
WEF World Economic Forum
Chapter 1
Introduction: Electrical-Energy
Revolutions and Smart Grids

Energy is as ancient as time. All phenomena, historical inventions, industrialisation,

civilisation, and modernisation unfolding in time, hinge on energy. It is an essential
property that exists in natural material and systems. Through energy, atoms and
molecules are set in random motion, enabled to interact and vibrate. It is thus an
important mainstay of livelihood, matter, and space. It is also the cause and effect,
as well as the measure of the historic, present, futuristic change in society [26, 45].
Energy continues to frame and drive development across global societies and as such
has been acknowledged the currency of motion, development, and progress over time
[2, 10, 11, 18, 23, 34, 39, 46, 47]. Hitherto, the role of energy in societal or human
development remains uncontested. It has become a universally applied measuring
standard for regional development. Improved access to energy has the propensity to
translate in ameliorated standards of living [11, 45].
Different types of energy carriers have been discovered in the past waves of the
revolution. Figure 1.1 is a historic overview and evolution of human reliance on
energy [10, 11, 23, 26, 39, 44]. Historically, particularly during the Pre-Industrial era
energy needs for human survival remained modest. The sun was the primary source
of heat. With time, reliance shifted towards burned wood, dried dung, and straw for
heat [47]. Sailing ships were the means of transportation through water and wind.
Animals were fundamental instruments of intensive labour [2, 46].
Whereas access to a specific form of energy, i.e. electrical energy, has now enabled
a more convenient livelihood for humanity, a significant portion of rural households
in Sub-Saharan Africa still has limited access to it [2, 34, 45]. This in-turn has
subdued development, and in an unfolding era of the fourth industrial revolution it
is imperative to draw-out implications associated with this.
With this backdrop, the chapter commences with a review and discussion of the
Industrial revolution, highlighting the different eras or waves that characterise it.
Essentially we show that energy and electricity are at the centre of this phenomenon.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 1

N. Kambule and N. Nwulu, The Deployment of Prepaid Electricity Meters in Sub-Saharan
Africa, Lecture Notes in Electrical Engineering 759,
https://doi.org/10.1007/978-3-030-71217-4_1
2 1 Introduction: Electrical-Energy Revolutions …

Fig. 1.1 Energy evolution [18]

1 Introduction: Electrical-Energy Revolutions … 3

We lastly focus on rural electrification and smart grid development, focussing on

how mini-grid systems and smart prepaid electricity meters (SPEM) are fundamental
building blocks for Sub-Saharan Africa’s move and intention of fortifying its agenda
on the fourth industrial revolution.

1.1 Industrial Electrical-Energy Revolutions Era

The Industrial Revolution unfolded between the eighteenth and nineteenth centuries.
This period was characterised by a sudden surge in fossil fuel (i.e. coal, oil, and
natural gas) based energy [2, 47]. The abundance of these resources and their use
in daily human life radically transfigured the general societal livelihood [11]. Until
recently, the era was generally divided into three waves (Figs. 1.1 and 1.2).

1.1.1 Era 1: Steam-Based Energy

The first wave of the 1700s Industrial Revolution mainly features inventions of steam
engines by Thomas Newcomen, Savory, and James Watt, between 1712 and 1765,
as a pillar that set the tone for intensive and unprecedented societal development
through fossil fuels [11, 26, 39, 45, 47]. Locomotives and farm implements were
powered by steam, and production for the first time was mechanised. On the other
hand, coal became a useful resource for warming-up buildings and steel production.
To date, more than 85% of the total share in modern energy use is from fossil fuels
[19, 47].

1.1.2 Era 2: Industrial Electric-Energy

The invention of the first electric-generator utilising coal in the 1800s signalled
the start of second and move to the third wave of the Industrial Revolution [11,
45]. This specific creation was shortly followed by Thomas Edison’s electric light
invention, which pro roved to be a watershed moment in the proliferation of electrical-
energy. In the beginning, electricity use was specifically for telegraph and lighting
applications [2, 4]. The invention of an electric system with a source of power resulted

Fourth wave
First wave Second wave Third wave
(2000): Cyber-
(1700s): Steam (1800s): (1900s):
physical
engine Electricity Computing
systems

Fig. 1.2 Waves of Industrial revolution [2, 11, 26, 39]

4 1 Introduction: Electrical-Energy Revolutions …

in Manhattan being the first region where mass electrification took-off [2, 11, 16,
26]. The availability of alternating current (AC) in the mid-1880s permitted for
electricity to be transmitted and distributed over long distances. This was primarily
because voltage could be increased (stepped-up) and decreased (stepped-down) [11,
18, 45]. At this point, electricity had become a market commodity with a price-
tag attached. However, it was still available in ‘local pockets’ because “each utility,
supplied electricity to its local city or neighbourhood and was completely isolated
from others” with “each utility vertically integrated1 ” [4]. Electricity was more of a
luxury than a necessity. It was expensive—statistically almost 70 times higher than
the current average cost [2, 17, 18].

1.1.3 Era 3 and 4: Modern Clean Electrical-Energy

As opposed to the second wave—highly dependent on fossil fuels for survival—the

third and fourth wave (twentieth and twenty-first century) marked the convergence
of clean energy and collaborative communication [20, 25, 34, 39]. The Third wave of
Industrial Revolution (starting in the 1960s) witnessed the use of digital computers
and the internet resulted in the automation of manufacturing and disruption of the
electrical-energy market [11]. The burgeoning market demand for electricity gadgets
(telephone, television, and radio) meant that: electricity capacity and supply had to
increase; and, the global economy was becoming electricity oriented (Fig. 1.2) [2].
Today, electricity has become a central feature of modernisation and develop-
ment. Lloyd [19] and Vllasaliu [40] recently assert that, electricity “is such a neces-
sary element in development that it should be seen as a basic right”. Electricity
accessibility or electrification has therefore been embraced as a socio-economic
development project that different governments across the globe are committed to
[7, 20, 25].
The youngest phenomenon is that of the fourth industrial revolution, wherein
focus in the twenty-first century has transitioned towards new technologies that fuse
the physical, digital, and biological realms [2, 7, 11] describes it as.
…the era of linking the innovated existing first industrial revolution devices with the inno-
vated existing second industrial revolution devices and innovated third revolution devices.
The linking will be done with effective communication through programming.

It is globally recognised as the most important economic and societal trend as it

affects all fields of human livelihood and will essentially transform the nature and
ability of functionality of business and society in the next decades [7]. As the fourth
wave continues to drive current and future markets, as well as human behaviour,
one of the fundamental questions that policymakers, researchers, and academics
need to address, is that of the impact of the wave on the electric-energy landscape

1 Utility
responsible for electricity generation, transmission, distribution to customers and subse-
quent billing.
1.1 Industrial Electrical-Energy Revolutions Era 5

in Sub-Saharan Africa. How can the wave be effectively used to improve house-
hold electrification? Can the wave be used to improve connectivity especially for
households located in remote areas to participate in the mainstream virtual (online)
economy? How will the regulatory landscape respond to this inevitable societal and
economic transformation?
Electricity is at the centre of this revolution. According to [45], the wave will
induce disruptions in three forms:
• Electrification
• Decentralisation
• Digitisation
These forms exist in a cyclic and interdependent manner. In electric-energy (or
electrification) terms this wave has altered the process of electricity generation. The
impact of burning fossil fuel for electricity generation has resulted in carbon-intensive
based global economies [11, 20, 39, 47]. Consequently, attention in the fourth wave
has increasingly been on the transition towards emerging clean electrical-energy and
energy efficient technologies. While the fossil fuels used for electricity generation
remain inexpensive, due to their abundance, but the environmental cost remains high.
Nuclear energy, albeit being clean, is a contentious energy source in the modern era
[25, 34, 45]. However, renewable energy sources are arguably universally accepted
as mainstream instruments for global economic development. The energy sources
include the sun, wind, biomass (e.g. garbage, and forest, and agricultural waste),
geothermal heat extracted underground, ocean tides and waves, and small hydro
[2, 26, 39]. Notwithstanding, geographical uneven distribution and intermittence
of the noted renewable energy sources and smart grid software systems form part
of the essence of the fourth wave [34]. In the light of the aforementioned global
electric-energy revolutions, realistically, a majority of nations—a majority located
in underdeveloped or developing regions—are struggling to evolve even beyond the
second wave [25, 26]. There are of course several underlying reasons why this has
been the case and the next section specifically discusses the role of improved of
electrification in Sub-Saharan Africa as a mechanism of development in the fourth
industrial revolution wave [2, 7, 11, 20, 45, 47].

1.2 Household Electricity in Sub-Saharan Africa

Improving electricity access accelerates human development [18–23]. The United

Nations Sustainable Development Agenda 2030 aims at providing universal access to
electricity by 2030. Improved electrification has the propensity of improving educa-
tion and health services, as well as creating employment [39, 41]. Currently, the
Sub-Saharan African region has an overall operational electricity capacity of about
100 GW. Of this total, 49% is from coal, 20% large hydropower, and 16% from
gas [2, 20]. Poor infrastructural maintenance, management, and planning are among
6 1 Introduction: Electrical-Energy Revolutions …

several factors that lead to relatively higher and unaffordable electricity generation
and distribution costs in the region [19, 23, 25, 41].
Albeit the reality of uncertainty about the household electrification rate in devel-
oping countries, and Sub-Saharan Africa specifically, it is broadly accepted that close
to 1.1 billion (14%) people worldwide still lack electricity [43]. More than 2.8 billion
households rely solely on traditional biomass for heating and cooking and [42]. The
low connection rates are linked to the high electricity connection charges, which entail
geographical hurdles in the construction of transmission and distribution networks,
and excessive stringency of technical standards, inefficient procurement practices [2,
6]. There is a clear need for governments to tailor individual development agenda
based on electrification reality in the region.
Figure 1.3 is an overview of the household electrification rate progress in the Sub-
Saharan Africa region between 2000 and 2017 [13]. While there is clear and positive
progress in connecting households to the electricity grid, the connection rates in 2016
were still among the lowest (42%) in the world. Additionally, the connection rate
is not homogenous; it is different across the region. For instance, in countries like
Gabon, Kenya, and, Swaziland, the rate has been more rapid (rising by more than
50% between 2000 and 2016) than in countries like Zimbabwe, where connection
rates have declined [39]. Figure 1.4, is an example of how the overall improved
electricity accessibility in the region is characterised by heterogeneity [13]. This is
an indication that electricity is an indicator of wealth disparity that exists within the
region [23, 25, 41].
The International Energy Agency [13] reports that close to 95% of those without
electricity are based between Sub-Saharan Africa and Asia [13]. In absolute and
specific terms, more than 600 million (57%) (2 in every 3 people) of the population
are without access to electricity in Sub-Saharan Africa. About 15 countries in that
region have less than 25% electrification rates. These rates are possibly extremely
lower with the exclusion of countries like South Africa which is responsible for the
majority (90%) of household connection rates in the region. In a recent survey of
22 Sub-Saharan Africa countries, it was found that “income levels…seem to be key
determinants of electricity use” [37].
Relative to the rest of the world, household electricity consumption rates in Sub-
Saharan Africa are significantly lower—especially in the exclusion of South Africa

Fig. 1.3 Electrification

access rate for selected
countries [13]
Less than 10% More than 80%
access rates access rates

South Sudan, the Ghana, Swaziland,

South Africa, Gabon,
Central African Cabo Verde,
Republic, Chad, and Seychelles, and
Sierra Leone Mauritius
1.2 Household Electricity in Sub-Saharan Africa 7

Fig. 1.4 Electrification access rate for Sub-Saharan Afrin Region [13]
8 1 Introduction: Electrical-Energy Revolutions …

[19, 23, 25, 41]. In comparison to countries like China and the United States of
America (USA) with electricity consumption per capita ranging between 12 and 15%,
the Sub-Saharan region has less than 3% [2]. The electricity tariffs in the region tend
to be below production costs (except for two countries; they remain relatively high in
global terms. Utilities continue to be unreliable guarantors of private investment [20,
41]. Again, the construction of new power plants/infrastructure is close to impossible
and electricity shortage is entrenched [19, 37]. Regulators, therefore, opt towards
increasing electricity tariffs for utilities to cover the full costs of the electricity supply
service.
Faced with growing electricity demand, systems losses (i.e. non-technical losses—
unaccounted electricity usage due to inter alia theft, utilities fail to correctly bill
customers or technical losses along the transmission and distribution networks) are
a reality in the Sub-Saharan region [19]. Thus far, only four countries (i.e. South
Africa, Botswana, Mauritius, and Lesotho) have well managed their losses within
the World Bank’s ‘Good Standard” threshold (i.e. loss of ≤10%). By contrast,
eight countries (Central African Republic (CAR), Republic of Congo, Sap Tome and
Principe, Comoros, Sierra Leone, Nigeria, Madagascar, and Cape Verde) experience
losses of ≥30% [37]. In simple terms this means that for every 10 kWh generated
by utility only 7 kWh can be financially accounted for [2, 19].
Until recently, household livelihood and survival in Sub-Saharan Africa has been
fixated on fossil fuels [20, 23]. The region is among the best for solar photovoltaic
(PV) and small-large scale hydropower. On the other hand, western Sub-Saharan
Africa has large natural gas reserves and Eastern with high geothermal potential
[19]. High investments in these sectors are necessary to harness optimal benefits
from these resources. Hitherto, decentralised electrification in a form of renewable
energy sources (such as solar home systems) is becoming the preferred alternative for
investment among private companies [23, 25, 27, 41]. This is generally because rural
households, constituting close to 80% of households without electricity, are sparsely
populated, thus making the connection cost level higher than normal [2, 13, 19, 20,
39, 41] . Off-grid, mini-grid, and stand-alone renewable energy systems have thus
gained traction in the region as instrumental in improving electricity accessibility in
the region. Low-income households may access low electrical appliances (e.g. light-
bulb and cellphone), and middle to high-income earners may access low or medium
power electric appliances (i.e. television, refrigerator, air, and cooling fan) [19].
Schwab [35] has argued that “Many (Sub-Saharan African states) have still not
enjoyed the benefits of the second industrial revolution”. Sub-Saharan Africa govern-
ments need to create conducive investment environments and be proactive in adopting
emerging household technologies. Smart household technologies may elicit positive
spin-offs for the region [1, 23]. For example, the development and introduction of
smart grid systems may assist improve the efficiency of distributing electricity across
several homes in very remote locations [19, 20, 25, 27, 41].
1.3 Rural Electrification, Smart Grid Development, and Decentralisation 9

1.3 Rural Electrification, Smart Grid Development,

and Decentralisation

From the third wave into the fourth, several electrical technologies have had signif-
icant implications on the Sub-Saharan electricity grid. This is what is commonly
attributed to as decentralisation. The phenomenon is comprised of the four following
factors:
• Distributed Generation: This is electricity generated from renewable energy
sources, particularly renewable energy sources. Sub-Saharan Africa is endowed
with solar-based resource and countries like South Africa, Namibia, Kenya, and
Ghana are identified as leading solar-based energy markets. Consequently, the
price of residential solar PV has become cost-competitive as it has plummeted by
more than 61% since 2012 [11].
• Distributed Storage: this is a mechanism of collecting electrical energy to utilise
it during peak periods or for backup. This flattens demand peaks and valleys. With
Sub-Saharan Africa again endowed with Hydro and Gas, this is another area that
will fast have an impact on the overall regional grid.
• Energy Efficiency: the ability to use and reduce energy without compromising
the quality of the final product and reducing demand is important for energy
economies. The goal is to reduce electricity consumption to as reasonably low
levels as possible, especially within household settings. According to [13], house-
hold energy consumption for lighting has decreased by about 80% as incandescent
lamps have supplanted with compact fluorescents and Light Emitting Diode (LED)
bulbs. By proactively applying energy efficiency measures, South Africa can miti-
gate its electricity demand by more than 16% by the year 2030 without restricting
economic growth [1].
• Demand Response: enables the control of energy consumption at peak demand and
high pricing periods by giving price or volume signals, and sometimes financial
incentives to reduce demand at certain strategic periods of the day [11].
A plethora of challenges continue to hamper the distributed generation and grid
connection project in Sub-Saharan Africa [23]. Energy needs, at least for lighting,
are still based on the availability or usage of candles, kerosene lamps, generators,
torchlights. Wood and dung are cooking the main energy sources for rural households
[20]. The demand for electricity in these areas thus remains low. A socio-economic
reason associated with is that a majority of the households relatively earn below-
average income and struggle to afford commercially available (on-grid) electricity
[1, 2, 23, 39, 41].
Besides this fact, the extension of existing grid networks to include rural areas also
stands as an important hurdle for improved electrification in the region. A majority of
rural households remain without electricity because of grid extension issues. There is
a growing realisation that achieving universal electrification rates through expanding
the traditional on-grid system is largely impossible [1, 39, 47]. This is due to issues of
topography, low population density, as well as the fact that most rural communities are
10 1 Introduction: Electrical-Energy Revolutions …

isolated in location,meaning that the cost of transmission and distributing electricity

to the areas make may prove expensive and cumbersome [27]. The World Bank
[44] found that the Sub-Saharan region has the highest number of countries with
high connection charges (i.e. ≥$100 per customer at the lowest connection service
rating). The aforementioned are among several factors that have prolonged the delay
of connecting households to the grid. According to [11]
The fourth may finally deliver electricity because it no longer relies on centralised grid
infrastructure...A smart grid can distribute power efficiently across a number of homes in
very remote locations.

Authorities across the region are therefore growingly considering smart mini-grid
grid systems as an alternative approach to leverage and bolster the electrification
rate in the region [1, 20, 27, 36]. The application of renewable energy technology
has become one of the most pragmatic approaches to improve rural electrification,
especially in the context of geographically challenging areas [41, 47]. Renewable
energy currently is the most preferable, sustainable, and viable energy source for
electricity accessibility in the region. Governments and public utilities are growingly
investing in this source of energy. Sub-Saharan Africa is endowed with a variety of
renewable energy sources, including solar, wind, hydro, geothermal, and biomass
[2, 23].
Among the various energy sources, solar energy has the largest potential to assist
with improved electrification. About 10 TW of energy can be harnessed for solar
power; wind about 1, 300 GW, and geothermal around 1 GW [9, 11, 39]. Solar
mini-grid (decentralised) systems have also become popular, enabling an easier and
cheaper means for electrification [1, 47].
The phenomenon of digitisation is imperative in the fourth wave of the industrial
revolution. According to ROSCONGRESS [34], “digitalization is the driver of effi-
ciency growth in energy”. Digitalisation is the ability of digital technologies, located
across the grid to communicate and give useful customer-based data for better oper-
ational and grid management [11]. With this, utilities have access to real-time oper-
ations of the grid network and its connected resources and may also collect network
data to optimise situational awareness and reduce system non-technical losses. Smart
meters are an example of digital technologies that assist utilities to provide services
in remotely located areas.
Thus far, the average electricity grid access rate remains at about 20%, so issues
of transmission and distribution prove to be a problem when it comes to connecting
households to the grid. The application of min-grid systems has become a viable
and cost-effective solution for electrification challenges (e.g. poor reliability and
inconsistent quality) in most countries (rural areas) in the region. Sub-Saharan Africa
has close to 2000 mini-grid sites, of which about 40% of those are solar projects [12].
Rural areas in countries like South Africa, Gambia, Botswana, Kenya, and Tanzania
have operational solar mini-grid systems. Some of the systems are solar-battery
hybrid systems [23, 47].
1.3 Rural Electrification, Smart Grid Development, and Decentralisation 11

In Nigeria, only about 36% of the country’s electrified households are based on
a centralised system; about R20 billion is being invested in mini-grid systems to
improve electrification [12]. The use of these systems is expected to grow exponen-
tially (16, 000 sites) in the region by 2023. Household mini-grid systems are currently
normally characterised by a fee for service, rely on dispersed technology (e.g. solar
heater systems), fixed monthly payments, use of batteries, and prepaid meter cards
[1, 3, 23, 36].
At operations level, in the context of smart household prepaid electricity meters,
the growth of renewable energy mini-grid systems has implications on the metering,
billing, and collections systems. The installation of smart prepaid metering systems
may enable utilities to accordingly measure electricity demand and usage [1, 20, 23,
27, 28, 36]. With that, operators or regulators are enabled to determine and control
household electricity consumption fees or tariffs [41]. As compared to a normal
payment meter, a smart prepaid electricity meter bears the following features and
advantages [1, 3, 39, 41, 47]:
• Quantity of electricity used
• Time of use
• Appliances associated with each connection
• Improved operational efficiency
• Reduced operations and maintenance costs.
As it will be seen later in the book, smart prepaid meters are becoming popular
models of payment in Sub-Saharan Africa [1, 27, 36, 47]. In a market where popula-
tions have access to smart mobile phones, smart prepaid electricity meters provide a
smart option of purchasing electricity using mobile phones. So, instead of a reliance
on vouchers or scratch card methods mobile phones are increasingly offering an
improved and more reliable payment option as well as revenue collection [2, 3, 41].
This means that households with access to the network may purchase electricity at
any point of the day and thereby improving sales. This is the advantage that comes
with the Fourth Industrial Revolution whereby customers or prosumers can have
direct control and impact on the final bill and be accountable for the energy choices
made.
In a study conducted in Nigeria, the revenue collection rate of 9 audited mini-grid
projects with smart prepaid electricity meters installed ranged between 98–100%
[23, 27, 39]. From these projects it was found that successful mini-grid projects
ensure about 15−20% returns. This is however reliant on a variety of factors which
include site selection, community engagement, demand, stimulation, ownership, and
regulatory support [1, 3, 28]. Table 1.1 is a reflection potential links between each
of the noted factors to the effectiveness of a smart prepaid electricity meter project.
Under a cloud that is now driven by virtual connectivity smart or mini-grid tech-
nologies are important agents of driving this connection for remotely located regions
(i.e. rural areas) [34]. Cost-effective mini-grid solar system technologies can be used
for a variety of reasons including charging laptops and cellphones to connect with
12 1 Introduction: Electrical-Energy Revolutions …

Table 1.1 Mini-grid related factors and implications associated with the use of prepaid electricity
meters [1, 2, 20, 23, 27, 36, 47]
Factors Implication on prepaid metered mini-grid system
Site selection for economic viability For whichever site selected it is important to first
determine the economic viability of the prepaid electricity
meter programme. In this conducting a socio-economic or
situational impact assessment study becomes necessary.
This may, for instance, assist to gauge the extent of use of
smart mobile phones and therefore improve the
convenience of the technology or programme. Again, an
assessment of this nature will reflect the willingness of
consumers to use and pay for prepaid meter based
electricity. The latter will help ultimately present minimal
concerns about safety or social unrest
Community involvement The involvement of the community within which the
prepaid electricity meter project will be carried out is
cardinal. The community may be comprised of various
stakeholders, i.e. local leaders, government officials, civil
organization leaders, and general community members.
The process of involvement has to be from inception or
conception phase and beyond. This may be undertaken
through regular public meetings. Such an engagement
will ensure local buy-in and the sustainability of the
prepaid meter programme within the mini-grid project.
Community’s involvement will also ensure that all
stakeholders are invested in the project and therefore
households, in particular, are likelier to embrace the value
of using the technology, which in turn increases the
physical and financial security of the project
On-going community engagement Community involvement is not to be a once-off event, but
an on-going process. The purpose of this is to maintain
satisfaction and constant identification of emerging
operational issues. In specific terms, on-going
engagement with include inter alia frequent site visits,
regular meetings with local community stakeholders.
There are several advantages attached to this:
• There is growing trust between authorities (government
or utilities) and the community
• Burgeoning or maintained customer/household
willingness to use prepaid electricity meter technology
• Programme remains relevant to the prevalent household
socio-economic conditions
• Improved economic viability
(continued)
1.3 Rural Electrification, Smart Grid Development, and Decentralisation 13

Table 1.1 (continued)

Factors Implication on prepaid metered mini-grid system
Demand Side Management (DSM) Prepaid electricity meters work most effectively within
DSM initiatives such as energy efficiency. The installation
of stand-alone solar home systems and prepaid electricity
meters should also be accompanied by DSM initiatives. In
a mini-grid system DSM may assist in the balancing of
load profiles in the community. The provision of energy
efficient incentives through the use of affordable Light
Emitting Diode (LED) lighting, refrigeration, heating,
and cooling systems, will improve the socio-economic
efficacy of the prepaid meter programme in the project site
Capacity building Project managers need to invest time and resources in
capacity building. This may come in a form of workshops
that seek to educate households on the benefits of energy
efficient appliances. These workshops will have to be held
periodically and in areas closest to the mini-grid sites
selected
Formulation of regulations The existence of policy to govern mini-grid projects is not
only pivotal for sustainable investment purposes but also
to protect the consumer/households. Poor regulatory
governance may result in consumers being
socio-economically marginalised by prepaid meter
technology. So, the presence and carrying out of mini-grid
regulations have to be tandem with that of formulating
and constant updating of prepaid electricity meter
regulations, to protect energy vulnerable households
Energy poverty High and escalating electricity tariffs have the propensity
of entrenching energy poverty. Although the Sub-Saharan
Africa electricity market continues to generally possess
relatively low tariffs, their increase over time in selected
countries such as South Africa have raised issues of
affordability and widened socio-economic inequality.
Improved education on energy efficiency and deployment
of the requisite technology may assist in protecting
vulnerable energy

the rest of the world for business or school purposes. This is becoming an integral
economic opportunity and a component of social development that government to
increasingly embrace and extensively invest on (i.e. human and monetary capital)
[11, 20, 23, 27, 36, 41, 47].
Given the foregoing context, this book aims is to generate specific knowledge
on the deployment of prepaid electricity meters in Sub-Saharan Africa. Thus far,
in the past three decades there have been but only a handful of scholars that have
endeavoured to research about this market [3, 5, 13–16, 21, 22, 24, 33, 36, 38].
The research, although beneficial but it has only looked at country-specific contexts.
14 1 Introduction: Electrical-Energy Revolutions …

No work has attempted to focus on the impact of this technology across the Sub-
Saharan Africa region. Why is this necessary? Recent research has shown, confirming
studies by O’Sullivan et al. [29–32] that this technology has the propensity of further
entrenching inequality and poverty. Brynjolfsson and McAfee [8] have additionally
warned that the Fourth Industrial Revolution could engender deepened inequality.
Much focus has thus far been on how utilities have managed to recover debt but [1]
has argued that “smart electricity planning considers the immediate needs of people.”
So, the real task is also in devising a sustainable means of averting energy inequality
through studying its impact on the populace.
To initiate and drive this inclusive growth, the book provides a Sub-Saharan Africa
prepaid electricity meter oriented framework that will render the technology to be
a socio-economic value-add in the region. The knowledge shared in the respective
chapters is trans-regional and can, therefore, be of assistance in other developing,
and perhaps also developed regions. The government, policy and decisionmakers,
public utilities, and non-governmental organisations involved in energy matters will
find this valuable as it adds to the scholarly debate on the effectiveness of the tech-
nology, particularly in the Fourth Industrial Revolution. The scientific knowledge
given creates a possibility for the poor to also benefit from this unfolding phenomenon
of the Fourth wave.

1.4 Structure

The book is comprised of 8 chapters that look into the development and status quo of
the prepaid electricity meter market in the Sub-Saharan Africa region. The diagram
below serves as a pictorial illustration of the structure, dynamics, and synchrony of
ideas that will be presented in the respective chapters of the book.
Chapter 1 echoes the necessary context within which the discussion of Chaps. 2–8
leans. This chapter focuses on household electrical-energy use in the Fourth Industrial
Revolution. We briefly track the evolution of the nature of energy and its consumption
within the four ways of the revolution. We share perspectives on the location of Sub-
Saharan Africa in the revolutions. While it is generally accepted that many countries
in the region still lag behind and possibly trapped in the second wave [11, 35],
we discuss prepaid electricity meters are an essential agent reform for improved
electricity accessibility. Most importantly, we argue that smart prepaid electricity
meters are a fundamental pillar and catalyst for the region to effectively ride the
Fourth Industrial wave.
1.4 Structure 15

Chapter 2 starts by gives background specific information about prepaid meters

as a technology device supplanting conventional meters. Building from Chap. 1, this
chapter elaborates on how prepaid electricity meters have gained traction over the
past 3 decades in the Sub-Saharan region. We proffer a historical narrative of the
development of the prepaid electricity meter market in the region. Beyond this, we
also provide statistics on the extent of device adoption and see how South Africa,
Mozambique, and Tanzania are the current leading users of the technology.
Chapter 3 serves to uncover the fundamental motives predicating, not on the
deployment but the surging deployment rate in the Sub-Saharan regions. Using the
identified motivations, we begin to share perspectives that challenged mainstream
ideas about the beneficial nature of the technological device among low-income
household settings. Consequently, we build a framework model that we see as a
conduit towards rendering the technology effective in this particular region. Of
course, this is following our view that the current framework for technology rollout is
not in touch with the poor household socio-economic realities, and therefore threatens
the already vulnerable households of the region.
Chapter 4 delves into fundamental arguments and perspectives around the nexus
between prepaid electricity meters and energy poverty. We ask, is there a link? If
there is, what is the nature of the relationship? Answers to these questions lead us
to conclusions that will be of assistance to governments, policy and programme
designers, civil society, and public utilities, for decision making.
Chapters 5–7 compartmentalises the nature of technological effect within three
sub-regions of Sub-Saharan Africa. Due to the scarcity of data we have calculatedly
selected leading countries (with the deployment) with reliable data to represent our
view and conclusions about the regions experience, location, and status quo with the
technology:
• Western Africa (Ghana and Nigeria)
• Eastern Africa (Tanzania and Kenya)
• Southern Africa (South Africa and Mozambique).
The Northern region was omitted because of scarcity in data and research.
The last chapter focuses on offering summated points on the knowledge shared
throughout the book, by giving a list of ten lessons learnt over the past three decades.
It is our hope as authors that with this book being the first of its kind in the Sub-
Saharan Africa continent, not that we know of any in any continent, better-informed
decisions may be carried out by policymakers and public utilities as we ride the
Fourth Industrial wave.
16 1 Introduction: Electrical-Energy Revolutions …

Book Outline: Chapter 1 - 8

Chapter 1 serves to provide contextual detail
predicating the central theme of the book which
is the deployment of prepaid electricity meters
The Industrial in Sub-Saharan Africa. The chapter unfolds in
Revolution, the in view of the Fourth Industrial Revolution
Electrification, Smart and its ability to improve connectivity in the
Grid development region.

Rationale Part1:
Chapter 2 explores the historical narrative of Historical
the prepaid electricity market by tracing its Development and
adoption surge by the Sub-Saharan market from Market expansion
the 1980s to date.

Rationale Part 2: Chapter 3 probes the deeper rationale behind

A Misdiagnosis of the technology and expanding prepaid
Non-Payment and electricity market. The chapter asks, are policy
Electricity Theft and decision makers cognisant of the
implications associated with such a surge?

Chapter 4 aims on showing the relationship

between prepaid electricity meter market and Prepaid
energy poverty. A framework to minimise this electricity meters
reality is proposed to policy and decision & energy poverty
makers of the region. – Lessons from
South Africa

Status & Challenges Chapter 5 shares knowledge on the experiences

Prepaid Electricity of the Western Sub-Saharan Africa region by
Meters in selected noting the challenges and status quo of the
Western African prepaid electricity meter market among selected
Countries countries.

Chapter 6 provides knowledge on the

experiences of the Eastern Sub-Saharan Africa Status &
region by noting the challenges and status quo Challenges Prepaid
of the prepaid electricity meter market among Electricity Meters
selected countries. in selected Eastern
African countries

Chapter 7 discusses the experiences of the

Status & Southern Sub-Saharan Africa region by noting
Challenges Prepaid the challenges and status quo of the prepaid
Electricity Meters electricity meter market among selected
in selected Southern countries.
African countries

Lessons Learnt &

Chapter 8 gives guidance to regional Policy
authorities and policy makers on how the project Recommendations
of prepaid electricity meter markets should be
framed, by considering the lessons learnt about
the technology in the regional market.
1.5 Highlights 17

1.5 Highlights

• Energy is an essential component of the four waves of the Industrial Revolution.

While the Fourth wave of the revolution is driven by electrification, more than
600 million (≈57%) people remain without electricity.
• Notwithstanding the pockets of electrification achievements in countries such as
South Africa, a significant portion of Sub-Saharan Africa continues to feature
within the second wave of the revolution and this is due to continued dependence
on traditional sources of energy and poor access to electricity services.
• Smart grid and renewable energy systems are being recognised by regional author-
ities as a sustainable approach towards, not only improved electrification rates in
Sub-Saharan Africa but also in establishing fundamental pillars for the Fourth
Industrial Revolution.
• The rural household electrification project with solar mini-grid systems, and
using smart prepaid electricity meter among technology is gaining popularity
(2000 mini-grid sites) across the region because of its viability (in the context of
challenges with grid extension) and its convenience in cost recovering for utilities.
• Smart mini-grid systems are a cost-effective way of ushering virtual connectivity
in the Sub-Saharan region. This can assist drive economic and social change in
most remote areas of the region.
• Authorities in the region should create conducive investment (e.g. improved gover-
nance systems and regulatory framework) milieu for further development of mini
grid systems and the adoption of household-based smart grid technologies (e.g.
mini-solar technology and smart prepaid electricity meters).

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 Part I
Smart Prepaid Electricity Meters
Chapter 2
Rationale Part I: Historical Development
and Market Expansion

2.1 Introduction

Africa is part of the global community that appreciates the value of smart prepaid
electricity meters (SPEM) [6]. From the first introduction of the technological piece
in 1988 to date, the continent has witnessed a surge in the rate of adoption—the rate
is set to reach 234% by 2034 [19]. Faced with this reality it is important to review the
historical and current role of the technology in the continent, understand its dynamics
in the household sector, and thus pave way for improved and informed technology
policies and programmes, as well as deployment strategies into the future [2].
This segment of the book focuses on the rationale supporting the introduction of
prepaid electricity meters in Sub-Saharan Africa. Part 1 sets the context for upcoming
discussions on prepaid electricity meters. It sets the scene by tracing the three decades
historical experience of the continent with the technology; with South Africa being
the first in 1988 and Angola being one of the youngest users of the technology. The
objective is to trace the gradual expansion of the market as it replaces conventional or
post-payment electricity meters. With that done, Chapters 3 and 4 extensively probes
the effect of the technology within households with poor socio-economic conditions.

2.2 From Conventional to Prepaid

All electrified households are fitted within some payment model via a particular tech-
nological system. There are currently two universal payment models: Post-payment
(credit) or smart prepaid model. These systems enable the consumer to quantify and
pay for electricity consumed. A household using a post-payment meter model pays
monthly bills according to what has been consumed. This means that the provision
of electricity service precedes payment) [2, 4, 7–10, 14, 20–22, 25, 26]. This model
of payment involves several administrative or operation activities, which include the

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 23

N. Kambule and N. Nwulu, The Deployment of Prepaid Electricity Meters in Sub-Saharan
Africa, Lecture Notes in Electrical Engineering 759,
https://doi.org/10.1007/978-3-030-71217-4_2
24 2 Rationale Part I: Historical Development and Market Expansion

Table 2.1 Smart prepaid electricity meter challenges for the utility and consumer [2, 11, 12]
Utility Consumer
Meter reading errors and therefore billing Meter reading errors and therefore billing
irregularities irregularities
Readings at times not accessible leading the Readings at times not accessible leading the
meter reader to then estimate meter reader to then estimate
Difficulty in managing usage because readings In case of non-payment utility may disconnect
are not accessible
Pilferage—illegal connections Lumpy payment bills
Considerate amount of time between the meter Processes of switching off the electricity due to
reading, administration of and the delivery of non-payment can be problematic. (No warning
accounts and the due date for payments is given beforehand)
Higher expenses because of the administrative Late delivery of post-paid bills to households
tasks and logistical support for meter billing
Late delivery of post-paid bills to households Arbitrary electricity consumption
and therefore delayed revenue collection
Constrained relations between supplier and Constrained supplier and client relations in the
client in the event of incorrect billion, during event of incorrect billion, during disconnection
disconnection and reconnection and reconnection

delivery of electricity bills after meter readings and possible disconnection and recon-
nection of the consumer. Over the years, the system has become cost-ineffective for
both the utility and the consumer. Consequently, several governments and utilities
are reconsidering the widespread application of this payment model. Table 2.1, is
an illustration of general issues associated with this system (may of course differ by
geography and time.

2.3 Prepaid Electricity Meters: Technology

Characterisation

Given these challenges, utilities and governments are resorting to the alternative
payment model or technological innovation—a prepaid electricity model or tech-
nology (Fig. 2.1). Under a pre-payment model for electricity payment transaction
precedes the consumption or provision of electricity service. So, households use
only what they can afford to purchase. The consumer pays for electricity services in
advance before consumption [2, 7, 8, 15, 21]. Households thus ‘hold credit and then
use the service until the credit is exhausted’ [22, p. 3]. It is a ‘technological tool that
plays the role of mediator between energy-producing agents and consumers’ [15,
p. 241].
There are various types of prepaid electricity meter systems in the world: namely:
keypad based systems, disposable card systems (one-way) and two-way smart card
systems (Table 2.2).
2.3 Prepaid Electricity Meters: Technology Characterisation 25

Fig. 2.1 Prepaid electricity

meter tool

Normally, the prepaid electricity meter device is located within the household,
thus enabling the consumer to easily access regular feedback on the quantity of
electricity consumed [11, 12]. The device works as a mobile phone system. One has
to top-up or recharge the system for it to fulfill its function—that is to activate the
supply of electricity in the house. The consumer has to purchase electricity units and
get a token with a reference code, which will be digitally entered into the device
and converted into electricity units (kWh). When the numbers are entered correctly
the system will automatically activate. The amount of credit loaded shows on the
device screen (as kWh) and the end-user is therefore enabled to occasionally monitor
electricity consumption and accordingly adjust behaviour [15].
The prepaid electricity meter is characterised by a unique regulatory option which
primarily motivates consumers to pay for electricity services delivered [5, 20, 21].
Furthermore, the following technical and operation components have to be in place
in order for the system to functioning efficiently [1, 27]:
• Prepaid electricity meter: Electricity Dispensers (ED) instrument
• Vending machines: to access Credit Dispensing Units (CDUs).
• Data Concentrators (DCs): used to manage and collect transaction data from
CDUs, also called the System Master Station.
The consumer may utilise the electricity credits until they are exhausted, thereby
be disconnected [8, 27]. The costing and payment systems vary by geography and
26 2 Rationale Part I: Historical Development and Market Expansion

Table 2.2 Types of prepaid electricity meter system [11]

Type Description
Keypad operated prepaid meters Electronic prepaid energy meters came initially
with keypad systems for inputting the credit.
Security of keypad payment system is very low.
The main reason is that the algorithm of key
creation is stored inside the meter and is available
to hackers. Keypad systems were created when
highly secure smart card payments did not exist.
Although keypad systems are getting obsolete, it
may still be cost-effective for remote villages,
where two-way vending may not be feasible
Smart card operated prepaid meters Customers may buy a reusable power debit card
for the amount of energy they desire. These
special, easy to use cards are individualized,
keyed to each customer’s meter and account
number. The customer simply passes the card a
few inches in front of the meter, and using an
integrated card reader, the meter is reset to the
number of kilowatt-hours contained on the card.
The card also captures data critical for load
forecasting
Smart card operated meters can be used either as
prepaid or post-paid. In such cases, each
consumer is assigned 50-day credit. After each
month, the consumer has to recharge a card to
pay off his negative balance. After the full
payment, his/her 50-day credit is restored. Credit
can be time-based or amount-based. A mixed
option like 50-day but not more than certain
kWh is also possible
Prepaid meter using two-way fixed network This is a real-time two-way communication
automated meter reading facility, where the transaction data is stored on a
central computer and authorized in the same
manner as for credit card terminals. Here
security is not at risk as the credit information is
stored on the central computer. However the cost
of implementing the AMR (Automated Meter
Reading) scheme needs to be justified on other
merits than for prepayment advantages

application. In some areas, the system generally functions within 60 amps; this may
differ according to household needs. For example in South Africa, the household
electrification vacillates between 20 and 60 amps.
2.4 Historical Development and Market Expansion 27

2.4 Historical Development and Market Expansion

South Africa and the United Kingdom (UK) are two pioneering prepaid electricity
meters countries in the world. Figure 2.2 shows the historical timeline of the tech-
nology of Sub-Saharan Africa concerning other selected global countries. South
Africa is the oldest prepaid metered country in the region—it stands the first devel-
oping country, 31 years ago, to use the technology. Ghana, Rwanda, and Tanzania are
among a few regional countries that have more than two decades of experience with
the system. Since the first installation in South Africa, there is widespread adoption of
the technology. Utilities across the continent are widely adopting prepaid electricity
meters, as opposed to conventional systems.
The Mozambique household sector is currently the biggest (80%), followed by
South Africa with close to 70% prepaid electricity meter users, in Sub-Saharan
Africa (Table 2.3). In that particular country, the technology has elicited a number of
favourable conditions since the introduction of the technology, including improved
electrification rising from 5% in 2001 to 18% in 2011; increased revenue levels, from
88% in 2001 to 97% in 2011; an overall decrease in losses, from 43% in 1995 to
21% in 2011 [7]. Positive results as these have fuelled governments in the region to
intensify technology roll-out.
Table 2.3 in the following section, shows the motivating factors responsible for
this. To date, the technology makes-up more than 30% of the regional household
electricity metering market, and the share is estimated to surge to 53% within the
next coming 5 years [19]. It is estimated that by the year 2034, Sub-Saharan Africa
would have experienced a 234% growth in the prepaid electricity market [19]. Later
discussions will provide an elaborate discussion on the status of the expanding market
and also possible ramifications associated with this.
In the past years, several scholars have dedicated time to studying and recording
country experiences with the technology in Sub-Saharan African households.
Table 2.4 reflects examples of prepaid electricity meters studies by country in Sub-
Saharan Africa between 2003 and 2019. From the 17 countries that were notably
using the technology, there was difficulty in sourcing credible research for 4 countries
(Mali, Cote d’Ivoire, Sudan, and the Democratic Republic of Congo).

2.5 Highlights

• South Africa is the first country in Sub-Saharan Africa to utilise prepaid elec-
tricity meters. Globally, together with the UK, it is recognised as a pioneer in the
application of this type of technology.
• The Sub-Saharan Africa prepaid electricity meter market is among the fastest-
growing across the globe. Estimates project the expansion rate will reach ≈234%
by 2034.
 28

Fig. 2.2 Prepaid electricity meter historical timeline for selected countries of Sub-Saharan Africa (Authors)
2 Rationale Part I: Historical Development and Market Expansion
2.5 Highlights 29

Table 2.3 Prepaid electricity meter use statistics in Sub-Saharan Africa [7, 28]
Country Quantified adoption status of adoption
Mozambique 80%
South Africa 66%
Tanzania 40%
Ghana 44%
Ethiopia 5%
Uganda More than 14, 000 customers in rural areas
Rwanda More than 90,000 customers a
Angola Aims to install 6, 000 systems
Botswana More than 298, 989 customers

Table 2.4 Prepaid electricity meter research studies in Sub-Saharan Africa (2003–2019)
Countries Researcher
1. Uganda Mwaura [18]
2. Ghana Azila-Gbettor et al. [3], Quayson-Dadzie [24]
3. Mozambique Baptista [4]
4. Kenya Miyogo et al. [17], Wambua et al. [30]
5. Zambia Malama et al. [15]
6. Motswana Mburu and Sathyamoorthi [16]
7. Nigeria Makanjuola et al. [13], Oseni [23], Aliu [2]
8. Zimbabwe Vutete [29]
9. Tanzania Jacome and Ray
10. South Africa Tewari and Shah [27], Kambule et al. [11, 12]
11. Rwanda Mwaura [18]
12. Angola Esteves et al. [7]
13. Ethiopia Esteves et al. [7]
14. Mali No research found
15. Sudan No research found
16. Democratic Republic of Congo No research found
17. Cote d’Ivoire’s No research found

• Mozambique is the largest (≥80%) prepaid electricity meter market in Sub-

Saharan Africa, followed by South Africa (≈70%).
• Across different regions the technology has managed to elicit several favourable
conditions such as improved revenue collection for utilities and savings for
households.
• There is still paucity with research focusing on the expansion of the prepaid
electricity meter market and its role in the electrification programme.
30 2 Rationale Part I: Historical Development and Market Expansion

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54:704–722
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9. Jack BK, Smith G (2015) Pay as you go: pre-paid metering and electricity expenditure in
South Africa. https://sites.tufts.edu/kjack/files/2015/08/Jack_manuscript7.pdf. Accessed 15
Nov 2016
10. Jack BK, Smith G (2016) Pay as you go: pre-paid metering and electricity expenditure in
South Africa. https://sites.tufts.edu/kjack/files/2015/08/Jack_manuscript7.pdf. Accessed 15
Nov 2016
11. Kambule N, Yessoufou K, Nwulu N (2018) A review and identification of persistent and
emerging prepaid electricity meter trends. Energy Sustain Dev 43:173–185
12. Kambule N, Yessoufou K, Nwulu N, Mbohwa C (2019) Exploring the driving factors of prepaid
electricity meter rejection in the largest township of South Africa. Energy Policy 124:199–205
13. Makanjuola NT, Shoewu O, Akinyemi LA, Ajose Y (2015) Investigating the problems of
prepaid metering systems in Nigeria. Pacif J Sci Technol 2:22–31
14. Makonese T, Kimemia DK, Annergarn HJ (2012) Assessment of free basic electricity and
use of pre-paid meters in South Africa. http://conferences.ufs.ac.za/dl/Userfiles/Documents/
00000/577_eng.pdf. Accessed 13 Oct 2016
15. Malama A, Mudenda P, Ng’ombe A, Makashini L, Abanda H (2014) The effects of the intro-
duction of prepayment meters on the energy usage behaviour of different housing consumer
groups in Kitwe, Zambia. AIMS Energy 3:237–259
16. Mburu PT, Sathyamoorthi CR (2014) Switching from post-paid to pre-paid models: customer
perception and the organisational role in managing the change: a case study of botswana power
corporation. J Manage Res 3:175–189
17. Miyogo NC, Ondieki NS, Nashappi GN (2013) An assessment of the effect of prepaid service
transition in electricity bill payment on KP customers, a survey of Kenya Power, West Kenya
Kisumu. Am Int J Contemp Res 9:88–97
18. Mwaura FM (2012) Adopting electricity prepayment billing system to reduce non-technical
energy losses in Uganda: lesson from Rwanda. Utility policy 23:72–79
19. Northeast Group (2014) Sub-Saharan Africa electricity metering: market forecast (2014–2024).
Northeast Group, LLC
20. O’Sullivan KC, Howden-Chapman PL, Fougere G (2011) Making the connection: the relation-
ship between fuel poverty, electricity disconnection, and prepayment metering. Energy Policy
39:733–741
References 31

21. O’Sullivan KC, Viggers HE, Howden-Chapman PL (2014) The influence of electricity
prepayment meter use on house hold energy behaviour. Sustain Cities Soc 13:182–191
22. O’Sullivan KC, Howden-Chapman PL, Fougere G (2015) Fuel poverty, policy, equity in New
Zealand: the promise of prepayment metering. Energy Res Soc Sci 7:99–107
23. Oseni MO (2015) Assessing the consumers’ willingness to adopt a prepayment metering
System in Nigeria. Energy Policy 86:154–165
24. Quayson-Dadzie J (2012) Customer perception and acceptability on the use of prepaid metering
system in Accra West region of the electricity company of Ghana. http://dspace.knust.edu.gh/
bitstream/123456789/4900/1/Quayson-Dadzie%20John.pdf. Accessed 16 Oct 2017
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114-31.pdf
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Ghana. Renew Sustain Energy Rev 62:280–288
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learned, and their policy implications for developing countries. Energy Policy 31:911–927
28. Tuffour M, Sedegah DD, Asante K, Bonsu D (2018) The role of pre-paid meters in energy
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Chapter 3
Rationale Part II: A Misdiagnosis
of Non-payment and Electricity Theft

There is an underexplored relationship between the prepaid electricity meters and

the effect that has on households that are non-payers (for electricity services). In
this chapter we refer to the phenomenon of electricity non-payment as arrearage.
Public utilities in sub-Saharan countries like Uganda, Botswana, Zambia Ghana,
Angola, South Africa, Nigeria, Ethiopia, and Mozambique are facing the challenge
of household electricity arrearage (i.e. non-payment of the electricity service). In all
these regional countries, prepaid electricity meters have been deployed to directly
reverse this mounting problem [9, 12, 53, 58, 60, 63, 69, 76, 85, 87]; Kambule et al.
[44–46]. The technology thus largely stands as the cost recovery mechanism for
utilities and/or governments.
While there remains a wide lacuna in the quantification of the effect of household
prepaid meter deployment in the sub-Saharan region, the ideal and direct result of
increased prepaid electricity meter deployments is a decrease in the overall elec-
tricity debt. So, generally utilities stand to benefit from the technology. But can the
same conclusion be drawn about the effectiveness of the technology on households,
particularly poor households based in the Sub-Saharan Africa region? This question
becomes critical to consider especially in view of the fact that any contemporary
form of development is framed and measured by its nature of sustainability.
Utilities have the legal obligation of disconnecting any household that does not pay
for the electricity services, but this right has been limitedly applied. Instead, prepaid
electricity meters seem to be imposed on non-paying, if not all, households. Tied to
the issue of non-payment is that of electricity theft. It is estimated that by 2040, the
global annual electricity consumption would have surged by 70% as compared to
2015 [42]. Faced with the reality of deepening poverty and inequality, it is important
to consider the possibility of a surge in household electricity theft, especially in the
context of the prepaid electricity meter. Is there a way that public utilities in the
Sub-Saharan African region optimally deal with these challenges?
This chapter focuses on the phenomenon of household electricity arrearage and
theft in Sub-Saharan Africa; particularly, in relation to the introduction of prepaid

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 33

N. Kambule and N. Nwulu, The Deployment of Prepaid Electricity Meters in Sub-Saharan
Africa, Lecture Notes in Electrical Engineering 759,
https://doi.org/10.1007/978-3-030-71217-4_3
34 3 Rationale Part II: A Misdiagnosis of Non-payment …

electricity meters as a cost-recovery machine for utility and governments. We probe if

the technology is the appropriate prescription. What is the real diagnosis of arrearage
and electricity theft? Are prepaid electricity meters the solution to these problems?
We argue that so far, our region has been shooting aimlessly, and there is therefore
a need for a more focussed and holistic approach to dealing with these problems in
a prepaid electricity metered marked.

3.1 Arrearage

While there are other issues that prepaid electricity meters solve (e.g. improved acces-
sibility, reduced non-technical issues, etc.), the main motivation thus far has been
to reduce electricity arrearage (Table 3.1). International studies and confirmed that
the installation of prepaid electricity meter is for reducing household non-payment
[9, 15, 17, 19, 22, 30, 31, 33, 35, 37, 49, 54, 55, 70–74, 77].
Electricity arrearage is a ubiquitous phenomenon plaguing the global electricity
sector [2, 50]. Countries like the United States of America (USA), United Kingdom
(UK), Eastern Europe, New Zealand, Australia, Argentina, Ireland, Colombia, Peru,
India, South Africa, Botswana, Colombia, Kosovo and Soviet Union are examples
of countries with households that have unpaid bills. Moreover, a correlation between
non-payment and expenditure ratios (i.e. the greater the electricity consumption as

Table 3.1 Motivating factors for adopting prepaid electricity meters [44]
Country Motivations for the introduction of prepaid meters
South Africa • Increase the electrification rate
• Reduce arrears
• Reduce non-technical electricity losses and fraud
Mozambique • Increase electrification rate
• Reduce non-technical electricity losses and fraud
• Solved efficiencies faced on meter reading and billing
• Reduce bad debt level
• Reduce the number of customers without meters
Nigeria • Power sector re-organization
• Solve billing and revenue problems
• Reduce Distribution system operator (DSO) non-technical electricity losses
Ethiopia • Solve billing and revenue problems
• Improve the quality of service
Uganda • Reorganization of the power sector
• Reduce losses and non- payment
Angola • Alleviate issues of household electricity debt
Ghana • Address supply-side problems
• Reduce operational costs
• Improve revenue collection
• Eliminate bad debt
3.1 Arrearage 35

a percentage of total household expenditure, the likelier the household does not pay
its electricity bills) has been acknowledged [59].
Consumer payment for electrical services is pivotal for economic and infrastruc-
tural sustainability of electricity supplying utilities. The revenue is inter alia used for
fixed development, operational and maintenance projects, research undertakings, and
administrative services. The unavailability of funds due to arrearage may translate
into a chain of intercompany arrears, bank arrears, tax and wage arrears—ultimately
leading to maintenance backlogs, system deterioration, lack of funds to buy fuel to
operate the generating units, and the deterioration of the economy [18]. Szabo and
Ujheyli [84] write that non-payment for public-utilities is an important constraint
that deprives expansion in the provision of electricity services.
The inability of households to pay for electricity services—engendering accruing
household electricity debt—may be driven by different factors. In South Africa,
the reasoning has a political element attached to it. In 1976, the African National
Congress (ANC) of South Africa and other anti-apartheid political parties, fought
against the ruling government by encouraging households to boycott the payment
of electricity services. Moreover, as a means of political campaigns people were
promised free electricity. Till today, people still believe that they are entitled to free
electricity because of the historical promise made by the current ruling government—
the ANC.
Free electricity is a non-real factor; household electricity arrearage is as such
recognised as a criminal act [34]. Electricity arrearage (non-payment) is the
inability—wittingly or unwittingly—of the user to pay for the electricity consumed.
Szabo and Ujhelyi [84] write that,
Improving people’s access to basic utilities like electricity is viewed as a key challenge in
many developing countries. However, consumers’ ability or willingness to pay for services
can be an important constrain to investment in infrastructure.

Furthermore, an economic perspective to non-payment may lead to one conclusion,

a social perspective to the non-payment may warrant a different one. Electricity
non-payment, from a social perspective, requires a consideration of aspects such
as employment status, demographics, and literacy among others. Socio-economic
conditions are arguably and normally the underlying cause of this scourge of non-
payment [19, 45]. The anticipation would therefore follow that utilities in countries
characterised by poor socio-economic realities would be faced with this problem
more than those based in economically developed regions. While utilities have the
power to cut-off electricity supply to non-paying electricity users, this option has
not been popular in most African regions, instead the adoption of prepaid electricity
meters has been the ultimate recourse.
The implication of this recourse is two-fold. The first implication should address
the obvious question: Is the utility recovering the cost, as intended through the
technology—therefore is household arrearage mitigated?
Research has shown that prepaid electricity meters do achieve their goal of
reducing debt, thus is of benefit for the utility. For example, it was found that in
36 3 Rationale Part II: A Misdiagnosis of Non-payment …

Zambia electricity arrearage dropped by close to 80% in one year through the adop-
tion of prepaid electricity meters. Again, South Africa is estimated to be saving close
to 2 billion per annum from the technology, revenue loss decreased by more than to
14% [86]. However, this positive aspect should be studied with caution. A township
in South Africa, Soweto is a quintessential case to consider household non-payment.
In 2015 municipalities across the country owed the utility ≈R13.5 billion due to non-
payment of bills [83]. Soweto, alone, owed R8.6 billion of this amount. Estimates
show that by 2019 the township’s debt had escalated to about R10 billion. This is
consistent with the countries risen overall household electricity debt of R26 billion
in the same year. This is despite the expanding prepaid electricity meter market.
In the above case, the ratio of arrearage increase remains stronger than that of
mitigation. This reality makes it clear that there is a misdiagnosis of the problem
and/or a misprescribed solution. Utilities have blindly and ignorantly assumed that
the problem is arrearage; this is a secondary problem that is a consequence and not
the essence.
A stronger and often unobvious implication or question is overlooked and hence
the misdiagnosis and misprescription—that is, in the context of entrenched poor
socio-economic conditions, what technology deployment strategy can be employed to
elicit beneficial livelihood conditions. Scholars such as Colton [19], O’Sullivan et al.
[71, 73, 72], and Kambule et al. [45] have ascertained the negative socioeconomic
implications associated with prepaid electricity meters. Chapter 4 expounds further
on this point. However, it is apparent that there is a misalignment in the nature of
the deployment prepaid electricity meters approach and the widespread household
socio-economic livelihood.

3.2 Disconnection: An Ignored Alternative?

In the foregoing section it was established that a natural response to non-payment—

disconnection or denied service. While this should be the case but until now utilities
and governments have applied this natural alternative limitedly. This is due to the
fact that it is often not feasible in Sub-Saharan Africa and other developing countries
to just cut-off non-paying households [84]. A natural response may be in contrast
to social ideologies of welfare and fairness and therefore erode citizen’s trust in
government; ultimately resulting in social unrest and more non-payment. When the
consumer refuses to pay because of socio-economic reasons, the utility may find it
difficult to take any enforcement action against the consumer. Utilities therefore have
limited enforcement power, if any, it is often costly. To prevent this, countries need
to deal with the issue with necessary sensitivity and precaution.
Between 1994 and 2001, approximately 10 million South African households
experienced electricity and water disconnections due to non-payment. About 95%
of electricity connections in the country are for households–making them important
electricity customers (even from a cost-recovery point of view). Despite having one of
the lowest residential tariffs in Sub-Saharan Africa, Eskom has voiced concerns about
3.2 Disconnection: An Ignored Alternative? 37

the prevailing electricity payment inefficiency from the municipalities and/or end-
user, resulting in accruing utility debt. In 2015, households owed the Eskom (the elec-
tricity supplying utility) more than R13.5 billion. Earlier that decade, around 2003,
the household electricity debt of Soweto was around R1.4 billion due to arrearage.
The utility erased that debt under the Integrated National Electrification Programme
(INEP) to encourage customers to pay for the service. Irrespective, by 2015 the
amount owed had risen again, this time to ±R10.6 billion [83, 86]. Until today, less
than 16% of households in Soweto pay for electricity services. Eskom has a legal
obligation to directly disconnect the 84% of its non-paying customers it has thus far
applied this approach limitedly and has however resorted to prepaid electricity meter
installation as a means of mitigating debt and household electricity arrearage.
Another case of non-payment is that of Georgia in America. In 1998, only about
15–38% of the electricity generation capacity was operational, and as such house-
holds received electricity for about 6 h per day [50]. The lack of investment hampered
efforts for infrastructural development and maintenance. The lack of capital was
due to non-payments, over-subsidization, and electricity theft contributed to the low
cost-recovery. Higher tariffs (affordability), free-riding, political tolerance of non-
payment, lack of incentives on the part of corporate management to resist polit-
ical pressure, lack of high-level political commitment, weak enforcement of laws
and regulations, theft, corruption, and falling household incomes also contributed to
non-payment in the region [81].
Borrowing from an international example, we consider Kosovo. In this country
electricity non-payment accounts for about 44% of electricity consumed by house-
holds—this translates to nearly e100 million per annum [84]. The main reason for
non-payment relates to household economic problems. Household electricity bills
consume more than 30% (even higher in winter) of the total share of monthly dispos-
able income. The residents also argue that the Kosovo Energy Distribution Services
(KEDS) is not transparent and charging more than it should. Group thinking is another
contributing to non-payment in area, wherein citizens find non-payment reasonable
because other households are doing the same. More than 81% of households (Alba-
nians) in Kosovo indicated that despite not having paid for their electricity bills, they
were yet to be disconnected by the utility.
From what has been noted above, causal factors of household non-payment can
be summated as outlined below:
• Declining incomes (salary or wages), rising unemployment, and escalating
electricity tariffs.
• The inability of the utility to enforce household disconnection and lack of political
will to intervene.
• The inability of the utilities to disconnect supplies to non-paying customers, as
governments maintained long lists of strategic consumers to which supplies could
not be disconnected and zealous local politicians went on adding to this list several
local industries to protect local jobs, and the local economy at the expense of the
energy firms.
38 3 Rationale Part II: A Misdiagnosis of Non-payment …

• In most countries, energy expenditures account for 15–30% of per capita income,
as such a majority of households find it difficult to pay bills.
• Limited electricity infrastructural development.
Notably, countries experience the problem of non-payment in different ways and
therefore have different solutions to the problem. Table 3.2 provides an outline of
deployed mechanisms to alleviate household non-payment. Regions either use one
or a combination of mechanisms.
From the cases considered above, non-payment is both an economic and social
issue. From a household perspective, whereas non-payment may be a free-riding
for some, for others electricity consumption is largely an aspect beyond the means
of control because of socio-economic factors at play. Due to this dynamism, to
understand and unearth the real cause, and therefore devise a potentially sustainable
solution, an objective inquiry is important. Lampietti et al. [50] recommend that
“the interests of the government and the utility need to be aligned to back reform
and share the risk of non-payment”. In a region like Sub-Saharan Africa, with deep
inequality realities, a blanket approach to solving the issue may benefit some and
still compromise the other [3].
Household electricity non-payment is a systematic problem and is therefore multi-
dimensional, characterised and driven by a variety of factors (i.e. economic or finan-
cial, social, infrastructural, and regulatory). This means that in devising a sustainable
solution to curb non-payment there is a need to equally consider different factors.
The diagnosis may be different by country, and therefore also the prescription will
be different. Thus far, the prepaid electricity meter programme or solution in the
Sub-Saharan region has primarily been cost recovery or economic oriented. While
there may not be a problem with the technology per se, but how the technology is
deployed across the region should be preceded by thorough socio-economic assess-
ments. Failure to undertake this will inadvertently breed an environment for energy
poverty (Chap. 4).

3.3 Power System Losses

Energy loss through the grid network is an inevitable phenomenon. Countries across
the world, both developed and developing regions experience this problem, though
to different extents. The losses may happen along the distribution or transmission
networks [1]. The distribution losses are used as an important performance indicator
as they have a direct bearing on the economy of the utility. Distribution losses are
“the difference between the amount of energy delivered to the distribution system
and the amount of energy biilled to the customers” [16]. Ideally, the amount of energy
generated should be equal to the energy registered to have been used by the end-user.
Figure 3.1 gives an illustration of how these system power losses are incurred.
These losses can further be divided into two, namely technical and non-technical
losses. While technical losses are recognised as inherent (i.e. from Dielectric losses,
3.3 Power System Losses 39

Table 3.2 Generic mechanisms to deal with non-payment [41, 40]

Mechanism Description Example of region
Communal metering The community bears a USA, UK, Georgia, Russia,
collective task for paying the Uganda
electricity consumed and
therefore the bill. The method is
more effective than individual
household meters when there is
a threat of a whole community
electricity disconnection a whole
intention is increasing
collections and keeping tariff
costs low. Community
self-policing is also key
Communities are metered at a
single remote location (where
tampering is difficult) and all
customers are billed based on a
consumption determined by
pro-rating using their meter
reading. This acts to deter
offenders through direct
community pressure
Bill fraction-payment This is more of a coping South Africa, Armenia, USA
mechanism where the non-payer and other countries
resorts to only paying a fraction
of the bill and maintaining
service while accumulating
arrears
Monitor electricity Consumers closely monitor the All countries encourage this
consumption amount of electricity used and
then self imposed austerity
measures when the limit is
reached
Prepaid meter system (Split The installation of a prepayment South Africa, UK, USA,
metering) system allows the consumer to Australia, China, Brazil, New
pay for electricity in advance as Zealand, etc.
opposed to a credit meter system
where electricity is consumed
before a payment transaction. A
split meter system uses two
electricity recording devices, one
placed in-house and another
outside the house (mounted on
pole or pavement); this ensures
that there is no interference
between the utility and the
consumer
(continued)
40 3 Rationale Part II: A Misdiagnosis of Non-payment …

Table 3.2 (continued)

Mechanism Description Example of region
Enforcement Relevant institutions, like the All countries (to) encourage
government, may need to this
improve law enforcement for
payment of electricity.
Enforcement improved
collections—Russia, Georgia,
Ukraine, and Armenia. The legal
infrastructure, may need to
properly the rights of the energy
supplier (e.g. to deny supplies to
those who do not pay for it), and
the consumer (e.g. protection
from illegal disconnections)
Energy transfer programs A certain (‘deserving’) South Africa, Armenia, Britain
population category (e.g. Ireland, UK,
veterans, pensioners, poor, etc.)
is allocated with electricity at
defined intervals
Elimination of unmetered This is a utility intervention South Africa
consumption whereby meter relocation to
places accessible to utility staff
is necessary. The benefit of the
intervention is theft prevention
and improving payment
collections—Armenia, Albania,
and Georgia
Electricity Price discounts This is an incentive to encourage UK
consumers to pay electricity
Education Information is noted as South Africa, Uganda
important to understanding how
the electricity service sector
functions. From this flows that
the lack of familiarity with the
consumption billing process is
the cause of non-payment.
Education may happen through
public information campaigns
which may generate unintended
consequences such as
psychological responses and
improve the payments

Copper losses, and Induction/radiation losses) and be avoided by improving the extant
infrastructure and technology, the extent of non-technical losses often exceeds the
technical losses experienced [16]. A non-technical loss refers to commercial losses
that comprise of energy that has been “delivered and consumed energy which cannot
be invoiced to an end-user” [25]. Bula et al. [16] add that the losses are due to
3.3 Power System Losses 41

Fig. 3.1 Types of system power losses [7, 89]

unauthorised means of consuming energy via unauthorised connections to the meter.

In an ideal setting, the customer receives a bill from the utility on the amount of
electricity used and to be paid for. However, under non-technical losses most of the
energy wrongly received by the consumer is unaccounted for. This ultimately affects
the economy of utilities. In the discussions below we will give examples of the extent
of losses suffered by utilities. Generally, the losses affect the operating costs of the
utility, ultimately leading to an increase of consumer electricity tariffs, and may
also lead to an increase in government subsidies [57, 89]. The problem ultimately
affects investments for capacity development and eventually leading to electricity
shortage. This is particularly a problem in Sub-Saharan Africa, where power utilities
experience marked inefficiencies [29].
Non-technical losses can be divided into several types, including fraudulent losses
that generally entail illegal connections, theft, meter tampering, and faulty meters. In
other cases the losses may be due to the use of non-compliant material in technologies
such as transformers. According to Mbanjwa [57] there are also hidden losses from
in-house consumption of the equipment along the distribution network, this may
be in cases where the power is needed to cool off a piece of technology such as a
transformer and operate control systems. Among these types of non-technical losses
electricity theft is by far the rifest and devastating [89]. This is a reality that again
faces both developed and developing regions. Electricity theft is when an individual
does not pay, or pays less of what they should, for the used electricity because they
have bypassed or tampered the electricity meter [16]. The ability to reduce non-
technical losses can translate into direct economic advantages for the consumer with
reduced electricity costs and also for the utility with improved income inflow. Navani
[65, p. 1] summarises the causes of non-technical losses in the following manner:
42 3 Rationale Part II: A Misdiagnosis of Non-payment …

The most probable causes of Non-Technical Losses (NTL) are: (i) Tampering with meters
to ensure the meter recorded a lower consumption reading (ii) Errors in technical losses
computation (iii) Tapping (hooking) on LT lines (iv) Arranging false readings by bribing
meter readers (v) Stealing by bypassing the meter or otherwise making illegal connections
(vi) By just ignoring unpaid bills (vii) Faulty energy meters or un-metered supply (viii)
Errors and delay in meter reading and billing (ix) and lastly, Non-payment by customers

However, we must look into how developing or emerging economies have dealt
with or struggling to deal with this challenge of electricity theft. The next section
discusses the extent, motivation, and consequences of electricity theft in the energy
or electricity fraternity.

3.4 Electricity Theft

This is a specific challenge that haunts power utilities across the globe. It can be
defined as an intentional attempt of the consumer to eliminate or reduce the cost
reflected on the electricity as owed to the utility [13]. This would be categorised
as illegal electricity consumption. Additionally, electricity theft is the “practice of
using electricity from the utility company without the company’s authorisation or
consent [1, p. 1]. Technically, it is identified as the difference between the amount
of electricity purchased from the power utility and that which is sold to consumers
[57]. There are several ways that this can be done. It can be by directly connecting an
unauthorised load to the network (or line) or tampering an already registered meter
to reduce the amount of the bill the utility charges for that load [13, 16, 20]. Once the
meter technology is vandalised, the system can be manipulated in different ways to
either stop or slow it down. Table 3.3 shows the different ways that electricity theft
can be undertaken [57].
Estimates show that electricity distribution companies globally annually lose
about $25 billion on electricity theft [16, 48]. The North East Group [67] raises
this estimate to be around $96 billion. To show how rife this issue is across the globe,
consider the outline of the statistics below:
• India loses $4.5 billion annually on electricity theft. If they could reduce theft by
10%, they can annually save about 83, 000 GWh of electricity [16].
• The United States of America (USA) loses around $6 billion due to non-technical
losses [16, 67]. Mbanjwa [57] asserts that theft costs the region between 0.5 and
3.5% of annual gross revenues approximately $280 billion (an annual loss of about
$1.4 billion $9.8 billion per annum).
• One of Canada’s electricity company (BC Hydro) spends $100 million annually
because of electricity theft [1].
• Electricity theft rates in countries like Bangladesh and Turkey reach levels as high
as 30% of the produced total electric energy generated [68].
• The cost of electricity theft in Brazil amounts to 4 billion annually [88].
3.4 Electricity Theft 43

Table 3.3 Types of electricity theft [5]

Type Description
Electricity fraud The consumer illegally uses electricity equipment and services with an
intention of not paying and avoiding the electricity bill [21]. The
consumer deliberately deceives the power supplying utility, this is
commonly done through tampering with the meter so that lower than
expected consumption levels reflect
Billing irregularities Billing irregularities transpire in different ways. Inaccurate readings may
be captured by the servicemen through receiving a bribe from the
consumers. The bill is intentionally fixed in the offices in exchange for
illicit money from households [24]. Again, power authorities may
sometimes be unable to enter consumer premises to capture the amount of
electricity utilised. Consequently, the serviceman gives an estimate which
is much higher or much lower
Illegal connections This is a connection that is undertaken illegitimately, that is without the
knowledge, authorisation, and permission of the electricity supplier for
that particular area (e.g. Eskom, ZESCO, etc.). Illegal connections involve
the rigging of one network from a certain power source to where it will be
connected (thus bypassing meter) [82]
Meter tampering This is another form of theft whereby the electricity meter is bypassed in
order to preclude the payment of electricity consumed
Unpaid bills Unpaid bills can be defined as the omission or failure to pay for a
particular service that is rendered by the utility. For example, in this case,
the non-payment of electricity would be a result of households or
organisations avoiding the payment of electricity bills [61]—ultimately
breeding a culture of non-payment

• Malaysia and Lebanon experience lose 40% of electricity from non-technical

losses, rendering peaking shortages endemic [21, 39, 78].
• South Africa suffers annual losses of about $1.5 billion on electricity theft and
illegal connections. The non-technical losses show themselves as vandalism
infrastructure, the abstraction of substation oil, cable theft, non-payment elec-
tricity, and the trading of illicit prepaid meter vouchers) [75]. Mbanjwa [57] adds
that by 2004 Eskom had already been losing R250 million on electricity theft. By
2007, the losses amounted to a total of 6 105 GWh.
• In 2019, the city of Cape Town reported that 3 000 electricity cable theft and 6,
000 cases on electricity tampering [75].
• The cost of electricity theft at eThekwini municipality was more than R150 million
in 2016 [57].
• Nigeria’s electricity sector suffers annual non-losses of about $54 million annually
(ESI [27, 32].
• Zimbabwe also annually loses about $237 billion (290 GWh) [62].
• Rwanda suffers losses of $200 million every year from theft. This is close to 10%
of the total electricity generated in the country [79].
• Mozambique annually loses $100 million from non-technical-loses [36].
44 3 Rationale Part II: A Misdiagnosis of Non-payment …

Fig. 3.2 Electricity theft and loss in kWh among selected developing countries [16]

Figure 3.2 reflects examples of unit (in kWh) loss that developing countries experi-
ence annually from electricity theft. India and Brazil are among the leading countries
with more than 180 and 90 billion units stolen annually, respectively.
To apply the correct solutions it is important that we also know the different and
specific motivations for this problem. As noticed, both developed and developing
regions suffer from this problem. While developed regions between 3.5 and 30% of
revenue to electricity theft, developing countries lose between 30 and 47% electricity
is from theft [8, 11, 57, 62]. However, the motivations for theft are reportedly different
[6, 39, 47]. In developing regions the prices of electricity are relatively higher and
electricity theft therefore comes as a means of avoiding payment. But in developing
regions where the tariffs are lower, general poverty drives consumers to steal [48, 57].
The report specifically notes that poor service delivery is an important contributor to
theft. Customers are generally motivated by varieties of factors that are premised by
the following [16]:
• Political or governance
• Socio-economic
• Managerial
• Educational
• Legal
• Managerial
• Infrastructural.
Of all the listed factors, the most prominent driver to electricity theft is socioeco-
nomic. This factor influences the ultimate ability of the nature of individual access to
electricity consumption. Specifically depicted in the figure below is a list of socioe-
conomic parameters or variables that have to be studied to understand the nature of
electricity theft [10, 38] (Fig. 3.3):
3.4 Electricity Theft 45

Fig. 3.3 Socio-economic variables for assessing electricity theft [10]

In the context of households, affordability may be an important factor in driving

theft [23, 89]. However, this is not always the case. In a country like South Africa
where the prices of electricity have in the past two decades been relatively low,
electricity theft has equally been rife, so in cases like there may be a need for a
more rigorous assessment on what drives the problem. Mbanjwa [57] advises that in
dealing with electricity theft “it is imperative to examine factors other than income.”
Other studies have also noted that that theft, for example in areas of India
and Pakistan, is closely related to governance, wherein countries without effective
accountability, political instability, and corruption have a higher rate of electricity
theft [82]. In countries like Jamaica it has been found that theft is closely associated
with low levels of education and income. Factors motivating for electricity theft rural
regions are largely attached to the reality of underdevelopment, while in urban space
this may be due to, though not exclusively, overpopulation. The table below reflects
some of the fundamental motivations between rural and urban areas [10, 16, 47,
48, 56, 57] (Table 3.4). Reasons for electricity theft are generally the same for both
rural and urban areas. In rural areas the difference is the poor implementation of the
pro-poor policies. While in countries like South Africa, Uganda, and Rwanda have
such policies in place but these mechanisms are not yielding the desired outcomes
for poor households.
46 3 Rationale Part II: A Misdiagnosis of Non-payment …

Table 3.4 Motivations for

Rural Urban areas
electricity theft—Rural and
Urban areas [14] Poverty Poverty
Unemployment Unemployment
Inequality Social inequality
Inability to afford Inability to pay bills
Poor implementation of the Poverty
pro-poor policies or
programmes
Corruption public utility Easy access to an individual
employees (i.e. taking bribes) who can illegally bypass a
meter
Fraud and unpaid bills

The heavy and negative effects of electricity theft are what prompt authorities to
find solutions to the problem. Before addressing and discussing the solutions, let us
note some of the effects of electricity theft [10, 29].
• Overloading of the electrical system
• The inability of utility to predict accurate peak demand (which is important for
decision making)
• Financial losses
• Increased electricity tariffs for the consumer
• Increased prices of essential commodities such as food
• No adoption of energy efficiency measures, leading to the abuse of electricity
• Threatens community safety and increases the risk of loss of life.

3.5 Mechanisms to Curb Electricity Theft—Is a SPEM

the Solution?

The cost of electricity theft is too high for authorities to overlook the problem. As
mentioned above, this criminal activity affects even investment opportunities. So
authorities in the Sub-Saharan region have started to seek ways to alleviate this
challenge. Below is a table that illustrates different solutions that authorities have
adopted or can adopt in the attempt of curbing electricity theft in Sub-Saharan Africa
(Table 3.5). The nature of the adoption of these should differ by country and context.
One of the motivations for increasing the use of prepaid electricity meters has also
been due to the need to reduce the problem of electricity theft and improve utility
revenue, hence the increasing deployment of smart SPEM in the region [62]. Between
2013 and 2017, through prepaid electricity meters Eskom managed to save about
R1.4 billion ($109,000) in revenue by decreasing electricity theft by 0.69% (from
7.1 to 6.4%) [29, 75]. However, this decline, although important, but is insignificant.
For instance, in South Africa where prepaid electricity meters were introduced in
3.5 Mechanisms to Curb Electricity Theft … 47

Table 3.5 Mechanisms for dealing with electricity theft in the Sub-Saharan region [4, 8, 26, 82]
Solution Description
Technical In the recent past, the ability to detect electricity theft has emerged as
an area of importance for research and development. This is as
authorities and public utilities seek to develop mechanism of reducing
electricity theft to find ways of dealing with this very economically
costly and deadly practice. Government or utilities increasingly
applying special devices such as smart technologies to detect and
resolve theft issues [64]. These smart meters have been built with
engineering algorithms that show electricity consumption patterns
[80]. The software can assist in detecting electricity that is being
consumed illegally. The challenge that comes with this
method/solution especially in the developing Sub-Saharan region is
the poor availability of skills to manage and monitor the system.
Additionally, the technology remains expensive for most countries to
easily access and deploy [82]
Some countries, like South Africa, have started to use tamper-proof
meters. These meters are made of iron that houses the actual meter
inside. The iron is not easy to grind through They need a special key
that only Eskom employees possess. In most township areas of South
Africa, these boxes currently lay open and are only closed or sealed
by cello tape. Households easily gain access to the iron box and
system and therefore can manipulate the system to permit them to
consume more and pay less
Vigilant Energy Metering System (VEMS) with Advanced Meter
Infrastructure (AMI) system is also another option that can detect
anomalies in household electricity consumption patterns
In some areas the use of Mobile Remote Check Meters is becoming
popular. This method can however be used only to detect electricity
theft at a micro scale (i.e. meters with low voltage) [62]
Awareness campaigns Countries can establish civil organizations that monitor electricity
theft in communities. Operation Khanyisa and Vuk’uzenzele are
prominent organisations in the region that help utilities such as
Eskom to track and reduce electricity in local communities
More than that, the availability of media space can also be used as a
means of raising awareness against electricity theft. In South Africa
you find a special hotline that communities can use to report
izininyoka (people that steal electricity). Governments and public
utilities should take advantage of the television, radio, emails, and
local newspapers to advertise and educate the general populace about
the danger of electricity theft
Education, through door-to-door engagements with community
members or households can help utilities can a trusting relationship
with households who can in turn help in reporting electricity theft.
Some utilities in the region, as in South Africa, Tanzania, Rwanda,
and Botswana already encourage its consumers to use available
designed anonymous and affordable messaging services, and free
hotline services [28, 66]
(continued)
48 3 Rationale Part II: A Misdiagnosis of Non-payment …

Table 3.5 (continued)

Solution Description
Governance and Any solution can only be effective if and when there is political-will
Managerial and transparent governance. In the case of electricity theft reduction,
it can only be possible whereby the governance culture endorses law
enforcement against this criminal act of electricity theft
With the reality that in some instances internal management is
centrally involved in facilitating electricity theft in communities, it
therefore becomes pivotal that there be independent periodical
managerial inspections and monitoring
Regulation, Strict regulations are necessary to reduce theft. More than that, the
Enforcement, and enforcement of present regulations is imperative. Mbanjwa [57] found
Penalties that more than 50% of electricity theft cases are yet to be presented
on a court roll [57]. In a different study, Lowvelder [52] ascertained
that 96% of South Africans are aware that electricity theft is a
criminal act. However, a mere 16% believe that they will get caught.
This is an important indicator that there is a need for law enforcement
Beyond a design of laws that will force authorities to enforce relevant
pro-poor laws, for example South Africa’s FBE policy. Currently no
law exists in the Sub-Saharan region holding local authorities
accountable for pro-poor policies
Governments need to issue out financial penalties for any household
found to have tampered with the meter (see Addition Table below). In
some cases, houses opt to give bribes to management and avoid high
penalties
Additional Table [75]
Domestic tamper fees
First offence (excluding R4, 561
the meter and
other-cost)
New meter R1, 886
Other (disconnection R612
and reconnection)
Second offence R7,059
(excluding the meter
and other-cost)
Third offence R12, 159
(excluding the meter
and other-cost)

2007 and the technology has constantly been bolstered even towards replacing the
traditional prepaid meters with smart technologies, this level of reduction is minute.
This is in line with Smith [82]:
The disturbing evidence is that losses (and theft) appear to be increasing in an era of readily
available technological means (metering, for instance) to lower non-technical losses.

So, we ask the question again: Can prepaid electricity meter assist in curbing
theft. If the technology fails to improve the socio-economic livelihood of households,
3.5 Mechanisms to Curb Electricity Theft … 49

particularly those in low-income households, then electricity theft will not end. The
general primary driver of theft in Sub-Saharan Africa is socio-economic. Therefore,
prepaid meters can only assuage electricity theft when the prepaid meter programme
fundamentally considers this point. Table 4.4 in the next chapter elaborates on what
a contextual and effective prepaid electricity meter deployment framework should
consider. Until the application of such a framework, households will constantly devise
mechanisms of vandalising or bypassing installed prepaid electricity meters.

3.6 Highlights

• Governments across Sub-Saharan Africa have introduced the technology in order

to deal, either by curbing or averting, the challenge of household electricity non-
payment. Whereas disconnection to electricity supply should be a natural response
to arrearage, governments and utilities have exercised this legal approach very
limitedly.
• Prepaid electricity meters have the potential of reducing arrearage by up to 80%
in one year.
• Electricity arrearage is both an economic and social issue. A holistic approach
to the issue is necessary. Thus far, the perspectives have either been economic or
social. Effective dealing with non-payment, through prepaid electricity meters,
require a holistic understanding and approach.
• Albeit South Africa is saving close to 2 billion per annum from prepaid electricity
meters—and the revenue loss has declined by ≥14%, households continue to owe
the utility about R26 billion. There is a need for an improved programme—a
holistic approach.
• Before deployment of prepaid electricity meters to deal with arrearage, authorities
need to understand the context and causal factors.

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Chapter 4
Prepaid Electricity Meters and Energy
Poverty—Lessons from South Africa

Electricity accessibility does not necessarily elicit maximum socio-economic bene-

fits in a society characterised by inequality [3]. This means that “the presence of
electricity is by no means a guarantee for development” [57]. Since 1994, South
Africa has achieved more than 90% of household electrification rates [48]. The role
and contribution of policy in achieving this milestone cannot be understated.
Electricity policies formulated henceforth have essentially, at least theoretically,
prioritised maximum and equitable household electrification regardless of household
socio-economic positioning and race. Access to electricity has become an ‘implied
right’ in the region [36]. By implication, all households are therefore to be afforded
access to basic energy or electricity services for inter alia water heating, cooking,
and lighting. Hitherto, the household sector consumes more than 30% of the total
electricity generated in South Africa [43].
Tied to this marked progress, is the aspect of electricity affordability. This is a
crucial feature of socio-economic livelihood and carries cardinal implications on the
state of energy poverty in the country [32]. In the past decade, the cost of electricity
has increased incessantly. Between 2007 and 2014, the cost of electricity (c/kWh) has
risen exponentially by more than 300% [10, 26]. In 2018, the National Energy Regu-
lator (NERSA) approved Eskom’s application of an additional 11% tariff increase.
Electricity price escalations and expenditure constraints on electricity also tend to
push households towards alternative energy sources and voluntarily disconnecting
from electricity supply [13, 16, 53].
Scholars have already drawn the link between increasing electricity tariffs, deep-
ened socio-economic vulnerability, and energy vulnerability/poverty among electri-
fied indigent households [32, 44, 45]. Household expenditure or affordability limi-
tation stands as a key indicator for measuring energy poverty status quo [27]. Adam
[1] ascertained that in South Africa, between 12 and 20% indigent electrified income
is spent on electrical energy. With the increase in electricity tariffs, this expenditure
level has certainly increased. Moreover, a study conducted by Winkler et al. [60] also

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 55

N. Kambule and N. Nwulu, The Deployment of Prepaid Electricity Meters in Sub-Saharan
Africa, Lecture Notes in Electrical Engineering 759,
https://doi.org/10.1007/978-3-030-71217-4_4
56 4 Prepaid Electricity Meters and Energy Poverty …

reports that indigent households connected to the electricity grid in Limpopo, one of
the provinces in the country, spend close to 19% of income on electrical energy.
Furthermore, in recent years, Eskom and the household sector have been
confronted with respectively unique but intertwined challenging realities associated
with the payment for electricity services. For Eskom, it has been the problem of
burgeoning household electricity arrearage. In a country of 20 million (close to 50%
population size) people considered impoverished, this is however not uncommon. On
the other hand, in the past decade, households have been confronted with the chal-
lenge of escalating electricity prices—by more than 324% [14]. Poor households
therefore remain socio-economically threatened and marginalised. In fact, about
43% of the population is energy poor and the role of increasing electricity prices in
this regard cannot be ignored [50]. To manage and reverse the scourge of household
arrearage, the utility introduced household prepaid electricity meters (around the
1980s). This was primarily undertaken under the Electricity Basic Services Support
Tariff policy (EBSST) (referred to as the Free Basic Electricity (FBE)) in 2003—an
elaborate discussion of this is given later.
Several studies and commentaries on the FBE policy or pro-poor incentives have
emanated over the years [1, 5, 16, 23, 22, 25, 36, 39, 46, 50, 54, 60]. With the rapidly
transforming energy/electricity milieu, there is a broad recognition that there is a
need for an updated FBE policy and incentive in order to improve the effectiveness
of prepaid electricity meter programme [4, 20, 34, 47, 55]. The effectiveness of the
tools is gauged according to the socio-economic value and relevance of its targeted
group [4]. For South Africa, as will be seen in the upcoming sections, the FBE
remains irrelevant and as such ineffective in dealing with prepaid metered household
socio-economic conditions. This then ultimately translates to deepened household
energy vulnerability or poverty, also explicated later in the chapter.
This reality has prevailed in South Africa in spite of the existence of several
energy policy frameworks and incentives introduced by the government. In the entire
region of Sub-Saharan Africa, South Africa’s energy regulatory framework is among,
if not, the best. It therefore befits to use the country as a reference scenario for
understanding how energy poverty can prevail and be averted within an expanding
household prepaid electricity market. The lessons drawn are mainly from a Soweto
based case study. Soweto, as is the majority of Sub-Saharan African communities,
is a predominantly low-income township and therefore broadly representative of
prevalent socio-economic conditions across the continent. This chapter is dedicated to
show the link between prepaid electricity meters (a technology driving electrification)
(discussions on the technology already covered within Chaps. 2, 3 and 4), energy
incentives, and energy poverty in South Africa. The lessons on the connectivity
of prepaid meters and energy poverty can assist in decision making and general
development for the continent.
4.1 Pro-poor Electrification Regulatory and Incentives Framework … 57

4.1 Pro-poor Electrification Regulatory and Incentives

Framework—Developing Countries

Improving household electrification, particularly in developing countries, is a

strategic measure of curbing socio-economic problems and reducing poverty [18,
40]. The electric commodity is a vital development conduit or resource used to meet
household basic needs and reduce prevalent socio-economic disparities. Government
policies have as a result formulated regulatory energy mechanisms coupled with
incentives or programmes that essentially target and seek to benefit poor households
[4]. Electricity incentives for poor households, particularly in developing countries,
play a specific strategic measure for enabling the affordability of electricity services,
improving social equity goals, and bolstering energy policy efficacy [5, 6, 18].
The household tariff structure stands as the most widely used mechanism when
designing incentives for the indigent. Authorities adjust tariffs according to the socio-
economic conditions, in order to make them attractive and affordable for the poor.
Fattouh and El-Katiri [20] point out that low electricity prices assist “the lowest
income groups to gain access to modern forms of energy”. According to Christensen
et al. [12], the sustainability of tariff incentives is dependent on whether the final
determined tariff remains relevant to the targeted group, and the ability of the group
to afford. The incentive provision of affordable electricity services has thus become
central to socio-economic progress in developing countries.
Table 4.2 depicts examples of countries that have formulated and introduced
pro-poor household electricity policies and incentives. These largely remain generic
and predicated by country-based prevailing socio-economic contexts. Additionally,
scholars have shared different perspectives on the role of these incentives [18, 33].
In Sub-Saharan Africa, countries like Ghana and Morocco stand as good examples
with pro-poor incentives. In Ghana, the Public Utility Regulatory Commission of
Ghana (PURC) runs a social tariff (lifeline tariff) of 50 kWh per month for poor
households. There is the availability of imported Compact Fluorescent Light Bulbs
(CFL) sold for poor households at highly subsidised rated. The positive impacts
of the incentives have however been affected by the increasing electricity tariffs in
the country. Morocco serves another specific example with pro-poor incentives. The
government disseminates solar photovoltaic home systems at a largely subsidised
fee—low-income households receive a 40% subsidy.
Latin American countries have introduced and adopted social tariffs to protect
vulnerable households from increasing energy or electricity costs or general
economic difficulties [20]. In Peru, low-income households are deemed fit for the
social tariff or any social programmes under the SISFOH (Sistema de Focalización de
Hogares) system. SISFOH is a central system that collects household socio-economic
details and characteristics, then calculates the poverty index and reflects the final
determination. In most of these countries, cross-subsidies finance social tariffs, elec-
tric companies, or the state. In Argentina, public funds finance incentives. In some
countries, customers consuming electricity beyond a certain specified threshold fund
the incentives. In the Dominican Republic, the government pays for about 75% of
58 4 Prepaid Electricity Meters and Energy Poverty …

the electricity consumed in the informal settlements [35]. The policy requires that
electricity-distributing companies be incentivised, in order to increase the number
of consumers included in the programme. Japan has since the 1990s encouraged the
use of the DSM program to reduce household electricity consumption. The govern-
ment and utilities have also applied the Time of Day pricing incentive. Some of the
programmes provide educational and employment opportunities to the targeted local
communities.
Other research has however contested the purported socio-economic benefit belief
of social tariffs and suggested direct welfare payments or investments in social
services as more effective means. Fattouh and El-Katiri [20] note that the benefits
of energy subsidies tend to leak to high-income households, and therefore recom-
mend that investments should be directed in other social nets (the provision of free
public services (e.g. health, education, etc.)) that may guarantee substantive social
returns. Because of the leakage, the subsidy may be socially regressive and not
beneficial to the targeted group (i.e. indigent households). Banal-Estañol et al. [4]
conclude that most incentives in Latin America remain limitedly effective because
the incentives are not adapted to the prevalent socio-economic realities. Some of the
Organisation for Economic Corporation and Development (OECD) countries have
eliminated social tariffs as they engender immaterial change in energy impoverished
households. Australia, offers a low-income household rebate of between $285 and
$313.50 per year (the noted rates were applicable until June 2018). In 2016, Canada
introduced a hydro-electricity rebate for indigent households with an income of
less than $50,000. The programme is funded by high-income households whose
combined monthly income is more than $50,000. A study by McRae [40] argues
social subsidies in Colombia contribute to the tendency of household non-payment
and that the state issues them out to expand political constituency and support in order
to avoid civil conflict. In the Asian ‘Big five’ countries (China, India, Japan, South
Korea, Indonesia), the subsidy system has proven inefficient [47]. Kemmler [34] and
Tongia [55] state that in India, the subsidy benefits middle to high-income house-
holds than low-income consumers (the indigent). The economic and social costs of
using subsidies in several instances outweigh the intended benefits (Table 4.1) [20].

Table 4.1 Cost of energy subsidies

Type of cost Description
Economic Energy subsidies tend:
• Reduce incentives for productivity improvements and investments in
technology that is more energy efficient
• They alter pricing signals resulting in energy waste
• The benefits of the incentives tend to leak to high-income households
Social While they are beneficial to the poor, they are equally regressive because richer
consumers tend to benefit from the subsidies
Environmental They result in increased energy consumption or downplay the importance of
energy conservation. This has negative environmental impacts (e.g. increasing
airborne emissions and greenhouse gases)
4.2 Pro-poor Electrification Regulatory and Incentives Framework—South … 59

4.2 Pro-poor Electrification Regulatory and Incentives

Framework—South Africa

All pre-1994 policies, of the Apartheid system in South Africa, were designed
to deepen socio-economic inequality according to race. This translated to socio-
economic development framed according to race. Specifically, most black commu-
nities, even to date, remain marginalised and indigent [43]. The consequence of
the apartheid ideology of ‘separate development’ was separate budgeting—meaning
inter alia underdevelopment of electricity services for black communities. While
close to 100% of white suburban areas were electrified, less than 20% of black
indigent households were electrified [5, 28].
The emergence of democracy in 1994, under the African National Congress
(ANC), sought to reverse this trend and reduce inequality. In the past 24 years, house-
hold electrification rates have risen from 36% to more than 90% [10, 48, 51]. The
increase has largely been driven by policies and programmes such as the Integrated
National Electrification Programme (INEP), Electricity for All, and Reconstruction
and Development Programme (RDP) that prioritise equitable socio-economic equity.
Among other key regulatory instruments that the government introduced to improve
household accessibility and livelihood was the Free Basic Electricity in 2003; incen-
tives included the Demand Side Management (DSM) projects. The next section
discusses the noted policy and initiatives.

4.2.1 Electricity Basic Service Support Tariff (Free Basic

Electricity) (2003)

In the 1970s, Soweto residents formed a defiance electricity campaign, as an approach

of fighting against the Apartheid regime. Through this campaign, households refused
to pay their electricity bills. The African National Congress (ANC) promised people
inter alia free electricity if elected into power. This promise was maintained into
the democratic rule. During the 2000 election campaign, free basic water and elec-
tricity to residents were at the core of the ANC’s local and national government
election manifesto. Eskom considers free electricity unrealistic. However, in 2003
the government in collaboration with Eskom introduced the Free Basic Electricity
(FBE) Policy. The FBE policy is a complimentary mechanism of the INEP, designed
and promulgated by the Department of Minerals and Energy (DME) in 2003. It is thus
far the only pro-poor household electricity policy. It centrally seeks to protect vulner-
able and impoverished electrified households through bringing relief and ensuring
optimum socio-economic benefits from the INEP. The policy serves as a steering
tool for the execution of FBE services by municipalities.
Faced with the reality of improving the electrification rate, this instrument was
introduced to assuage affordability issues for electrified households. The policy
intended to provide basic services to indigent households (grid-tied). The policy
60 4 Prepaid Electricity Meters and Energy Poverty …

asserts that 56% of low-income households have low electricity consumption

patterns, and not consuming more than 50 kWh per month. It therefore freely allo-
cates 50 kWh per month (as an incentive) to indigent households and considers
this adequate to meet household basic electrical energy needs (i.e. lighting, water
heating, and basic cooking or ironing). Just like other developing country pro-poor
electricity incentives, similarly this policy instrument seeks to socio-economically
protect vulnerable and impoverished electrified households by freely proving them
with 50 kWh per month to meet household basic electrical energy needs. One of the
fundamental requirements of the 50 kWh electricity provision, is the compulsory
installation of a household prepaid electricity meter.
The allocation is concomitant with Eskom’s Incline Block Tariff (IBT) beyond the
provided 50 kWh. This means that electricity consumption beyond the free allocation
is then paid by the consumer. The policy acknowledges that the value of this benefit
may be expanded through the application of energy efficiency and conservation
initiatives. A Self-targeted (instead of a Broad-Based approach) is used to identify
the poor qualifying households. Herein, two approaches exist:
1. Self-targeting approach with Current-Limiting:
• Household electricity-based needs are limited to a certain (Amperes) current
level (e.g. 10 Amp).
• After exhausting the FBE, the consumer pays the approved tariff per kWh.
• Households apply with municipality or service provider to be placed under
that approved tariff.
2. Self-targeting without Current-Limiting:
• Households electricity needs are on average or above 150 kWh per month.
• The exhaustion of the FBE allocation means the consumer purchases
electricity at an approved tariff rate per kWh.
• Consumer applies to be placed under the set approved tariff.
The process of household registration and qualification is administered by the
Department of Social Development. The incentive is financed through national
government transfers to local government or a cross-subsidy from high electricity
consuming customers and richer households (by charging a higher tariff). House-
hold benefits from FBE are both direct and indirect [23, 22, 57]. The direct benefits
include monetary savings, protracted electricity use, and appliance purchases. On the
other hand, the indirect benefits include improved health, education, environment,
and safety, and quality of life.
Currently, more than 51% of households have access to this incentive [50].
Different studies have attached several benefits associated with this incentive, such
as monetary savings, extended electricity use, and appliance purchases, improved
health, education, environment, and safety and quality of life [5, 23, 22, 25, 39,
46, 57]. However, since 2010 scholars have questioned the socio-economic effect
of the incentive for the poor [1, 7, 16, 36, 50, 60]. Some scholars have argued
that the incentive contributes little to effect material socio-economic transformation
4.2 Pro-poor Electrification Regulatory and Incentives Framework—South … 61

[5, 39]. Furthermore, the limited rollout of cost-effective measures (e.g. Demand
Side Management (DSM) and energy efficient measures) has also fuelled preva-
lent scholarly assertions that the FBE instrument is obsolete [2, 8, 16, 29, 30, 41,
42, 56, 60]. The role of the DSM project cannot be underestimated, particularly in
Sub-Saharan African electrified prepaid metered households that are energy inef-
ficiency, experiencing increasing electricity price, and are most probably already
energy vulnerable.

4.2.2 Demand Side Management (DSM)

As is in countries such as Brazil, Mexico, and Latin American countries (Table 4.2),
the South African government has recognised the important role of the DSM

Table 4.2 Regulatory and incentives framework for pro-poor electrification programme in
developing countries
Country Electrification rate Description
(%)
Brazil 97 • Rural Poverty World Bank grant for
Alleviation Program financing local
(RPAP) (1993) grid-connected rural
electrification projects.
Communities come up with
approaches and projects that
will be best effective and
beneficial to the local
conditions
• Law 10438 (2002) Lowered tariffs for indigent
households
• Luz no Campo (Light Introduced to improve
in the Countryside) electricity accessibility and
programme (1999) socio-economic
• Luz para Todos (LpT) development among
(Light for All) low-income households. The
program (2003) LpT is the first
social-oriented incentive that
is cross-subsidised (financed
through energy providers)
and seeks to reduce social
inequality in rural areas.
Incentives provided include
inter alia capacity-building
campaigns for local
households, education on
electricity conservation,
security, and efficiency
(continued)
62 4 Prepaid Electricity Meters and Energy Poverty …

Table 4.2 (continued)

Country Electrification rate Description
(%)
Other Latin 90 • Peruvian incentive: Promotes accelerated
American FOSE (Fondo de electrification through
Countries (Peru, Compensación Social renewable energy sources
Ecuador, Chile, Eléctrica—Electricity Use of social tariffs financed
Dominican Social Compensation through cross-subsidies. The
Republic, Fund) (2001) and consumption subsidies differ
Bolivia, Mexico) SISFOH (Sistema de by country: Peru (0–30
Focalización de kWh/month); Bolivia (70
Hogares kWh/month); Mexico (900
• Chile: National kWh/month—depends on
Program for Rural region and season); Ecuador
Electrification (PER), (110–130 kWh/month)
the National Program In Mexico, there are energy
on Rural and Social efficiency programmes for
Energy (PERYS), light bulbs
• Mexico: Luz
Sustetable
(Incandescent light
bulb replacement
programme) (2011)
India 85 • The “Bright Home The programme was
Programme” (Kutir launched to improve
Jyoti) (1989) electrification among the
• Rajiv Ghandi Grameen poor
Vidyutikaran Yojana Poor households get free
(RGGVY) (2005) electricity connections with
• Rural Electrification a 100% capital subsidy.
Policy (2006) Close to 96% of local
households qualify for
government 50% taxpayer
subsidy. For example, all
households in Tamil Nadu
get free 50 kWh per month
Indigent households are to
get free electricity
connections. But the poor
specifically get a 33% (about
Rs. 1000) subsidy per annum
(continued)

programme. Its pro-poor policy, which is the FBE, recognises the role energy
efficiency initiatives in expediting socio-economic improvement in low-income
households. In association with the country’s main electricity supplier, Eskom and
municipal, the government has prioritised its focus on the DSM programme as a
cost-effective measure for improving quality of life. Through the programme and
retrofits more than 1 800 MW worth of electricity savings have been generated. This
4.2 Pro-poor Electrification Regulatory and Incentives Framework—South … 63

Table 4.2 (continued)

Country Electrification rate Description
(%)
Ghana 83 • National An incentive for local
Electrification engagement wherein the
programme or scheme government works with local
(1989) communities to accelerate
• Self-Help the electrification rate.
Electrification Communities within the
Programme (SHEP) 20 km distribution network
and have started
electrification projects, get
support from the government
to complete the initiated
project earlier than
scheduled
The Public Utility
Regulatory Commission of
Ghana (PURC) introduced a
social tariff (lifeline tariff) of
50 kWh per month for
low-income households
Compact Fluorescent Light
Bulbs (CFL) have been
imported and sold to
households at highly
subsidised rates. But
increasing tariffs have
pushed the product prices up
again
Morocco 98 • Programme for Global Dissemination of solar
Rural Electrification photovoltaic home systems.
(PERG) (1996) This is carried out at a fee
but largely subsidised by the
government. Low-income
households receive a 40%
subsidy

has transpired through two main initiatives discussed below, namely the Efficient
Lighting and Solar Water Heater programme.

4.2.3 Efficient Lighting Programme (2007)

Another demand management mechanism employed by Eskom and the Department

of Energy (DoE) is towards reducing household electricity demand was the distribu-
tion of Compact Fluorescent Lights (CFL). The country launched this cost-effective
initiative in 2004, and the goal was to freely distribute 43.5 million energy efficient
64 4 Prepaid Electricity Meters and Energy Poverty …

CFLs by 2010. This was a door-to-door exchange programme involving the replace-
ment of high consuming incandescent light bulbs with efficient CFLs. By 2014 more
than 60 million light bulbs had been deployed. About 30,000 persons were employed
from this project.

4.2.4 Solar Water Heater Programme (2008)

One of the direct outcomes of the White Paper on Renewable Energy (2003) was
the Solar Water Heater Programme. In 2008, the Eskom conceptualised rebate or
subsidy programme, firstly named Geyser Load Reduction Programme. The aim of
the programme then was to reduce electricity demand and consumption, particularly
among the high-end electricity consumers. The later was in the light of the electricity
crises. In 2009, the programme was initiated by the DoE and became known as the
National Solar Water Heater programme. The target was to have 50% of South
Africa’s household water heating through solar water heating technology by 2020.
This was going to be achieved by deploying 1 million solar water heaters by 2015. The
plan was that, between 2009 and 2012, the programme would be funded through the
National Treasury. But this never effectively materialised because of the financial
crises experienced by Eskom in 2013 and the programme was halted. The social
component of the programme aimed at delivering hot water services through low-
pressure solar water heater systems to indigent households across 54 municipalities.
Close to 90,000 systems have been distributed thus far. Rebates are only offered to
households with high-pressure systems. The installations are cost-free. By 2017, only
30,000 systems had been installed for indigent households. Although a negligible
number of households have the systems installed, the put government has recently
budgeted R411 million to intensify the roll-out exercise.
Another important incentive given in South Africa, as done in other developing
countries, is the social tariff. The tariff is characterised by electrification grants, the
already mentioned FBE, and cross-subsidies whereby the richer are charged more to
subsidise households at the lower end of the income distribution.
Unfortunately, to date, none of these programmes have been sustainable—the
effectiveness is questionable either because of infrastructural, administrative, or
management issues. In the light of increasing tariffs and deepening energy poverty, it
is important to design programmes or introduce mechanisms that will ensure optimal
programme efficacy. The next section opens up with an elaborate discussion on energy
poverty in the context of a prepaid electricity metered market. More importantly,
mechanisms to deal with the challenge are then proposed.
4.3 Energy Poverty 65

4.3 Energy Poverty

Energy poverty only occurs where households use electricity or gas [11]. Fuel
poverty on the other hand places traditional sources of energy (wood, etc.) at the
centre. Energy poverty is generally associated with low-income households. While
the concept of energy poverty is generic and the definition varies by geography, but
it is broadly recognised the poverty expenditure threshold standard at 10–15% of
household income [9, 44, 27]. This is household income spent to meet energy related
needs such as cooking, lighting, heating and cooling. These services are necessary
for human development and the lack of access thereof poses a socio-economic threat
to the households. One of the contributing factors for households to struggle in
accessing the services, and rendering them energy vulnerable, is the increasing cost
of electricity.

4.3.1 Increasing Electricity Tariffs

One of the determinants of energy poverty in South Africa is access to affordable

electricity [27]. This is one of the central imperatives of FBE policy. In the past
decade, electricity tariffs have increased by more than 324% [10, 14]. The incessant
increase has been attributed to the need for Eskom to strengthen its financial basis
for infrastructure and electricity capacity building, in order to avert another load
shedding incidence. This surge in cost has however affected the household’s ability
to access affordable and sufficient electricity and has rendered households vulnerable
and further impoverished. Households that have access to electricity through the
national electrical grid have become more prone to energy poverty than those off the
grid [27].
South Africa uses the expenditure approach to measure energy poverty. For
example, a household earning a monthly income of R10 000 ($654.5) (assumed
rate of R15.2/$), will have to spend between R1 000 ($65.4) and R1 500 ($98.1)
on energy to be considered energy poor [32]. To date, about 43% of South Africa’s
households are classified as energy poor. Energy poverty is not unique to South
Africa. Regions such as the United Kingdom, Northern Ireland, and New Zealand
have 20, 44, and 23% energy poverty levels, respectively [24]. International studies,
for instance by O’Sullivan et al. [44] and Chester [11], have already confirmed the
link between increasing tariffs and energy poverty. The rising tariffs may translate
in a surge of disconnection rates because of the non-payment of bills, resulting in
deepened energy poverty and further strained household budget [24]. The reality that
is facing the FBE policy is that increasing electricity tariffs reduce the value of the
50 kWh incentive and therefore having immaterial socio-economic impact among
poor households.
66 4 Prepaid Electricity Meters and Energy Poverty …

4.3.2 Energy Efficiency

The FBE policy acknowledges the value of cost-effective measures such as energy
efficiency in reducing energy poverty. One of the realities that remain unchanged in
most grid-connected low-income households of South Africa is that they continue to
depend on old inefficient electric appliances for heating, cooking, and refrigeration
need [36]. This is while the energy efficiency market has expanded over the years. For
instance, current energy efficient refrigerators use at least 75% less energy than a ten
year old refrigerator model. Progressive as the market has been, but the upfront cost of
energy efficient home appliances remains to be relatively high for indigent households
to affordably access in South Africa. Take for example, the basic differences between
the incandescent, Compact Fluorescent Lightbulbs (CFL), and Light Emitting Diodes
(LED) lightbulbs.
Energy efficient LED lightbulbs are beneficial in their average life span, stretching
to a duration period of 25,000 h or 10 years. Associated with this may be the envi-
ronmental benefits. Poor households, however, choose appliances almost exclusively
based on price and brand, not on duration [31, 29, 38, 52]. Therefore, given the
socio-economic reality and the light-bulb prices, the likelihood of poor households
choosing a R10.00 ($0.64) energy inefficient incandescent lightbulb as compared to
an energy efficient one with a ten-fold higher cost, is higher.
After more than a decade of the promulgation of the DME [17], energy efficiency
remains unaffordable for poor households. Whereas the government has established
the DSM programme (e.g. Efficiency Lighting and Solar Water Geyser project)
targeting poor households, in the course of its deployment and operation it has been
plagued with challenges and as such been halted [2, 8, 16, 41, 42, 60]. With all
this, the programme’s socio-economic effectiveness is therefore questionable. With
household energy inefficiency being another indicator of energy poverty [44], this
prevalent condition denotes that the FBE policy has failed in assisting household
maximise the benefit of the 50 kWh incentive. Low-income households therefore
remain trapped in the cycle of energy poverty.
The arguments expressed thus far border on the fact that increasing electricity
prices and the pervasive energy inefficiency in low-income households of South
Africa render the FBE policy obsolete. The next discussion unfolds in relation of
this stance and primarily extends it by arguing, as opposed to mainstream ideology,
that in the context of FBE policy, prepaid electricity meters for poor households are
socio-economically ineffective.

4.4 Prepaid Electricity Meters and Energy Poverty

The utilisation of prepaid electricity meters is deemed as another mechanism that

government and Eskom have proclaimed as a means of improving quality of life for
impoverished households. Additionally the technology was introduced to manage
and mitigate the problem of household non-payment for electricity services. In the
4.4 Prepaid Electricity Meters and Energy Poverty 67

past decade, the government has intensified the deployment of the technology. Hith-
erto, more than 66% (4.2 million) of the residential sector in the country is prepaid
metered [29]. The goal is to have all households prepaid metered by 2020 [29].
While over the years the installation of the technology was based on consumer
willingness, in 2016 Eskom declared that the installations should be on a
‘compulsory-basis for all households’ to inter alia curb the utility’s losses from
household non-payment [21]. In 2003, Eskom in an effort to encourage its customers
to pay for the electricity consumed, concurrently promulgated the FBE policy to make
electricity affordable and erased R1.4 billion for one township’s debt. Regardless,
by 2015 the debt had escalated again—this time six-fold (R8.6 billion) [49]. Herein
has been another motivation for deploying the technology, as a credit management
tool. Some of the overall pronounced benefits of the technology include: electricity
and monetary savings therefore reduce energy poverty, the elimination of stress
associated with bills, and useful tool to aid budgeting [19, 37].
A plethora of the aforementioned studies and the FBE policy fundamentally
fail to acknowledge that household prepaid electricity meters may elicit different
socio-economic outcomes for different income households [29]. Meaning that, the
purported benefits of the technology may not be true for all household income groups.
In South Africa specifically, the rollout of prepaid electricity meters under the current
FBE status quo, will socio-economically marginalise low income households.
In an analysis of prepaid meter based electricity consumption data (2007–2014),
for 3 841 low-income households of Chiawelo—the first area in Soweto township to
receive the technology—it was ascertained that although prepaid electricity meters
resulted in 48% electricity reduction (Figs. 4.1 and 4.2), because of prevalent socio-
economic realities this finding should be interpreted with caution [32]. This is because
it was further proven that a low-income household in the area that earns on average
R992 per month1 spends about 66% of their monthly income on prepaid meter based
electricity (Table 4.3), which ultimately renders this household income group energy
impoverished (i.e. ratio: income vs. electricity). So, while Eskom is arguably recov-
ering the non-payment debt, this is however coming at a socio-economic detriment
for poor households.
Poor prepaid metered households will either spend more in order to avoid discon-
nection or self-disconnect because they cannot afford the electricity. With most of
these households located in urban locations, alternative fuel and energy sources
such as wood for cooking and water heating may be inaccessible. So, while prepaid
electricity meters result is reduced electricity consumption, but they have a strong
potential for further entrenching energy poverty. In a prepaid metered household
context, the government’s 50 kWh only contributes about 7% to the final prepaid
based electricity consumption of an indigent household [32]. This is inadequate to
meet the basic energy needs stated in the FBE policy of lighting, water and space
heating, basic cooking and ironing. In view of this reality, the FBE policy is recog-
nised as obsolete as it fails to achieve its set goal of reducing energy poverty through
improving access to affordable prepaid meter electricity services.

1 Based on StatsSA [48] data.

 68
4 Prepaid Electricity Meters and Energy Poverty …

Fig. 4.1 Electricity consumption trend among prepaid metered low-income households of Chiawelo, Soweto (2007–2014) [32]
 4.4 Prepaid Electricity Meters and Energy Poverty
69

Fig. 4.2 Annual electricity consumption pattern (monthly trend) for low-income households (2007–2014) [32]
70 4 Prepaid Electricity Meters and Energy Poverty …

Table 4.3 Prepaid meter based electricity consumption and expenditure for an average low-income
household [32]
Prepaid meter based electricity Assumed tariff Electricity expenditure per month
consumption per month (Based
Eskom’s 2014 data for 3 841 low
income households; this is the overall
total for consumption (including space
and water heating and etc.))
667.6 kWh R0.98 per kWh R642.2 ($43.8) per month

An effective prepaid electricity meter programme or market for poor households

will require a consideration of several aspects. There is a need to reengineer the
prevalent social contracts based on the current and emerging socio-economic status
quo. In the past 15 years, the FBE policy remains unchanged and proves to be socio-
economically irrelevant [1, 27, 36]. One key factor that has rendered the policy
instrument irrelevant or ineffective is the aforementioned rise in electricity costs
in the past decade and it remaining unchanged. While the 50 kWh incentive, in
and of itself has been considered immaterial (Dlamini 2016) [43], the escalating
price of electricity has further reduced the value of the social value of the incentive.
Despite that, no efforts have thus far been put to review and update the state of the
FBE instrument. Research has inferred that the efficacy and sustainability of a tariff
incentive is dependent on its relevance to the target population [12]. The specific
policy areas that need to be reviewed to improve the relevance of the instrument
include the size of allocation and Self-targeting approach with Current-Limiting (i.e.
20 A). Household electricity consumption needs, use exceedingly more (60 amp)
than the Current-Limiting stipulated in the policy document [1, 36].
Scholars also generally concur on the need for relevant pro-poor household elec-
tricity incentives, particularly in developing regions such as Sub-Saharan Africa
(Matsukawa et al. 2000; Elinder et al. 2016) [4, 5, 12, 35, 40, 47]. The FBE policy,
for example, stands as one of the pro-poor electricity policies and incentives that
need to be revised. Since its promulgation, no review has been undertaken—in spite
of increasing electricity prices. One of the additional components of the revised
document is an the establishment of a policy monitoring and review committee. The
policy review process should be made mandatory and carried after a set number of
years. This will ensure that the tool is timeously improved to be constantly rele-
vant to the socio-economic conditions prevailing among indigent households. A
context-specific approach is therefore a prerequisite.
Moreover, the current prepaid electricity meter programme should be redesigned
by 2020. A new design should thus feature a process characterised by a context-
specific deployment-link of prepaid meters and cost-effective measures (e.g. energy
efficiency). The aim is to concomitantly increase the level of energy efficiency and
deploy prepaid meters in a manner that will elicit maximum socio-economic benefits,
and ultimately reduce the 66% household expenditure levels on prepaid meter elec-
tricity. Energy efficiency measures are the cornerstone for prepaid electricity meter
4.4 Prepaid Electricity Meters and Energy Poverty 71

efficacy [29]. These will assuage the impact of increasing electricity prices, which
are likely to continue increasing into the future. The role of the established FBE
monitoring and review committee will include managing the proposed deployment-
link. This is because the effectiveness of the FBE social incentive will be framed by
the extent of energy efficiency among prepaid metered low-income households.
In addition to the context-specific approach, a holistic method has been suggested
by Kambule [30]. This method is comprised of 10 benchmark factors that should be
considered if a prepaid meter programme is to be effective and thus reduce energy
poverty in low-income household settings. The factors are tabulated and described
in Table 4.4.
For electrification to be fully effective, it has to be tied with incentive programmes
and strategies that will render the electricity affordable and reduce energy poverty. Up
to now, this is not the case. Increasing tariffs for low-income households are further
entrenching energy poverty [44, 45]. White et al. [58] remarked that electricity at
the time remained an expensive commodity for poor households. This status quo
persists in spite of the existence of FBE policy and other noted pro-poor incentives.
For that reason, studies have in recent years recommended alternative approaches
for improving the effectiveness of the pro-poor electricity incentives in South Africa.
For example, Adam [1] has argued for an expanded allocation of 200 kWh (poverty
incentive); Bhorat et al. [7] suggests a reconsideration of the household poverty line
(<R1 500), to be raised beyond this level; improved social education and energy
efficiency programmes [27]; use of carbon tax to reduce energy poverty [59].
Overall, research studies advocate that the following be undertaken in order to
improve the socio-economic value and relevance of pro-poor electricity incentives
in South Africa:
• A need to re-evaluation current pro-poor electricity instrument, particularly its
nature of design
• Strengthened focus on efficient and sustainable DSM incentives to reduce the
affordability burden. Technologies that prevent communities from developing
should be not be imposed upon the poor [60]
• Household based capacity building for optimal effectiveness of the policy and
other incentives.
While Eskom and government are applying noticeable effort in improving poor
households’ socio-economic living, by promulgating pro-poor electricity incentives
and programmes, thus far most of these efforts are largely ineffective. The current
prepaid electricity meter programme is an example of such an initiative. The deploy-
ment process currently does not consider the differences in socio-economic condi-
tions prevalent among different households. All poor households qualifying for the
FBE 50 kWh incentive are required to install prepaid electricity meters as a means
of reducing energy poverty.
To date, households were noted to spend about 66% of their monthly income on
electricity. A context-specific approach that is relevant to the socio-economic reali-
ties of poor households is as such recommended to reduce the energy poverty levels.
Escalating electricity prices and energy inefficient poor households also render the
72 4 Prepaid Electricity Meters and Energy Poverty …

Table 4.4 Benchmark factors characterizing a holistic approach to deploying prepaid electricity
meters [30]
Benchmark Description
Target group The introduction of the prepaid meter programme in
2007 was arguably supposed to reduce electricity debt
due to household electricity non-payment. However,
the target has now shifted to mainly covering all newly
built government houses for the poor
Non-payment Electricity non-payment is a major issue in Soweto,
particularly amongst households that are Eskom’s
clients. By the end of 2015, the township owed Eskom
close to R9 billion, and 86% of the households did not
pay their electricity bills. So, the technology is a credit
management tool for non-paying customers
Disconnection/Reconnection Prepaid electricity meters installed in Soweto
disconnect the consumer immediately after the credits
are exhausted. Reconnection is only activated when
the meter is recharged
Marketing, education, and training In introducing prepaid meters marketing, training, and
education become central aspects for familiarising the
target population with the technology
Stakeholder (community) involvement The involvement of all key stakeholders in the design
of the prepaid meter programme and its roll-out
thereof is important
Electricity tariff and consumption The tariff market is regulated by National Electricity
Regulator of South Africa (NERSA). All households,
with or without a prepaid electricity meter are subject
to similar tariffs, as approved by NERSA.
Furthermore, the installation of prepaid electricity
meters will have a bearing on household electricity
consumption
Incentives The prepaid electricity meter programme for poor
households in South Africa comes with a free 50 kWh
monthly incentive—based on the FBE Policy (2003).
Besides this electricity subsidy, there exists none
Appliance/Energy efficiency Electricity appliance and their nature of efficiency play
an important role in the consumption of electricity, and
therefore the effect of prepaid meters in households. A
majority of low-income households in Soweto use
high consuming appliances, leading to the credit
finishing faster than a household using an energy
efficient appliance. Moreover, the size and age of
dwelling are energy inefficient, making the households
energy vulnerable
Regulator tools A widespread use of prepaid meters may require a need
for regulatory (codes of practice) guidelines dealing
with the governance of the programme. Currently,
Eskom has no prepaid electricity meter guidelines but
has voiced out the importance of having this
(continued)
4.4 Prepaid Electricity Meters and Energy Poverty 73

Table 4.4 (continued)

Benchmark Description
Leadership and management The electricity sector history of South Africa is
political. Political leaders encouraged township
residents to boycott payments—enhancing the culture
of non-payment. It may require equal leadership to
encourage people to pay and adopt prepaid meters

FBE policy obsolete because these realities reduce the socio-effectiveness of the 50
kWh incentive and consequently also deepen energy poverty. The policy framework
is to be reviewed and constantly updated based on prevailing socio-economic reali-
ties. Secondly, the deployment of prepaid electricity meters should be concomitant
with that of cost-effective measures aligned with DSM. This is so that the level
of household expenditure on prepaid meter based electricity may be reduced. The
proposed approach will ensure that while Eskom recovers the debt owed, poor house-
holds are also sustainably benefiting from prepaid electricity meters. South Africa is
a global pioneer in household prepaid electricity meters, perspectives shared alterna-
tive approaches improve policy and programme effectiveness may be reciprocated in
other Sub-Saharan African countries that aim to expand their prepaid meters market
and equally reduce energy poverty for low-income households.
Lastly, no Sub-Saharan African state, including South Africa has a specific prepaid
electricity meter regulatory mechanism that governs the deployment and function-
ality of the prepaid meters programme. In the light of the expanding market and the
noted implications on household socio-economic conditions, thus energy poverty, it
is important that this be considered by the individual regional countries.

4.5 Highlights

• Coherent and up to date policy framework: The presents of a regulatory framework

is pivotal for giving guidance to the expanding prepaid electricity meter market.
Additionally, these regulations need to be clear and up to date. This means that
they have to be timeously aligned to the socio-economic conditions or needs of
the households.
• Prepaid electricity meter regulatory mechanism: Given the expanding market and
the impact that the technology may have on household livelihood, it is important
to formulate laws to protect households from inter alia energy poverty. This will
ensure that both the authorities (for management) and households (payment of
electricity services without being affected) are accountable.
• DSM project or incentives: No prepaid electricity meter programme should run
without a DSM project or incentives. Energy efficiency programmes should be
an integral component of prepaid meter programmes. Moreover, poor households
should be given incentives to optimise the benefits of prepaid electricity meters.
74 4 Prepaid Electricity Meters and Energy Poverty …

• Context-specific and holistic approach: Before the deployment of the technology,

authorities should dedicate time to assess the prepaid meter target market, in order
to create a programme that context-specific. This means that the programme will
be relevant to the prevalent socio-economic conditions on the ground and therefore
can reduce energy poverty in the community. This can be done, for example, by
considering the benchmark factors suggested by Kambule [30].

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 Part II
Sub-Saharan Region: Adoption
and Experiences
Chapter 5
Western Africa Region

5.1 Ghana

5.1.1 Geographical Overview

The Republic of Ghana is a country in West Africa on the Gulf of Guinea with
geographical coordinates 8˚00’N and 2˚00’W, total area of 238 533 km2 and sharing
borders with Burkina Faso, Côte d’Ivoire and Togo. The Republic of Ghana, shown
in Fig. 5.1, has the world largest artificial lake called Lake Volta [19]. According to
the World Bank [72, 73], Ghana’s population as of 2019 is 30 417 856. However,
Worldometer [75, 76] estimates that the population of Ghana as of November, 2020
is 31,327,040 with a population density of 137 per km2 . Geographically, Ghana is
flat with coastal savannahs, tropical rain forests and sandy beaches with her capital
city named Accra [21]. The Republic of Ghana is the first African country to gain
independence in 1957 with English Language as her official language in addition
to several national indigenous languages. The Ghanaian people are adherents of
Christianity, Islam and Traditional faiths [16].
Economically, Ghana has a rich natural resource base of gold, cocoa and oil along
with industries in mining, manufacturing, lumbering, food processing, smelting,
aluminium, cement and small commercial ship building [19]. The GDP of Ghana as
of 2019 is $65.3 billion and a GDP per capita of $2,164 [30].

5.1.2 Energy Overview

Energy is the fulcrum of any economy and a primary driver for prosperity and increase
in living standards, especially for a developing economy. Ghana’s energy resources
comprise of oil deposits, natural gas reserves, coal reserves and renewables such

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 79

N. Kambule and N. Nwulu, The Deployment of Prepaid Electricity Meters in Sub-Saharan
Africa, Lecture Notes in Electrical Engineering 759,
https://doi.org/10.1007/978-3-030-71217-4_5
80 5 Western Africa Region

Fig. 5.1 The Republic of Ghana [16]

as wind and solar energy [6, 19]. Electric energy for the Republic of Ghana comes
from thermal energy, hydro-electricity, natural gas, solar, diesel, and imports from
Côte d’Ivoire [6, 35]. According to the country’s energy ministry, the total installed
capacity for electricity generation is 4,132 MW, where hydro sources makes up 38%,
thermal sources 61% and solar energy sources makes up less than 1%. According
to the 2019 Electricity Supply Plan for the Ghana Power System [33], generation
plants are from the government owned Volta River Authority (VRA) and independent
power producers (IPPs) as shown in Table 5.1.
The generated electricity is transmitted through the Grid Company (GRIDCO),
distributed by two government owned distribution companies (Electricity Company
of Ghana, ECG and Northern Electricity Department, NED) and one privately owned
distribution company named Enclave Power Company, EPC Ltd, [35]. The demand
for electricity in Ghana ranges from 3500 MW and is projected to rise to 4,500 MW
by 2024 as shown in Fig. 5.2 [33]. Additionally, it is estimated that the energy
consumption for 2019 was 17,237.79 GWh including transmission network losses
(898.03 GWh) [33]. However, according to Our World in Data [58], the per capita
electricity consumption in Ghana as of 2019 is 471 kWh, as shown in Fig. 5.3.
Moreover, access to electricity in Ghana is at 85% with an electrification rate of
93% in urban areas and 75% in rural areas, with the population without access to
5.1 Ghana 81

Table 5.1 Ghana’s generation plants [33]

Plants Installed capacity (MW) Dependable capacity (MW) Fuel type
Akosombo G 1 020 900 Hydro
Kpong GS 160 105 Hydro
Tapco (T1) 330 300 LCO/GAS
TICO (T2) 340 320 LCO/GAS
TTIPP 110 100 LCO/GAS
TT2PP 80 70 GAS
KTPP 220 200 GAS/DIESEL
VRA Solar Plant 2.5 0 Solar
TOTAL VRA 2,263 1,995
BUI GS 404 360 Hydro
CENIT 110 100 LCO/GAS
AMERI 250 230 GAS
SAPP 161 200 180 GAS
SAPP 330 360 340 LCO/GAS
KAR POWER 470 450 HFO
AKSA 370 350 HFO
BXC 20 0 SOLAR
MEINERGY SOLAR 20 0 SOLAR
TROJAN 44 39.6 DIESEL/GAS
GENSER 22 18 GAS
CEN POWER 360 340 LCO/GAS
AMANDI 2,820 2,598
TOTAL IPP 2,820 2,598
TOTAL (VRA + IPP) 5,083 4,593

electricity given as 5 Million [40]. Moreover, electricity, which is the dominant form
of modern energy in Ghana accounts for 65% of energy in Ghana’s industrial and
services sector and about 36% in the residential sector [25].
In the management of Ghana’s energy sector and electricity sub-sector, below are
the relevant stakeholders [31, 32]:
a. Ministry of Energy: this is the ministry responsible for energy policy formula-
tion, monitoring, implementation and coordination of all the activities relating
to energy in Ghana both electricity and petroleum sub—sectors [35].
b. Electricity Company of Ghana (ECG) Ltd: this is a limited liability company
owned by the state, which distributes and sells electricity to southern Ghana,
which comprises of Ashanti, Central Greater Accra, Eastern and Volta Regions
of Ghana, making it the largest distribution company in Ghana [39].
82 5 Western Africa Region

Fig. 5.2 Ghana electricity demand and supply outlook (2020–2024) [33]

Fig. 5.3 Ghana’s electricity consumption per capita [58]

5.1 Ghana 83

c. Ghana’s Grid Company (GRIDCO): this is the state electricity transmission

company, which transmits electricity from electricity generating companies to
customers such as Electricity Company of Ghana (ECG), Northern Electricity
Company (NEDCo) and the mines [37]. The company also provides metering
and billing services and manages assets required to transmit energy.
d. Volta River Authority: this is the company responsible for the generation of
electricity in Ghana, currently controlling eight [8] power plants in Ghana and
working in Renewable Energy (RE) policy [71].
e. Northern Electricity Distribution Company: this is the distribution company
owned by the state responsible for distributing electricity to Northern Ghana
which comprises of Berong–Ahafo, Northern, Upper East and Upper West
regions of Ghana [35].
f. Energy Commission: this is Ghana’s electricity/energy regulator and advisor to
government on energy matters on the regulation, utilization, development and
management of energy resources in Ghana [26].
g. Enclave Power company Ltd (EPC): This is a private owned electricity distribu-
tion company in Ghana, covering Tema free zones enclave in the Greater Accra
Region, with 50 industrial customers in the Region [35].
h. The Public Utilities Regulatory Commission (PURC): this is a government
agency responsible for the regulation and provision of guidelines for electricity
rates and rates chargeable for utility services [60].
Furthermore, below are the laws, regulations and policies guiding Ghana’s
electrical energy sub-sector [26, 36, 43]:
• Energy Sector Levies (Amendment Act, 2019)
• Petroleum (Exploration & Production) General Regulation 2018
• Energy Commission Act, 1997 (Act 541)
• Public Utilities Regulation Commission Act, 1997 (Act 538)
• The Volta River Development Act 1961 (Act 46)
• Bui Power Authority Act 2007 (Act 740)
• The Renewable Energy Act 2011 (Act 832)
• National Electricity Grid Code (The Grid Code) 2009
• The Environmental Protection Agency Act, 1994 (Act 490)
• Electricity commission (Technical, operations, and standard of performance)
Rules, (2008)
• The Atomic Energy Commission Act (2000)
• National Energy Policy 2010 (The Policy)
• Electricity Supply and Distribution (technical and operational) Rules, 2005
• Electrical Wiring Regulations 2011
• Electricity Supply and Distribution (Standards of performance) Regulations, 2008
• Renewable Energy Act (2001)
84 5 Western Africa Region

5.1.3 Prepaid Electricity History and Current Status

According to Azila et al. [14] and Boadu [15], the Electricity Company of Ghana
(ECG) whilst attempting to solve issues such as inefficient cash flows, elimination
of bad debts, ineffectual revenue collection and ensure financial probity adopted the
prepaid metering system. The prepaid metering system started as a pilot test in 1994
and 1995 using ‘cash power’ in areas such as Sakumono Accra, Kumasi and Tema
for both commercial and residential consumers[14].
The prepayment meter is an electronic instrument used for the supply of elec-
tricity and premeasurement of the amount of power a customer consumes [15, 38].
According to the authors, a prepayment system is an advance purchase of electricity to
be consumed and the electricity supply stops after the expiration of the purchase rate
of electricity. Furthermore, UK Power Limited [69] opined that the prepayment meter
works like its name and does not entail receiving payment for electricity consumed
at the end of the month, because the bills are already paid before consuming the
electricity.
According to Boadu [15] and O’Sullivan et al. [51], the following are the benefits
of using prepaid meters in Ghana:
• A decrease in billing and disconnecting customers.
• Significant improvement in generation of revenue, which also leads to decrease
in working capital for the distribution companies.
• Understanding how energy consumption takes place leading to proper control of
energy use and proper budgeting.
• Reduces the practice of customers delaying in paying overdue bills.
• It ensures transparency in its operations requiring no deposits.
In Tuffour et al. [66] five types of prepaid meters are used in Ghana and they
include; Smart cash, Pay and smile, Electro—cash, cash power and BOT/BXC.
According to Quayson and Dadzie [62], there are different categories of prepaid
meters, and they are summarized as follows:
a. Integrated Single Phase (ISP) electric meter: it is a compact keypad
based prepaid electricity meter typically used in households compatible with
standard display information such as low credit warning, load contractor status
and energy consumption using the Liquid Crystal Display (LCD). The meter,
which is keypad oriented, supports Standard Transfer Specification (STS) and
supports the algorithms of the 20—digit STS encryption.
b. The Integrated Three Phase (ITP) Meter: this is a 4—wire 100 Amp per phase,
keypad based meter, which is suitable for residential, commercial and light
industrial environments. It has diagnostic indicator features showing the status
of communication to the remote Customer Interface Unit (CIU). The meter
comprises of critical metering, token decryption and load control functionality.
c. The Split Single Phase (SSP) meter: this is a two wire, keypad—based prepay-
ment electricity meter with two parts, namely the Energy Management Unit
5.1 Ghana 85

(EMU) and the Customer Interface Unit (CIU). Also, meter information such as
low credit warning, energy consumption and load contactor status are displayed
on the CIU.
According to Tuffour et al. [66], prepaid meters were introduced in Ghana for two
main reasons:
• To address ECG operational challenges such as ensuring efficacy in the utiliza-
tion of electricity, reduction in ECG’s operational cost, high cost of customer
billing by ECG, tampering of post-paid meters by customers to evade payment,
delay in payment of bills and high indebtedness by corporate bodies and private
individuals.
• To solve squabbles and conflicts between landlords and tenants over bills payment.
The 1994/1995 pilot test of prepaid meters in Ghana led to it’s ful launch in
2005, extending to major cities, metropolis, municipal and district capitals, with
the installed meters produced by Ghana Electrometer [14]. As of 2013, about
30% of ECG customers have purchased and are using prepaid meters [23]. Further-
more, according to Ghana’s electrometer company, it has distributed 440,000 prepaid
meters as of 2014 [44]. Also, in 2019, ECG installed more than 4,000 prepaid meters
in Kibi city of Ghana [34]. Although there are no available updates on the number of
prepaid meters currently deployed in Ghana, ECG’s website [24] shows the type of
prepaid meters used and their deployment areas as summarized in Table 5.2. There-
fore, logically comparing Table 5.2, the 2014 installation numbers and the 2019
Kibi installation with World Population Review [74] of cities in Ghana and their
population, it could be adduced that over 60% of ECG customers and electricity
consumer have prepaid meters across Ghana and about 800,000 prepaid meters have
been installed.

5.1.4 Challenges of Prepaid Metering

Despite the benefits and advantages of prepaid meters as introduced in Ghana,

there have been various consumer complaints about the technology. For instance,
prepaid consumers complain that their electricity expenses are higher than postpaid
consumers. Alfred [9] stated that the use of prepaid metering is quite expensive due
to Ghana being a ‘developing country’ and the fact that the prepaid meter runs faster
than post-paid, meaning more money is needed to buy more units. The author further
stated that the use of prepaid metering in Ghana is riddled with faulty meters and the
difficulty in inputting or uploading the units coupled with the expiry dates of cards.
Another challenge enumerated by the author is the nonchalant behaviour of workers
responsible for installing, repairing and responding to the need of the users.
Quayson and Dadzie [62] stated that the use of prepaid meter has benefitted the
distribution companies especially the Electricity Company of Ghana (ECG) over and
above Ghanaians. The author further opined that the adoption of prepaid meters has
86 5 Western Africa Region

Table 5.2 Types of prepaid meters used in Ghana [24]

Prepaid Type Features Areas of Deployment
E-Cash I • It has a smart card for payment • Cape coast
• Kasoa
• Kasoa south
• Swedru
• Akim Tafo
• Koforidua
• Nkawkaw
• Ho
• Agona
• Bibiani
• Takoradi
• Afienya
• Krobo
• North Tema
• Nungua
• Prampram
• South Tema
E-Cash II • It has a user interface unit • Dodowa
• It has a smart card • Kwabenya
• Legon
• Makola
• Mampong
• Roman Ridge
• Teshie
E-Cash III • It has a smart meter but not operated • Agona
as such • Axim
• It has a RFID card • Bibiani
• It has a contact less smart card • Half Assini
• Takoradi
• Sekondi
• Ho
• Hoshoe
• Afienya
• Krobo
• North Tema
• Prampram
• Nungua
• South Tema
• Akim Tafo
• Koforidua
• Cape coast
• Kasoa
• Kasoa south
• Swedru
• Winneba
• Dodowa
• Kwabenya
• Legon
• Makolo
• Roman Ridge
• Teshie
(continued)
5.1 Ghana 87

Table 5.2 (continued)

ENER SMART • It uses smart GPRS Technology • Ashanti East PDS Operational
(Holley) • It has a user interface unit region
• It has a RFID card
KAMSTRUP (NURI) • It uses smart ZIGB and GPRS • Dodowa, Kwabenya
technology • Legon
• Customer gets meter information via • Makola
SMS • Akuapim – Mampong
• Roman Ridge
• Teshie
• Krobo
• Prampram
SMART G • It has a RFID card • Danyame
• It uses contactless smart card
• It has KEYPAD user interface unit
• Uses GPRS technology to read data
from meters.
SMARTCASH—BOT • It is not a smart meter • Kaneshie
• It has a RFID card • Bortianor
• Its uses contactless smart • Nsawam
card/Remote card for loading money • Achimota
onto the meter from vending point • Dansoman
• Korle – Bu
SMARTCASH—BXC • It uses a PLC and GPRS smart • Accra West (Bortianor)
technology. • Accra East (Teshie)
• It has a user interface unit • Tema (Nungua)
• It has a RFID card
• It uses a contactless smart card for
loading money into the meter from
the vending point

reduced in Ghana due to the high cost of prepaid meters in the country. Moreover,
Tuffor et al. [66] noted that the disadvantages of prepaid meters in Ghana are technical
faults in meters, the expensive nature of the prepaid meters, difficulty in uploading
prepaid units, delays in obtaining a meter, scarcity of prepaid units, and low voltage.
Furthermore, Asante [13] noted that despite the benefits of prepaid meters, there
are several challenges which includes; long & winding queues at private vending
points and ECG revenue collection centre, whenever there is an internet disruption
leading to revenue loss. The authors also stated that prepaid meters users in Ghana
experience voltage problems whenever electricity is cut off at the slightest voltage
hikes or drop in voltage levels, which doesn’t affect post-paid customers.

5.1.5 Future Prognosis

The traditional power grid in Ghana utilizes one directional power flows and is yet
to fully embrace a key technological breakthrough in the energy/electricity industry,
88 5 Western Africa Region

which is the advent of the Smart Grid [12]. The traditional grid system in Ghana has
suffered from blackouts, lack of robust outage management systems, vulnerability
to tampering activities and inevitable human errors.
Smart Grid are intelligent grids that integrate a variety of distributed energy
resources (DER), smart meters, smart appliances, energy efficient resources,
advanced control of power distribution, voltage and frequency synchronizers with
improved monitoring devices [1]. Armah [12] opined that smart grid is a transforma-
tion from a centralized producer—controlled networks to one that is not centralized
and enables remote monitoring and customer- interaction whilst remaining efficient,
reliable, flexible, and grid visibility through the use of latest information technologies.
It is therefore obvious that smart meters, a key component of the smart grid is
a necessary evolution in the Ghanaian prepaid metering sector. ECG has pioneered
this in 2014 [59] in partnership with GRIDCo and DNVGL. This initiative should
be further deployed and widespread in order to take full advantage of technological
breakthroughs in the energy industry i.e. smart metering [1, 2, 12, 77].

5.2 Nigeria

5.2.1 Geographical Overview

Nigeria is a country located in West Africa with geographical coordinates of 10˚00 N

and 8˚00E. Niger, Chad, Cameroon, Republic of Benin, Gulf of Guinea and Equa-
torial Guinea are Nigeria’s neighbours as shown in Fig. 5.4 [20, 67]. According to
Worldometer [75, 76], Nigeria’s population as of November 2020 is 208,076,483,
making the nation the 7th largest country in the world and Africa’s most populous
country with a population density of 226 per km2 and a total land area of 923 777 km2 .
Ubogu [67] stated that Nigeria’s land area spans across six ecological zones, from
swampy coastal rainforest of the south, semi-arid fertile grassland of the eastern
region, northern region & western region coupled with creeks & lagoons of the
Niger Delta and drainage system of the Niger–Benue Rivers.
The official language of Nigeria is English and there are three major indige-
nous languages in the country, namely Hausa, Yoruba and Igbo. The country also
has three [3] major religions; Christianity, Islam and Traditional religions [19, 67].
Nigeria is a culturally diverse country with different ethnic groups spanning across
36 autonomous states further divided into 774 local governments and the Federal
Capital Territory, Abuja [72, 73].
Economically, Nigeria is the largest economy in Sub-Saharan Africa with a GDP
of 475 billion USD as of 2019, annual growth of 2.3% and a GDP per capita of 2,363
USD [29]. The Nigeria economy is highly dependent on oil accounting for 10% of
the country’s GDP, 70% of government revenue and 83% of the country’s total export
earnings [49].
5.2 Nigeria 89

Fig. 5.4 The Federal Republic of Nigeria (Britannica 2020b)

5.2.2 Energy Overview

Energy is an indispensable and crucial factor for the growth of a nation’s economy
as it affects other sectors like agriculture, education, commerce and manufacturing
[17, 50]. Nigeria has huge energy resources comprising of fossil fuels (Nigeria is
the sixth largest producer of crude oil in the world and possesses 193.35 trillion
cubic feet of gas), ample deposits of coal, wood fuel, wind energy, tidal energy and
hydropower energy [55].
Nigeria has an installed electricity generation capacity of 12,522 MW mainly
from thermal sources (10,142 MW) and Hydro sources (2,380 MW), however the
quantum of electric energy available for use by consumers ranges from 3,500 to
5,000 MW (USAID, 2020) [31, 32]. Moreover, as shown in Fig. 5.5, the NERC [47]
report stated that as of the first quarter of 2020, available generated electricity is
3,912 MW consisting of a 73.45% thermal source and 26.55% hydro sources. In
addition, the 2019 electric consumption per capita in Nigeria was 152 kWh [64] with
62% of the population having access to electricity and 77 million Nigerians have
no access to electricity (predominantly in the rural areas [40]. In addition, Nigeria’s
current supply of electrical energy only meets one—third of its demand for electricity
[61].
90 5 Western Africa Region

Fig. 5.5 Nigeria’s electricity generated as of first quarter of 2020 [47]

Historically, the Nigerian electric energy sector, otherwise known as the power
sector has its roots in the Electricity Corporation of Nigeria (ECN), established in
1950. Subsequently in 1962, the Niger Dams Authority (NDA) was established for
the construction and maintenance of dams for electricity generation. The NDA was
instrumental to the construction of the Kainji dam which was commissioned in 1968
[45, 55]. ECN and NDA were merged to create the National Electric Power Authority
(NEPA) in 1972 responsible for the generation, transmission and distribution of elec-
tricity. Subsequently NEPA metamorphosed to Power Holding Company of Nigeria
(PHCN) in 2005 [28, 55].
The privatization process of NEPA, which led to PHCN, further led to the
unbundling of PHCN leading to six (6) electricity generation companies, eleven (11)
electricity distribution companies and one power transmission company, succinctly
described below [27, 55]:
a. Generation companies: through the privatization of 2005, the government
divested its stake in its thermal power plants and hydropower stations which
led to six [6] generation companies, otherwise known as GENCos, listed in
Table 5.3:
5.2 Nigeria 91

Table 5.3 Electricity generating companies of Nigeria [55]

S/N GENCO Type Installed capacity Privatization status
1. AFAM VI power Plc Thermal 776 MW 100% sold
2. Sapele power Plc Thermal 414 MW 51% sold
3. Egbin power Plc Thermal 1 020 MW 100% sold
4. Ughelli Thermal 900 MW 100% sold
5. Kainji/Jebba power Plc Hydro 1338 MW Longterm concession
6. Shiroro hydro electric Plc Hydro 60 0 MW Longterm concession

The generated electricity is sold to the Nigeria Bulk Electricity Trading (NBET) at
an agreed price based upon the power purchase agreements, which then collaborates
with the transmission company of Nigeria (TCN).
b. Transmission Company of Nigeria (TCN): this is a company fully owned by the
Federal Government and managed by the private sector from the unbundling
of PHCN in 2005. It is the link between generation and distribution of elec-
tricity and oversees the grid system, reduces system failures and ensures that
sectors players are in full compliance with the National grid code. The TCN
has three departments namely; Transmission Service Providers (TSP), System
Operation (SO) and Marketing Operation.
c. Distribution companies (DISCOs): there are 11 distribution companies over a
coverage area closer to the consumers. Table 5.4 shows the eleven DISCOs and
their areas of operation:
In the Nigeria Power sector, apart from the GENCOs, TCN and DISCOs, other
stakeholders are:
a. Nigerian Electricity Regulatory Commission (NERC): this is an independent
regulatory body that promotes and ensures the power sector is investor friendly
and the market structure is efficient to meet the needs of Nigeria Electric
Demand.
b. Nigeria Bulk Electricity Trading (NBET) Plc: this is the administrative agency
that manages Nigeria’s electricity pool in the market, acting as the bulk purchaser
of electric energy in Nigeria electricity supply industry.
Moreover, regulating laws, policies, and regulations guiding the industry includes
the following [55, 68]:
92 5 Western Africa Region

Table 5.4 Electricity Distribution companies of Nigeria [47, 55]

S/N DISCOs name Area of coverage
1. Abuja electricity distribution company Abuja, Kogi, Nasarawa and most parts of
Plc Niger state
2. Benin electricity distribution company Edo, Ondo, Delta and parts of Ekiti state
Plc
3. Eko electricity distribution company Southern Lagos: Ojo, Festac, Ijora,
Mushin—orile, Apapa, Lekki, Lagos Island
and Agbara in Ogun state.
4. Jos electricity distribution company Plc Bauchi, Benue, Gombe and Plateau state
5. Kaduna electricity distribution Kaduna, Kebbi, Sokoto and Zamfara state
company Plc
6. Kano electricity company Plc Kano, Kastina & Jigawa state
7. Ibadan electricity distribution company Oyo, Ogun, Osun, Kwara and Parts of Niger
Plc state, Ekiti and Kogi state
8. Ikeja electricity distribution company Parts of Lagos state: Ebule Egba, Akowonjo,
Plc Ikeja, Ikorodu, Oshodi, Shomolu
9. Enugu electricity distribution company Abia, Anambra, Enugu, Ebonyi and Imo state
Plc
10. Port–Harcourt electricity distribution Akwa—Ibom, Bayelsa, Cross-River and River
company Plc state
11. Yola electricity distribution company Adamawa, Borno, Taraba and Yobe State
Plc

a. Electric Power Sector Reform Act (EPSR) of 2005

b. National Electric Power Policy Document of 2001
c. Regulations for the Investment in Electricity Network, 2015
d. Nigerian Electricity Supply and Installation Standards Regulations 2015
e. Regulations on National Content Development for the Power Sector 2014
f. NERC Regulation for the Procurement of Generation Capacity 2014
g. NERC (Embedded Generation) Regulation 2012
h. NERC (Independent Electricity Distribution Networks) Regulations 2012
i. NERC Permit for Captive Power Generation Regulations 2008
j. NERC Mini Grid Regulation 2016
k. Nigerian Electricity Smart Metering Regulation 2015
l. Feed in Tariff for Renewable Energy Sourced Electricity in Nigeria 2015
m. NERC Meter Asset Provider (MAP) regulation 2018
n. NERC Eligible Customer Regulations 2017
o. The Market Rules 2009
p. Grid Connection Policies
q. National Renewable Energy and Energy Efficiency Policy
r. National Renewable Energy Action Plans
s. Rural Electrification Strategy and Implementation Plan
t. National Mass Metering Program (NMMP) Implementation 2020
5.2 Nigeria 93

u. Competitive Transition Change Regulations

v. Capping of Estimated Billing Regulations.

5.2.3 Prepaid Electricity History and Current Status

In combating the issue of over—billing of customers for electricity and other defects
associated with electricity consumption, metering was introduced in Nigeria in
2005 [45]. Simpson [63] defined metering as the method and procedure by which
devices are used in measuring the amount and direction of energy flow, especially
by the end-user. Moreover, according to Kettless [42], prepaid metering is a system
where a customer pays for energy before using it. Also, Ajenikoko and Adelusi [7],
Nextier [48] and Malama et al. [46] opine that prepaid electricity/energy meters
ensure that energy/electricity bills are paid for by end- users or customers prior to
its consumption. Moreover, Fagbohun and Femi–Jemilohun [28] further reiterated
that due to the disadvantages of post–paid metering and the customer debt profile
resulting from inadequate revenue collection, the then Power Holding Company of
Nigeria, PHCN in 2005 introduced the pre-paid system, which entails the purchase
of electricity credit in customers electricity account before usage. The prepaid meter
is like using airtime on a prepaid mobile line, where a customer controls what he
uses [3].
Amhenrior et al. [10] detailed the various energy prepaid meter models in
Nigeria, summarized in Table 5.5.
From the research of Ajenikoko and Adelusi [7], Adekitan et al. [4], Fagbohun
and Femi–Jemilohun [28], Ogbuefi et al. [53]; the benefits and advantages of
introducing prepaid metering systems in Nigeria include:
a. Eliminating issues of unpaid bills and inaccurate bills.
b. Up-front payment for electricity.

Table 5.5 Types of prepaid meters models in Nigeria [10]

S/N Name Type Compact/Split Keypad type
1. Actaris Token Compact Compact wired
2. Itron Token Split Wired
3. A. Conlog (Bec 23) Token Compact Compact wired
B. Conlog (Bec 44) Token Split wired
C. Conlog (Bec 44) Token Split—wireless Wireless (Rf based—150 m)
4. A. Mojec Token Split wired
B. Mojec Token Split Plc
B. Mojec Token Split PLC
B. Mojec Token Split
5. Mommas Token Split Wired
94 5 Western Africa Region

c. It enables efficient consumer energy budgeting in accordance with their financial

position and lifestyle.
d. It helps in gauging utilization and monitoring of electricity units because the
remaining credits are displayed.
e. There is reduction in the level of contact between energy provider officials and
consumers.
f. It improves cash flow and revenue management for DISCOs.
g. The DISCOs benefits from reduction in cost associated with billing notification
of disconnection and reconnection, customer service staff and call centres.
h. It improves detection and management of outages.
i. The prepaid meter will help and enable the distribution companies to determine
their revenue.
However, despite the significance and importance of prepaid meters to both the
consumer and distribution companies, there is still a large number of customers
without meters in Nigeria [52]. Historically, the prepaid meter was introduced as a
revenue generating system in 2005 by PHCN to collect bills from evading customers
[57]. The lack of a widespread deployment of prepaid meters in the power sector led
the NERC in 2012 to introduce a meter intervention scheme called “Credited advance
payment for metering implementation (CAPMI)”, where consumers will self–finance
the meter cost and repay over a period at a 12% interest rate per annum [48]. After
the privatization of PHCN in November, 2013, DISCOs planned a metering target
of supplying 4.92 million Meters within three years with an annual target of 1.640
million meters, which they failed to achieve [3]. In 2016, according to the data
from NERC, about 45% of 7.47 Million customers nationwide possessed prepaid
meters [48]. According to Adams [3], available data from NERC shows that as of
December 2018, only 3.7 million customers have been metered out of over 8 million.
Collaborating this, Orient Energy Review [56] citing the NERC website, shows that
out of above 8 million registered active electricity customers, only 44.6% have been
metered.
These figures consistently show that over 55% of registered customers with
various DISCOs are yet to be metered from 2006 till 2020 [5]. Moreover, the metering
status of DISCOS as of March, 2020, as released by NERC [47] quarterly report,
shows that there’s an increase in registered customers and a slow progress of metered
customers. Furthermore, according to NERC, the current metering gap as of October
2020 is over 10 million, comprising of unmetered customers and customers with
obsolete meters that need to be replaced [18]. However, in the report of Nigeria’s
widely read and recognized newspaper, Vanguards Newspaper [70], in its report
quoting a metering expert stated that Nigeria needs 24.7 million prepaid meters,
with majority in the real estate sector of the economy (Fig. 5.6).
In meeting this metering gap, NERC approved the meter asset providers (MAP)
regulations in 2018, with the objectives of allowing independent meter providers
in agreement with Distribution companies to supply prepaid meters to the Nigerian
Electricity Consumers [27]. As cited by the author, the objectives of MAP include
[27]:
5.2 Nigeria 95

Fig. 5.6 Metering status of DISCOs customers as of first quarter 2020 [47]

a. Encourage the development of independent and competitive metering services

b. Eliminating estimated billing practices
c. Attracting private investment to the provisions of metering services.
d. Closing the metering gap through accelerated meter roll out.
e. Enhancing revenue assurance in the Nigerian Electricity Supply Industry
(NESI).

5.2.4 Challenges of Prepaid Metering in Nigeria

In Makanjuola, et al. [45] and Orient Energy Review [56]; the authors x-rayed the
challenges and problems associated with prepaid metering system in Nigeria, which
are succinctly explained below:
a. Lack of vending infrastructure in some locations: the authors argued that vending
machines helps in the generation of prepaid tokens and helps conclude associ-
ated prepayment transaction. This machine is lacking in some areas/locations for
prepaid meters deployment, hence some DISCOs are unable to deploy prepaid
meters because of the symbiotic relationship between vending machine and
prepaid meters.
96 5 Western Africa Region

b. High cost of purchasing a prepaid meter: prepaid meters cost as much as thrice
the amount of post-paid meters. As of 2015, a single-phase prepaid meter was
₦39, 375 and three phase prepaid meter was ₦68, 901. However as of 2020,
the NERC increased the price of prepaid meter for single phase to ₦44, 896.16
and three phase to ₦82, 855.19, citing reasons such as hike in foreign exchange
rate for the increment.
c. Absence of Local Manufacturers: there is no presence of competent local manu-
facturers in Nigeria, thus delaying the mass procurement of meters for Nigerians
as envisaged by the Federal Government and in the purchase agreement with
DISCOs.
d. Lack of Expertise: when prepaid meters have fault and gets damaged, there is
inadequate expertise in the country to fix the faulty/damaged meters culminating
in meter abandonment and long waiting period to export for mass repair.
e. Unavailability of service on Sundays and Holidays: the customer service
oriented prepaid metering stops on Saturday and is unavailable on Sundays
and during public holidays irrespective of when their electricity unit finishes.
f. Single phase overloading: due to ignorance, many customers overload a single
phase prepaid meter beyond its capacity, which thus leads to its damage.
g. Delay in getting and installing prepaid meters.
Furthermore, Adams [3], Orukpe and Agbontaen [57] opined that the eleven [11]
distribution companies are failing to meet up with their role in providing free meters
to Nigerians as stated in the Meter Asset Provider services (MAPs) of 2018, but have
engaged in corrupt collection of money from customers for prepaid meters without
installing the meters. Also, x-raying the prepaid meters challenge in Nigeria, Olalere
[54] stated that the DISCOs themselves are a major problem in the optimization
of the benefits of pre-paid metering. The author opined that DISCOs are exhibiting
lethargy in implementing metering measures by “gaming” the system, which they
blame on massive unpaid bills at the time of takeover, inadequate data on the Nigeria
electricity supply industry (NESI), significant electricity theft, bypassing of meters
by consumers, high inflation rate, unstable exchange rate, generation & transmission
low capacities, high gas price and lack of orientation of the consumers.
Moreover, in the reports of Adekoya [5] and James–Igbinadolor [41], many
customers blames the DISCOs for what they called “unholy alliances with estimated
billing” for deliberately not supplying prepaid meters to customers in order to slap
customers with outrageous bills that have no bearing whatsoever on the quality or
quantity of electricity supplied to customer. The non-metering issue by the DISCOs is
a major source of revenue loss in Nigeria according to the Nigerian extractive industry
transparency initiatives, NEITI [48]. There is therefore a need for optimizing market
efficiency as seen in the telecommunication industry [41].
Furthermore, one of the challenge of the prepaid metering system in Nigeria is
the expansive power granted to the Distribution companies in the 2018 Meter Asset
Providers (MAP) regulations [27], which led to wide discretionary powers given
to DISCOs to declare a metering gap, thereby creating room for corruption and a
situation whereby private entrants can only participate in metering when it does not
have conflicting interests with DISCOs. Also, another problem with the wide power
5.2 Nigeria 97

granted to DISCOS is that consumers whilst paying for metering service charge and
cost of meters are at the mercy of MAP and DISCOs. Others challenges according
to the author includes; lack of clarity with respect to ownership of meter after the
expiration of the technical life of the meters; lack of knowledge about consumers
obligations under the MAP arrangement and also the MAP regulation makes no case
for consumers who paid for meters under the CAPMI scheme but were not provided.

5.2.5 Future Prognosis

In a bid to solve the many metering challenges in Nigeria, Tsado et al. [65] advocates
for the use of an advance prepaid metering energy meter, using Global System for
Mobile Communications (GSM) technology. According to the authors, this new
device provides high level energy management through an advanced algorithm
embedded in a micro-controller, monitoring peak and off– peak energy consump-
tion. This new prepaid energy meter is designed to communicate to the consumer
through a GSM module as a Short Message Service to the registered phone number
programmed with the micro controller.
Supporting the usage of GSM based prepaid meters, Dike et al. [22] had stated
that this type of prepaid meters will minimize household electricity theft in Nigeria,
which entails meter tampering, meter bypass, illegal terminal taps of overhead lines
on the low tension side of the transformer, illegal tapping to bare wires or underground
cables, billing irregularities and unpaid bills.
However, Aniedu [11] stated that with the disadvantages of prepaid meters in
Nigeria such as travelling to designated locations to buy the tokens (either the
keypad type or smartcard type), smart meters are preferable. The authors argued
that smart meters are like prepaid meters but with additional features such as ability
to communicate with other meters, ability to monitor and control energy usage of
home appliances and capability for remote monitoring and management (such as
reconnection, disconnection and credit recharge). Moreover, smart meters utilizes
technologies such as Bluetooth for Home Area Networks (HAN) employing the
IEEE 802.15.1 protocol, Broadband power line communication (BPL) employing
TCP/IP over radio frequency spectrum, WI-FI or WI.MAX technology employing
the 802.11a/b/g/n standard, the Global system for mobile communication (GSM)
and the General packet radio service (GPRS).
Furthermore, Akpan et al. [8] in supporting the mass metering system through
the usage of Smart meters opined that smart meters with a prepayment functionality
enables new and flexible methods of crediting the consumers account and it could
be done remotely, using suitable payment means. It is a system that can disconnect
when predetermined energy usage thresholds are reached.
However, irrespective of the prepaid metering choice, the Federal Government of
Nigeria in October, 2020 launched the National Mass Metering Program (NMMP)
implementation to bridge the metering gap in the country [18]. The NMMP enables
98 5 Western Africa Region

the Central Bank of Nigeria (CBN) to financially support DISCOs and local meter
manufacturers. NMMP has the following objectives [18]:
a. Increase Nigeria’s metering rate
b. Elimination of arbitrary estimated billing
c. Strengthen the local meter value chain by increasing local meter manufacturing,
assembly and deployment capacity.
d. Support Nigeria’s economic recovery by creating jobs in the local meter value
chain
e. Reduction of collection losses and increasing financial flows to achieve 100%
market remittance obligations of the DISCOs and
f. Improve network monitoring capability and availability of data for market
administration and investment decision making.

5.2.6 Highlights

• Prepaid meters were launched in Ghana and Nigeria (two West African nations)
to foster financial probity and solve issues such as reducing collection expenses,
overbilling of customers, efficient cash flows, eliminating bad debts, and
improving revenue collection.
• Significant challenges exist during the prepaid journey in Ghana and Nigeria
ranging from technical problems (voltage level drops, single-phase overloading,
etc.), logistic problems (meter installation delays, lack of local manufacturing
capacity, etc.) to financial problems (high cost of prepaid meters, etc.).
• There is the need to leverage further technological innovations like smart prepaid
metering, big data analytics and machine learning algorithms in resolving some
of the technical, logistical and financial challenges the roll-out of prepaid meters
is experiencing in these West African nations.

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34. Ghana Energy Mix Report (2019) Ghana’s ECG installs 4, 000 prepaid meters in
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35. Ministry of Energy, Ghana (2020) Overview of the Ghana power sector. Available at https://
www.energymin.gov.gh/sector-overview. Accessed 15 Nov 2020
36. Global Legal Insights (2020) Energy 2021|Ghana GLI. Available at https://www.globallegali
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37. GRINCO (2020) Functions. Ghana grid Company Limited. Available at https://www.gridcogh.
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38. Harvey E (2005) Managing the poor by remote control: Johannesburg’s experiments with
prepaid water meters. The age of commodity: water privatization in Southern Africa
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40. IEA, World Energy Outlook (2020) Electricity access. Available at https://www.iea.org/rep
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42. Kettless PM (2004) Prepayment metering systems for the low income group. PRI Ltd, London
43. Kimathi Partners (2018) Electricity regulation in Ghana. Kimathi & Partners Corporate Attor-
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e7e3e6f53b38. Accessed 15 Nov 2020
44. Kwofi M (2019) Ghana electrometer supports communities with 790, 000 meters. Graphic.
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tss-communities-with-790-000-meters.html. Accessed 15 Nov 2020
45. Makanjuola NT, Shoewu O, Akinyemi LA, Ajose Y (2015) Investigating the problems of
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46. Malama A, Mudenda P, Ng’ombe A, Makashini L, Abanda H (2014) The effects of the intro-
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102 5 Western Africa Region

69. UK Power Limited (2012) A simple guide to gas and electricity meters. http://www.ukpower.
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2020
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Chapter 6
Eastern Africa Region

6.1 Tanzania

6.1.1 Geographical Overview

The United Republic of Tanzania is a country located in East Africa bordering the
Indian Ocean between Kenya and Mozambique, with geographical coordinates of
6˚00S and 35˚00E [10]. Tanzania’s total land area is 947, 300 km2 comprising of
885, 800 km2 land area and 61, 500 km2 water, with the following neighboring
countries; Burundi, Kenya, Malawi, Mozambique, Democratic Republic of Congo,
Rwanda, Uganda and Zambia as shown in Fig. 6.1. Tanzania is the sixth most popu-
lous country in Sub—Saharan Africa, connecting six land—locked countries to the
Indian ocean and is home to Africa’s highest mountain of Kilimanjaro with several
wild life national parks [3, 37].
According to Worldometer [51] based on extracted data from the United Nations,
Tanzania population as of November 2020 is 60 465 128 with a population density
of 67 per km2 and a life expectancy of 66.39 years of which the city with the highest
population in Tanzania is Dar es Salaam, estimated at 2 698 652. The Nation’s capital
is Dodoma and its official languages are Swahili, English Language and Arabic, with
religious beliefs such as Christianity, Islam and traditional faith [9].
Economically, Tanzania is a middle income growing country with a Gross National
Income (GNI) per capita of $1,080 as of 2019 [49]. According to Statista [40] and
Macrotrends [25], Tanzania’s GDP is 198.65 USD as of 2020 and a GDP per capita
of $1,122 as of 2019. The CIA World Factbook [9] stated that the main industries
in the Tanzanian economy are agricultural processing (Sugar, Beer, Cigarettes, Sisal
twine); mining (diamonds, iron & gold), salt, soda ash, oil refining, shoes, apparel,
fertilizers and cement.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 103
N. Kambule and N. Nwulu, The Deployment of Prepaid Electricity Meters in Sub-Saharan
Africa, Lecture Notes in Electrical Engineering 759,
https://doi.org/10.1007/978-3-030-71217-4_6
104 6 Eastern Africa Region

Fig. 6.1 The United Republic of Tanzania [5]

6.1.2 Energy Overview

Energy is an indispensable input that ensures sustainable development in a country

[19]. Tanzania’s energy sources include wood fuel, hydropower, biomass energy,
natural gas, coal, uranium, and solar energy [13]. The country possesses very large
reserves of black coal (1.9 billion tons) and gas (1.6 billion m3 ) with large sources
of renewable energy [13, 17, 36]. Tanzania’s electrical energy is derived mainly
from hydroelectric sources and natural gas resources [17]. According to Netherland
Energy Agency (NEA) [36], electrical energy is supplied from oil (1381 GWh), Gas
(2764 GWh), Biofuels (21 GWh), Hydro (2108 GWh), solar PV (21 GWh) totaling
6295 GWh.
6.1 Tanzania 105

Table 6.1 Generating plants

Power station Owner Installed capacity
in Tanzania and their owners
(MW)
[17]
Hydro power plants
Kidatu TANESCO 204
Kihansi TANESCO 180
Mtera TANESCO 80
New Pangani Falls TANESCO 68
Hale TANESCO 21
Nyumb Ya Mungu TANESCO 8
Uwemba TANESCO 0.84
Mwenga Mwenga Hydro Ltd 4
Yovi SPP 0.95
Gas power plants
Songas IPP 189
Ubungo 1 gas TANESCO 102
plants
Tegeta gas plants TANESCO 45
Ubungo 11 gas TANESCO 121
plants
Kinyerezi 1 TANESCO 150
Liquid fuel power
plants
IPTL IPP 103
Diesel TANESCO 7.4
(TANESCO)
Nyakato TANESCO 63
Biomass power plants
TANWAT 1PP 1.5
TPC IPP 9
Total 1357.69

Table 6.2 Kenya electricity’s

Final electricity consumption GWh
consumption [35]
Industry 4229
Residential 2544
Commercial and Public service 1153
Total 7926
106 6 Eastern Africa Region

According to Power Africa [37], installed electricity capacity is 1504 MW,

comprising of Hydroelectric (568 MW), Thermal (925 MW) and other renewables
82.4 MW. The generated electricity is managed by the Tanzania Electric Supply
Company Limited (TANESCO), which is in charge of the generation, transmission
and distribution of electricity [36]. Also, GetInvest [17] citing the Tanzania Ministry
of Energy and Mineral 2016 Quarterly Digest stated that most electricity generating
plants are owned by TANESCO, Small Power Producers (SPP) and Independent
Power Producers (IPP) as shown in Table 6.1.
Furthermore, for the transmission and distribution of the generated electricity by
TANESCO, there are 48 transmission substations interconnected by 7 transmission
lines consisting of 3340 km of 220 kV, 2063 km of 132 kV, 668 km of 66 kV, 24
165 km of 33 kV, 6006 km of 11 kV and 71 629 km of 400 kV and 230 kV lines [35].
Also, TANESCO generates, transmits, distributes, purchase and sells electricity to the
Tanzania mainland and also sells bulk power to the Zanzibar Electricity Corporation
(ZECO), which also sells to the public [41].
According to GetInvest [17], the economic sectors that consume electricity as of
2014 are industry (25.5%, 1 270 GWh), Residential (44.8%, 2227 GWh), commercial
and public services (22.9%, 1141 GWh), Agriculture/Forestry (3.6%, 180 GWh),
others non-specified (3.1%, 158 GWh), totaling 4,976 GWh. with an electricity per
capita consumption of 137 kWh/year. Furthermore, electricity access in Tanzania is
at 40%. Out of this number, 71% are in urban areas and 23% in rural areas, whilst
35 Million of the populace is without access to electricity [18].
The Tanzanian energy sector is managed by the following stakeholders [4, 36]:
a. Ministry of Energy and Minerals (MEM): this is the Tanzanian Ministry saddled
with the responsibility of coordinating activities involving energy in the country
through the creation of policies, frameworks, strategies and guidelines for
optimal utilization of the sectors potentials, especially renewable energy.
b. Rural Energy Agency (REA): this is an autonomous agency that is respon-
sible for the implementation of electrification projects in rural areas of Tanzania
through the financial utilization of Rural Energy Fund. The agency is coordi-
nated by the Rural Energy board, consisting of eight delegates from different
government agencies and civil societies.
c. Energy and water utilities regulating authority: this is Tanzania’s energy regu-
lator, which is autonomous in nature and a multisectoral regulating authority.
The agency is responsible for regulation of the Tanzania energy sector and
regulation of electricity tariffs.
d. TANESCO: this is a government owned utility, which is responsible for genera-
tion, transmission and distribution of electricity to the consumer. Also, the utility
buys electricity from different generating companies such as Independent Power
Tanzania limited (IPTL), Symbion Company and Agrreko Company.
e. Other power producers: in Tanzania, there are three different groups of power
producers, which contribute 40% to the installed capacity, therefore helping
TANESCO in power supply. The three groups are Independent Power Producers
(IPP), Emergency Power Producers (EPP) and Small Power Producers (SPP).
6.1 Tanzania 107

The IPPs runs 9 large power plants in Tanzania usually larger than 10 MW.
There are also two EPP namely; Aggreko and Symbion LLC. SPP are private
companies that run power plants less than 10 MW.
f. Zanzibar Electricity Corporation (ZECO): this is a government owned utility
that facilitates the generation, transmission, transformation, distribution, supply
and use of electricity in the Island of Zanzibar, through a working relationship
with TANESCO.
Furthermore, laws, regulations and policies that guides and regulates the Tanzania
energy sectors are:
• National Energy Policy 2015
• The Model Power Purchase Agreement
• Public Private Partnership Policy 2009
• Public—Private Partnership Act, 2010
• Energy and Water Utilities Authority Act 2001 and 2006
• Rural Energy Act 2005
• Electricity Act 2008
• The Petroleum Act 2008
• Standardized Power Purchase Agreement and Tarriffs (2008)
• The Electricity Supply Reform Strategy and Road Map 2014–2015
• The Electricity (Market Re-Organization and Promotion of Competition) Regu-
lations 2016
• Power Systems Master Plan (PSMP) 2012
• MEM Strategic Plan from 2011/12–2015/16
• Scaling up Renewable Energy Programs (SREP)—Investment Plan for Tanzania
(May 2013)
• Biomass Energy Strategy (BEST) for Tanzania
• Electricity Supply Industry (ESI) Reform Strategy and Roadmap, 2014–2025.

6.1.3 Prepaid Electricity History and Current Status

Mushi [32] states that prepaid meters are electricity meters where consumers pay
before using electricity. Also, Magambo [26] opined that prepaid meters are meters
that automatically disconnect a consumer, when the purchased electricity credit
has finished. Mhando [29] stated that prepaid metering was introduced in Tanzania
by TANESCO for operational efficiency and revenue collection effectiveness. The
factors that necessitated the deployment of prepaid meters are as follows; delayed
generation of bills for credit type meters, non-payment of monthly bills, energy theft
by customers and high cost of disconnection campaigns for debt collection.
In Tanzania, the prepaid metering system was introduced by TANESCO in a pilot
project from 1995 to 2004 in four regions within the city of Dar es Salaam, Tanzania’s
highest populated city [29, 24]. The prepaid system when introduced was targeted
108 6 Eastern Africa Region

at small power users either on single or three phase current meters consuming less
than 7600 kWh and was successful due to an improvement in revenue collection
and significant reduction in operational cost. However, Magambo [26] and Sospeter
[39] opined that the prepayment metering project started between 1993 and 1997
through a world bank funded program called “Lipa Umeme Kadiri Utumiavyo”
(LUKU), translated in English as “Pay for electricity as you need it”, which led to
40,622 prepaid meters installed. The success of the pilot project led to the roll out
of prepaid metering system throughout the country, which ensured that customers
controlled their energy consumption by 8%, using energy as necessary.
Mushi [32], Magambo [26] and Sospeter [39] in x-raying the importance and
benefits of the prepaid meters grouped them into benefits to the TANESCO and to
the consumers. The benefits of prepaid meters to TANESCO are:
• Possibility of tracking individual and group sales.
• Quick and early detection of fraud related activity.
• Provision of comprehensive management reports.
• Up-front payments.
• Elimination of bad debts.
• Elimination of disconnection and reconnection fee.
• Improved customer services.
• There are no more incorrect and unpaid bills.
• Efficient and effective load control.

Also, the benefits and importance of prepaid metering to the customers are:
• Controlled electricity usage.
• Effective budget management.
• Convenience in buying the electricity.
• No cost and anxiety for reconnection and disconnection.
• Improved energy consciousness.
Mushi [32] further stated that the process of prepaid metering in Tanzania includes
the following:
• Consumer’s buys electricity from TANESCO vending stations, telephone
company services like Vodacom and from ATM machines.
• The consumer receives a twenty (20) digit codes, which is to be keyed into the
meter.
• The codes are inputted into the meter.
• The meter is credited and is gradually depleted depending on usage and speed of
consumption.
However, despite the benefits of prepaid metering system in Tanzania, as of 2009,
there are 520 000 credit meters which needs to be replaced with prepaid meters,
leading to a yearly target of 100 000 replacements of credit meters with prepaid
meters [29]. TANESCO in aligning and recognizing the benefits of prepaid metering
system opined that most of its customers should use prepaid plans [27]. However,
6.1 Tanzania 109

with the call for bids for prepaid electricity meter procurement for the 2018/2019
financial year by Zanzibar Electricity corporation (ZECO), it shows that the 100 000
yearly target of 2009 has not been met and about half of electricity consumers in
Tanzania do not have prepaid meters [7].

6.1.4 Challenges of Prepaid Metering

The prepaid metering system in Tanzania despite its benefits has some deficiencies
especially as it could not stop energy theft in the system [29]. Mogambo [26] and
Mushi [32] stated that the problems faced with prepaid meters in Tanzania are:
• Ignorance and lack of education amongst prepaid meter consumers due to the
complexities of prepaid meters such as problems whilst inserting disposable
magnetic tokens, (which damage the magnetic tokens) and also the issue of
inputting the twenty digits tokens into the prepaid meters.
• There are defective meters that do not give electricity to consumers and also failure
of vending machines.
• The ease of manipulating vending machines and the instability of the machines,
which leads to fraud, thus reducing utility revenue targets.
Also, Sospeter [39] stated that sixteen (16) years after the introduction of prepaid
meters in Tanzania, there still exists a huge loss by TANESCO through energy
thefts and debts owed the utility, which prepaid meters could not solve due to meter
bypassing, thefts and illegal connection.

6.1.5 Future Prognosis

The massive and rampant electricity theft in Tanzania despite the usage of
prepaid meters has led to the adoption and usage of Automatic Meter Reading
(AMR) systems, a subsystem of smart metering. This system in Tanzania was
launched by TANESCO in 2007, through a pilot project, involving 100 large power
users, which resulted in 62% improved sales and 73% revenue protection [29].
Mhando [29] and Mnzava [30] highlighted the benefits and advantages of the AMR
system:
a. Non-paying customers can be remotely disconnected.
b. There is an alarm, whenever there is a meter tampering attempt.
c. Improved quality of services, as temporary breakdown can be detected by the
AMR, communicated and quickly fixed by the utility.
d. Low cost of billing due to automated billing process.
e. There is intelligent communications between the meters, customers and the
TANESCO offices.
110 6 Eastern Africa Region

6.2 Kenya

6.2.1 Geographical Overview

According to the CIA World Fact Book [10] Kenya is a country located in Eastern
Africa, whose capital is Nairobi with a land area of 569, 140 km2 and water area
of 11, 227 km2 , sharing borders with Ethiopia, Somalia, South Sudan, Tanzania and
Uganda as shown in Fig. 6.2. The population of Kenya as of 2019, according to the
World bank [49] was 52 573 973, however, according to Worldometer [51] based
on United Nations projections, Kenya’s Population as at November, 2020 is 54 239
315 with different ethnic groups and official languages like English Language and
Kiswahili.
Economically, Kenya is an Agro-driven economy and it is the economic, financial
and transport hub of East Africa, with economic growth averaging at 5.7% whilst
it’s the 9th largest economy in Africa [9, 50]. The economy majorly backed by
Agriculture, Livestock, and Pastoral activities has a GDP of $95.3 Billion [15].
According to the Netherland Enterprise Agency (NEA) [35], Agriculture in Kenya
involves the cultivation of tea, coffea, corn, wheat, sugarcane, fruit, vegetables, dairy

Fig. 6.2 The Republic of Kenya [6]

6.2 Kenya 111

products, beef, fish, pork, poultry, eggs, while the industrial sector of the country
comprises of plastic, textiles, battery, furniture, flour, clothing, aluminium, steel,
lead, cement, commercial ship repair and tourism.

6.2.2 Energy Overview

Tellez and Waldron [43] opined that energy is central to human existence and it
is one of the sustainable development goals (goal seven), which seeks to ensure
access to affordable, reliable and sustainable modern energy for all. The economic
growth and the rising national population of Kenya has increased public demand and
exacerbated pressure on electricity supply, with an annual demand increase of 18.9%
[36]. According to Energypedia [13], Kenya’s energy sector comprises of petroleum
and electricity, where wood fuel services the basic energy needs of most Kenyans.
Since this study focuses on electricity, Kenya’s electric energy is derived mainly
from Hydropower, Fossil Fuels, Geothermal, Bagasse cogeneration, wind and solar
energy [14, 36]. Also, according to International Energy Agency [18] and KPMG
Sub-Saharan Africa power outlook [20], as of 2015, the proportion of electricity
sources in Kenya are; Hydro (3310 GWh; 36%), Oil (1714 GWh, 19%), Geothermal
(4,479 GWh, 44%), Biofuel (136 GWh, 1%), Wind (38 GWh, < 1%) and solar (1
GWh, <1%). Power Africa [36] in its reports opined that in comparing Kenya’s
population with its per—capita GDP, Kenya is performing well. Kenya has a per—
capita power consumption of 161 kWh (as of 2014) compared to Nigeria which had a
per-capita power consumption of 126 kWh, even though Nigeria’s per—capita GDP
is thrice that of Kenya. However, the per capita electricity consumption in Kenya as
of 2019 is 222 kWh [2].
The Africa Energy Series [1] special report stated that electric power demand in
Kenya is around 1802 MW as of 2018, 1 912 MW in 2019 and as of 2020 it ranges
between 2600 and 3600 MW, rising at a rate of 3.6% annually. Moreover, according
to the IEA [18] and NEA [35], electricity usage per sector is shown in Table 6.2.
Kenya’s installed electricity capacity is approximately 2.7 GW, mainly from
renewables such as Geothermal and Hydropower, of which geothermal sources
have overtaken hydropower as Kenya’s main source of electric power, thus ensuring
energy availability during drought season [1]. The report further stated that Kenya
Electricity Generating Company (Kenya Power), generates approximately 70% of
installed capacity, while the remaining 30% is generated by Independent Power
Producers (IPP), from the following firms; Westomont, AEP Energy Africa (Iber-
africa), OrPower4Kenya Limited, Tsavo Power company, Aggreko and Africa’s
Geothermal international, operating in total 15 power plants. The generated elec-
tric energy is transmitted to different households using 4149 km of transmission
lines of 200 kV or 132 kV. Currently approximately 4,500 km of new lines are
currently being built with the introduction of 400 kV and 500 kV DC lines and three
major regional interconnections to Ethiopia, Uganda and Tanzania in accordance
with the Eastern African Power Pool [1, 20]. According to TradingEconomics [46]
112 6 Eastern Africa Region

and IEA [18] world bank data, access to electricity is 75% as of 2018 and 84.5% as
of 2019, where 99% are in the urban areas and 73% are in the rural areas, with 8
Million people without access to electricity.
In the electricity energy sub-sector in Kenya, as cited by NEA [35], Power Africa
[20], CIA World Factbook [10] and Kenya National Electrification strategy [21],
below are the summaries of relevant stakeholders:
• Ministry of Energy: the ministry is saddled with the stewardship of creating
rules, regulations, and energy policies for the operational growth and investment
optimization of energy in the country.
• Energy Regulatory Commission (ERC): This is an agency established by Kenya’s
Energy Act 2006, responsible for economic & technical leadership in conjunc-
tion with the Ministry of Energy and the regulation of the electric power, renew-
able energy and downstream petroleum sub-sector. The agency is responsible for
enforcing licensing, settlement of disputes, setting and review of tariff, approving
power purchase and network service contracts. The Agency is operationally inde-
pendent and hence plays a key role in overseeing pricing and negotiation of power
purchase agreements (PPAs) between Kenya Power and Power Producers.
• Rural Electrification Authority (REA): it’s an agency established in 2007 that
oversees the planning and commissioning of power plants for electrification of
rural settlements in Kenya using the Kenya Rural Electrification Master Plan.
• Kenya Power and Lighting Company (KPLC) Ltd: this is Kenya’s electric power
brainbox, also known as Kenya power, established in 1975. The company is the
middleman between Kenya electricity generator, transmitter and distributor to
consumers. The company sells electricity to over 7.5 Million Kenyans as of June,
2020. The company is listed on the Nairobi securities exchange, with government
having 50.1% controlling stakeholder’s stake and private investors having 49.9%
[23].
• Kenya Electricity Generating Company (KenGen): this company oversees the
production and operation of power plants from hydro, geothermal, gas and
diesel, accounting for 72% of electricity consumption in Kenya. It is owned by
the government and private investors in the 70–30% proportion.
• Kenya Electricity Transmission Company (KETRACO): It’s a government
owned entity, responsible for planning, designing, developing, operating and
maintaining all new transmission lines above 132 kV.
• Geothermal Development Company, GDC: The major Source of electricity in
Kenya is Geothermal energy, hence a fully owned government company (GDC)
established in 2008 is responsible for the exploration and production drilling of
geothermal fields and also for the development of Steam fields.
• Independent Power Producers: these are private entities competing with KenGen
for the production of electricity in Kenya, and there are 13 independent power
producers in Kenya.
In the operation of these relevant stakeholders, there are laws and regulatory
frameworks backing their operations in providing adequate power supply in Kenya,
they include:
6.2 Kenya 113

a. Energy Act 2006

b. Least Cost Power Development Plan (LCPDP) (2010)
c. Standardized Power Purchase Agreement
d. Electricity Licensing Regulations
e. Connection Guidelines for Small—Scale Renewable Generating Plants
f. Energy Management Regulation (2012).

6.2.3 Prepaid Electricity History and Current Status

Prepaid metering is an electricity billing system, where consumers pay in advance

before consumption, and includes a superior electronic customer accounts manage-
ment system. It is the opposite of post-paid metering [28]. Prepaid metering gives
the customer control over their consumption rate and it is the upfront payment for
electric usage [47]. To boost efficiency and improve quality of customer services,
the prepaid meter was adopted and seeks to bring relief to the many challenges asso-
ciated with the post-paid system. The challenges includes; lack of consumer control
of consumption, ineffective revenue collection, inefficient coordination, high recon-
nection fees, overestimated bills and wrong estimation of bills, corruption during
disconnection, and not returning consumers account deposits [18].
The prepaid metering system of electricity allows consumers to consume energy
only when they have bought electricity units from Kenya Power and the supply is
terminated when the credit units are exhausted. Consumers can be reconnected when
those units are funded again. The prepaid meter helps Kenya Power in increasing
managerial efficiency for distributing power to consumer, increases cash flow, reduces
credit and arrears collection cost and avoiding reconnection charges [45]. Tirop [45]
stated that the prepaid meter in Kenya works in the following steps; issuance of card
with a unique meter number that must be presented when buying electricity at a
sales outlet or mobile money platform, a credit slip or code, called token is received
upon payment, the credit unit or code, which is usually 20—digits are loaded and
the consumer receives electricity units for consumption.
This innovative metering system was adopted in Kenya and started on a pilot
test through a contract with Actaris Ltd in April 2009 in Nairobi, Kisumu and
Nakuru towns, while the full roll out was done in March, 2011 and within four (4)
months 123, 000 prepaid meters had been installed throughout the country, mostly
in Kenya’s Capital city of Nairobi [22, 48]. Moreover, according to Datascience
[12], Kenya power stated that as of March 20, 2017, there are 5.9 million customers
connected to the National grid, of which 3.5 million are on prepaid meters, repre-
senting 59.32% on prepaid meters. Also, in April 2018, Kenya Power stated that it has
4.5 million customers on prepaid metering system. However, according to Bungane
[8], Kenya Power in introducing its USSD code stated that its post-paid customers
are 1.8 Million, showing a decrease in post-paid customers and an increase in prepaid
customers.
114 6 Eastern Africa Region

In the usage of prepaid metering, customers pays for prepaid tokens using plat-
forms such as mobile money transactions, KPLC offices, banks, sales Kiosks and
Mobile and Web based self-service applications [44].

6.2.4 Challenges of Prepaid Metering

The introduction of prepaid metering system in Kenya in 2009 was intended to

reduce and eliminate the shortcomings of the post-paid metering system. However,
the installation and adoption of prepaid system led to the following challenges and
shortcomings as noted by Wambua et al. [47] and Tirop [45]; faulty gadgets, poor
consumer education on how to use the metering system, incorrect billings and high
cost of connectivity. Moreover, according to the Nation [34] and Chege [11], whilst
using the prepaid metering system, consumers in Kenya were dissatisfied due to the
following challenges; limited places to buy tokens, delays in purchasing credits units
through money transfer, long digits or codes and varying & inconsistent rates of units
for the same amount (due to fuel price, foreign exchange & inflation).
Furthermore, another issue affecting the reliability of Kenya Power in terms of the
prepaid metering system is electricity outages [42]. Another issue, is the shortage of
pre-paid meters which is a major issue for both electricity consumers in Kenya and
Kenya power; as customers wait for months to collect pre-paid electricity meters,
they have paid for due to procurement issues by Kenya Power. The author reported a
complaint of a customer in the following words “I have visited Kenya power offices
over ten times and I have been informed that I have to wait longer as they seek the
meters which will first be served to those who applied first” [31].

6.2.5 Future Prognosis

In tackling the bottlenecks and challenges surrounding the usage of prepaid meters,
Kenya Power has opted for the use of smart meters [33]. This will improve trans-
parency, accuracy and proper monitoring of electricity bills, outages and supplies.
The Nairobi Garage [33] further reported that Kenya power has so far installed 15,736
smart meters for its large and small electricity consumers. According to Franek et al.
[16], smart meters measures more variables related to electricity consumptions and
also the quality of energy delivered. According to the authors, benefits of smart
metering are the ability to control electric consumption rate, remote data acquisi-
tion, collection of data for analysis, reduction of illegal consumption and ability to
schedule or on demand tariff charge and disconnect power supply.
Smart meters enable two—way communication between the meter and the control
centre of the distribution company. The introduction of smart meters also enables the
implementation of the presidential directive of President Uhuru Kenyatta on reduced
electricity tariff for manufacturers who will be using power between 10 pm and 6 am
6.2 Kenya 115

[33]. However, the main disadvantage of the smart meter is the higher cost of meters
and need for communication infrastructure [16]. Furthermore, Kenya Power in 2014
earmarked $1.6 million for a two (2) year smart meter pilot to cut distribution and
operating cost; thus saving the company $11 million over the next four (4) years [38].

6.3 Highlights

• The introduction of prepaid meters in Tanzania and Kenya stemmed from the need
to give customers more control over their electricity use and the resultant bills. It
also sought to eliminate incorrect or wrong meter readings.
• Even though prepaid meters have been installed for over 20 years ago in Tanzania
and Kenya, challenges relating to meter reliability and meter bypassing/tampering
remain and cause significant consumer dissatisfaction.
• Increased deployment of smart meters to combat the challenges in the prepaid
electricity sector is crucial. There is also the need to increase the number of
meters in the hands of those that desire them and work on the serious issues of
access to electricity for significant portions of their populace.

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116 6 Eastern Africa Region

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Chapter 7
Southern African Region

7.1 South Africa

7.1.1 Geographical Overview

The Republic of South Africa is Africa’s southernmost country with a great topog-
raphy and cultural diversity. South Africa has a population of 59 602 202 (as of
November, 2020), a total land area of 1 220 813 km2 and a population density of
49 km2 , where 66.4% of her population resides in urban areas and 33.6% resides
in rural areas [51]. According to the CIA World Fact book [7], South Africa shares
boundaries with the following countries; Lesotho, Swaziland, Botswana, Namibia,
Mozambique, and Zimbabwe as shown in Fig. 7.1. A majority black population
(which constitutes 81% of the population) dominates the country whilst whites,
coloured and the Indians/Asian population [25] constitute the rest.
The Republic of South Africa practices a constitutional multi-party democracy
divided into three levels of governance: local, provincial and national governments,
where the country’s administrative headquarters is in Pretoria, the legislative head-
quarters is in Cape Town and the judicial headquarters is in Bloemfontein [25]. The
Republic is a multicultural country with 11 official equal status languages, which are
English, Tswana, Afrikaans, Tshivenda (Venda), Pedi, Sesotho (Sotho), IsiNdebele,
Xitsonga (Tsonga), Siswati (Swazi), Isixhosa and Isizulu with different religious
beliefs comprising of Christianity, Hinduism, Traditional African religion, Islam,
Atheism, Judaism, Buddhism, Bahaism, and Agnosticism [25].
The Economy of South Africa is the second largest economy in Sub-Saharan
Africa after Nigeria, with a GDP of $360 billion and a GDP per capita of $6,121 [4,
20]. South Africa is the most industrialized country in Africa, Africa’s manufacturing
hub and a viable market to create a $2.6 trillion GDP [28]. South Africa is the
world’s largest producer and exporter of gold, chrome, platinum, and manganese,
the world second largest producer of palladium and the world fourth largest producers
of diamond [38].
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 119
N. Kambule and N. Nwulu, The Deployment of Prepaid Electricity Meters in Sub-Saharan
Africa, Lecture Notes in Electrical Engineering 759,
https://doi.org/10.1007/978-3-030-71217-4_7
120 7 Southern African Region

Fig. 7.1 The Republic of South Africa [5]

7.1.2 Energy Overview

Energy is the centerpiece of any development and a powerful force that powers
businesses and all sectors of the economy. The energy sector of South Africa is
driven majorly by coal, crude oil, renewable energy, nuclear and natural gas [42].
Narrowing down to South Africa’s electrical energy, the electricity sub-sector is
dominated by Eskom, which has 27 operational power plants and is the country’s
national utility. Eskom is majorly responsible for the generation, transmission and
distribution of 96.7% of South Africa’s electricity, the independent power producers
(IPPs) account for the remaining. Furthermore, South Africa is the supplier of
approximately 40% of Africa’s electricity [21, 42].
According to GetInvest [22], electricity demand in South Africa is about 34
481 MW, where 214 487 GWh is transmitted to the end users by Eskom. Also,
electricity production in South Africa as of August 2020 is 20 978 GWh [46].
In terms of electricity consumption, WorldData [50] revealed that the total
consumption of electricity in South Africa is 207.10 bn kWh per year and a per
capita average of 3537 kWh. South Africa also exports and imports electric energy
as revealed in Table 7.1 [50].
7.1 South Africa 121

Table 7.1 South Africa

Electricity kWh total kWh per capita
electricity distribution matrix
[50] Consumption 207.10 bn 3 536.65
Production 234.50 bn 4 004.56
Import 10.56 bn 180.33
Export 16.55 bn 282.62

Eskom is responsible for the operation and maintenance of 95% of South Africa’s
transmission network in collaboration with 187 licensed municipal distribution
through the Regional Electricity Distribution (REDs) at a tariff set by the National
Energy Regulator of South Africa (NERSA), while the independent power producers
take care of the remaining 5% of the transmission network [22, 42]. Furthermore,
according to the IEA [26], electricity access in South Africa as of 2019 is 94% and
approximately 3 million have no access to electricity.
The South Africa Electrical Energy sector comprises of the following stakeholders
[34]:
a. Department of Energy (DoE): It is the agency responsible for planning, formu-
lation and implementation of policy regarding energy as well as generation,
transmission and distribution of electrical energy for efficiency and electrifi-
cation. It also determines the generation capacity needed and how it is to be
implemented by the IPPs and Eskom.
b. National Energy Regulator of South Africa (NERSA): It is an independent
regulator established by South Africa’s 2004 National Energy Regulatory Act,
giving it power to generate licenses, enforce regulatory compliances, regulate
Eskom tariff proposals and provision of National Grid codes and standards.
c. South African National Energy Development Institute (SANEDI): It is an insti-
tute helping the DoE in achieving its aims and objective by directing, moni-
toring and conducting necessary research and development in promoting energy
efficiency, especially green energy in South Africa.
d. Eskom: This is the national utility, which is the backbone of South Africa’s
electricity industry as it generates, transmits and distributes electricity to
various consumers. It’s also the only buyer of electricity produced by various
consumers’ independent power producers (IPP) and ensuring electrification. It
also collaborates with 137 municipalities in distributing electricity.
e. Supporting Associations: Below are associations and councils in South Africa
supporting and contributing to the growth of the energy sector:
• South Africa Renewable Energy Council.
• South African Wind Energy Association (SAWEA).
• South Africa PV Industry Association (SAPVIA).
• Southern African Solar Thermal and Electricity Association (SASTELA).
• Sustainable Energy Society of South Africa (SESSA).
• South African Independent Power Producers Association (SAIPPA).
• Southern Africa Biogas industry associations (SABIA).
122 7 Southern African Region

• Liquid Fuels and Gas Market.

• National Energy Efficiency Agency (NEEA).
• Green Cape.

Moreover, the South Africa energy sector is regulated by the following laws,
policies and regulations [34]:
• National Energy Act 34/2008
• The Electricity Regulation Act (ERA) of 2006
• White Paper on Energy Policy (1998)
• White Paper on Renewable Energy (2003)
• Energy Policies for Sustainable Development in South Africa
• National Response to South Africa’s Electricity Shortage
• South Africa’s Renewable Energy Independent Power Producer Procurement
Programme (REIPPPP)
• 2011 and updated 2016 Integrated Resource Plan (IRP) 2010–2030
• 2015 Integrated Energy Plan
• 2016 Integrated National Electrification Program (INEP)
• New Households Electrification Strategy (2013)
• 2030 National Development Plan (NDP 2013)
• Small Projects Renewable Energy Independent Power Producers (IPPs)
Programme
• 2007 Biofuels Industrial Strategy
• 2012 Biofuel Mandatory Blending Regulation
• Carbon Tax Act 15 of 2019
• South Africa’s Renewable Energy Policy Roadmap
• National Cleaner Production Strategy 2004.
Furthermore, according to Global Legal Insights [24] and Slabbert [44], there are
plans by the South Africa National Government to unbundle the state owned Eskom
into three separate state owned entities covering electricity generation, transmission
and distribution. The decision was due to Eskom poor financial performance and
operational performance.

7.1.3 Prepaid Electricity History and Current Status

Historically, the prepaid metering system was introduced in South Africa in 1988,
when South Africa electricity supply provider (ESKOM) had a change of strategy
in reaching out to those without access to electricity [23]. Eskom in 1989 engaged
two manufacturers, AEG and Conlog for 10 000 meters. This action made Eskom to
be the pioneers for massive deployment of prepaid meters in the World. According
to Ewon [18] by the year 2000, approximately 3.2 million prepaid meters had been
installed in South Africa, with the meters facilitating effective budgeting, fair sharing
of energy burden, preventing arrears, preventing credit action and high reconnection
7.1 South Africa 123

costs and fostering accessibility. A prepayment system consists of prepaid meters

(measurement and metering device); vending system (a system where electricity
required is bought) and a revenue management system (managing the prepayment
infrastructure) [23]. Jack and Smith [29] stated that prepaid electricity meters are a
technological solution to non-payment of electricity fees and the challenges asso-
ciated with post-paid metering system. According to the authors, prepaid metering
involves the purchase of electricity before consumption with the meters displaying
the number of units and having features to inform the customers when the balance is
getting low. The prepaid meter has the following advantages; generation of revenue
in advance of consumption, cutting down on non-payment or late payment of bills,
reduces meter inspection bribery, improves cash flow and reduces administrative
inefficiency [29, 33]. De Buck [11] opined that a prepaid meter is preferable due
to these reasons; provides more control over amount of electricity consumed, there
is no under—charging or over—charging, feature of an SMS reminders when the
balance is low and topping up via cell phone, availability of usage statistics and
great customer service from metering companies. In South Africa, customers can
buy their prepaid electricity from electronic and/or physical vendors which includes
gas stations, online/mobile phone, kiosks, ATMs, small shops and supermarkets.
In describing how the prepaid meters works, Gina [23] describe thus; the electricity
consumer with a prepaid meter goes to a vending site to purchase electricity along
with the meter serial number or a meter swipe card and in return, the vendor will
return a token (like a paper receipt) containing 20 digits to the customer. This
transaction is digitally recorded in the management system of the vendor. The 20
digits is entered into the meter and there is electricity loaded to the meter.
Moreover, Nhede [36] stated in an interview that as of 2018, there are approxi-
mately seven (7) Million prepaid meters currently installed in South Africa which
could increase to eight Million by 2024.

7.1.4 Challenges of Prepaid Metering

The key prepaid metering challenge in South Africa stems from electricity theft
resulting in significant loss of electricity and revenue [23, 33, 37]. The authors
categorise these challenges as follows:
a. Tampering and bypassing of meters: this is a situation whereby consumers
connect and hook into a power supply and distorts a meter in order to avoid
recording of electricity usage. This leads to overloading and is harmful to elec-
tronic appliances. Another aspect of this challenge is tapping into neighboring
premises which involves illegally connecting electric wires across fences, which
could lead to fire outbreaks and electrocution of innocent people due to exposed
wires and ill—concealed wires.
124 7 Southern African Region

b. Illegal prepaid electricity vouchers: this includes the sales and purchase of illegal
prepaid electricity vouchers from stolen vending machine.
Furthermore, another challenge with prepaid meters in South Africa according to
Jack et al. [30], Jack and Smith [29] and Kambule et al. [31] is the exacerbation of
energy poverty. This is because it is shown that in South Africa, prepaid metering has
a negative effect on the poor who are forced to reduce their energy demand/electricity
by approximately 14% and are forced to purchase small amounts of electricity per
time, thus affecting their livelihood. Also, Nhede [36], PamL [39] and Roodbol [43],
stated that all prepaid meters worldwide, including South Africa are facing a Token
Identifier (TID) timeline challenge. According to the authors, TID is the number of
minutes that have elapsed since a defined based date of 1993 up to the time of creating
the token. The TID will run out in November 2024, where all existing prepayment
meters will stop accepting credit tokens, meaning no electricity supply. The authors
further opined that the existing meters needs to be cleared of all stored TIDs and a
change in its cryptographic key before 2024, where a new range of TID will then
start from a new base date of 2014 and run out in 2045, extending the usefulness of
the prepaid meters.

7.1.5 Future Prognosis

In line with technological advancements and the mechanical difficulties associated

with prepaid meters, Ellenki and Srikanth [16] opined that Advanced Metering Infras-
tructure (AMI) system in the energy sector is the game changer for prepaid energy
metering, as it integrates prepaid meters into the grid whilst simultaneously moni-
toring households’ electric power usage. Luan et al. [32] opined that the AMI is
the communication hardware and software that creates networks between advanced
meters and utility business systems which allows collection and distribution of infor-
mation to customers [1]. AMI is often synonymous with Smart Metering. According
to the [45], a smart metering system is an electricity metering system that measures
the consumption of energy on a time interval basis, allows two—way communica-
tion between the end—users and the utility, permits storage of time interval data
and remote load management. The report further stated that smart metering in South
Africa will be mandated for consumers with a monthly consumption of at least
1000 kWh. A smart meter possess the ability to store metering data in registers
and support a variety of tariffs (like Time of Use, TOU, Inclined Block Tarriff, IBT,
Maximum Demand, Free Basic Electricity (FBE), which can all be updated remotely
[17]. Gina [23] and Edison Electric Institute [15] highlighted the benefits of smart
metering for different categories and stakeholders and it is shown in Table 7.2.
7.1 South Africa 125

Table 7.2 Benefits of smart metering [15, 23]

Stakeholder Benefits
Municipal customers • Efficient access and data to manage electricity use
• Proactive customer notification
• More accurate and timely billing
• Improved outage restoration
• Power quality data
• Possibility of shifting consumption away from heavy
demand periods and when tariffs are higher
• Improved safe, reliable and stable electricity supply
• Knowledge of appliances that consumes more
electric energy
Customer services and field operations • Reduced cost of meter reading
• Reduced trips for off—cycle reads
• Reduction in transactions and frequency call centers.
• Reduction of issues surrounding
connection/disconnection
• Improved reliability of grid
Transmission and distribution • Improvement in load management of transformers
• Improved capacity banking switching
• Improved demand management
• Data for improved efficiency, reliability of service,
losses and loading
• Improved data efficiency grid system design
Revenue protection • Reduction in back office rebilling
• Quick and early detection of meter bypassing and
meter tampering
• Reduction in estimated billing and errors on bills

Furthermore, Prepaid smart meters are expected to populate South Africa cities in
line with “Smart Grid Vision 2030” initiative by the South African National Energy
Development Institute (SANEDI) as its readily accepted by South Africans due to it
numerous benefits [17]. The prepaid smart metering market in South Africa is fast
growing as it was valued at $54.1 Million in 2017 and is projected to be worth over
$79.5 Million by 2025.

7.2 Mozambique

7.2.1 Geographical Overview

The Republic of Mozambique is a country in Southern African, specifically at the

east coast of Southern Africa between South Africa and Tanzania at the Mozambique
Channel [7]. Other countries that share borders with Mozambique include Malawi,
Eswatini, Zambia and Zimbabwe as shown in Fig. 7.2, with geographic coordinates of
126 7 Southern African Region

Fig. 7.2 The Republic of Mozambique [6]

18.6657˚S, 35.5296˚E. According to the Food and Agriculture Organization (FAO)

of the United Nations [19], Mozambique’s total area is 79 9380 km2 with three
geographic divisions, namely:
a. A coastal belt comprising of areas south of the Save river and the lower Zambezi
area, covering 44% of Mozambique.
b. Middle Plateau area that ranges from 200–1000 m in elevation covering about
29% of the country.
c. A plateau and highland region with average elevations of around 1000 m to the
north of Zambezi River covering 27% of Mozambique.
According to Worldometer [51], the population of Mozambique is estimated to
be 31, 622 178 as of November, 2020 with a population density of 40 per km2 and
a life expectancy of 62.13 years. The country’s capital territory is Maputo and its
official languages are Makhuwa and Portuguese [8].
7.2 Mozambique 127

Economically, Mozambique is a poor country with a GDP of 15 billion USD and

a GDP per capita of $483 [20]. Mozambique is a least developed country and a low—
income economy with the following industries; aluminium, petroleum products, coal,
chemicals, tobacco, food processing, manufacturing, agriculture and the services
sector [27, 48].

7.2.2 Energy Overview

Developing countries, especially a hitherto war ravaged country like Mozambique

need adequate supply of energy to promote developmental projects for the well-being
of her citizens and for rebuilding the country [10]. Mozambique’s energy resources
comprises of hydropower, natural gas, coal, biomass and renewable energy such
as wind energy, geothermic and oceanic energy [9]. According to the US Interna-
tional Trade Administration [47], electricity generation in Mozambique as of 2020 is
17.44 TWh. However, according to Power Africa [41], installed electricity capacity
is 2827 MW with 2184 MW stemming from hydroelectric sources and 643 MW
stemming from thermal sources. The derived/installed electricity generated is mostly
from the Cahora Bassa Dam, where 60% of the generated electricity is utilized by the
Mozal aluminium plant, 30% of the generated electricity is exported to South Africa
and Zimbabwe, while the rest is used in Mozambique. Also, there are power plants
that complement the generation of electricity from the Bassa Dam and they include
Corumana, Chicamba, Maruzi, Cuamba, Lichinga, GTG1 , Maputo, GTG2 Maputo,
GTG3 Maputo and GTG Beira, Termica de Temane, Gigawatt MZB, Central Termo-
electrica de Ressano Garcia (CTRG), Aggreko (Nacalal) and Aggreko [21]. The
generation of electricity is done by Mozambique owned utility called Electricadade
de Mocambique, EdM [22].
According to the [47], electricity consumption in Mozambique is 19.6 TWh.
Electrical energy in Mozambique is distributed by the Mozambique Transmission
Company (MOTRACO), which supplies to the Mozal Aluminium smelter, after
purchasing it back from Eskom, South Africa [35].
The NEA [35] report classified the EdM transmission system into three, namely;
a. The Northern Region: it has a 220 kV transmission system spanning 1,000 km
from Songo substation to Nampula and continuing at 110 kV to Nacala town.
It also has a 220 kV system but operated at 110 kV extending from Tete up to
the central region of Chibata.
b. The Central Region: it has a 110 kV system linking the hydroelectric power
stations in Chicamba and Mavuzi with the load centers in the corridors of Beira–
Manica.
c. The southern Region: it has a 110 kV network extending from Maputo to Xaixai,
Chokwe and Inhambane. It also has a 275 km single—circuit line from Maputo
to Komatipoort, which connects with South Africa’s Eskom.
128 7 Southern African Region

Furthermore, according to the NEA [35], electricity consumption in Mozam-

bique is approximately 13 449 GWh, from the following sectors industry; industry
(9426 GWh), residential (1654 GWh), Commercial and Public services (702 GWh),
Agriculture/forestry (30 GWh) and others (1637 GWh). However, according to the
WorldData [49], there is a total consumption of electric energy per year of 11.57bn
kWh and a per capita energy consumption of 381 kWh, Furthermore, only 35% of the
population in Mozambique has access to electricity, with EdM planning to increase
it to 49% by 2024.
The Energy [9] and NEA [35] in their reports highlighted the stakeholders in
Mozambique energy sector and electricity sub-sector, which are:
a. Ministry of Energy: This government ministry is responsible for the national
energy strategic planning and formulation of policy in overseeing the opera-
tion and development of the energy sector. In provinces, the ministry is repre-
sented by Provincial Directorates of Mineral Resources and Energy with goals
of increasing access to electricity; ensuring the supply of reliable and quality
energy and also promoting diversification of the energy matrix.
b. Electricidade de Mocambique (EdM): It is a government owned vertically—
integrated electricity utility that is responsible for generating, transmitting and
distributing electricity through the national grid, in a working relationship with
HCB and MOTRACO. The Mozambique national grid is interconnected with
South Africa, Zimbabwe and Swaziland.
c. Hidroelectrica de Cahora Bassa (HCB): this is the company that manages the
generation of electricity from the Cahora Bassa Dam/Plant, the HVDC trans-
mission system, Matambo substation and transmission lines. HCB is run as an
independent power producer (IPP) but it is 92.5% owned by the government of
Mozambique and the remaining 7.5% is owned by the Portuguese government
(the country’s former colonial master). It has a working relationship with EdM
and ESKOM in South Africa.
d. Mozambique Transmission Company (MOTRACO): this is a joint venture
founded in 1998 between three electricity companies in Mozambique, South
Africa and Swaziland, which are Mozambique electricity (EdM), Eskom
Holdings Limited (ESKOM) and Swaziland Electricity Company (SEC).
MOTRACO transport electricity from Eskom to EdM and SEC.
e. Fundo Nacional de Energia (FUNAE): this is a public institution saddled with the
responsibility of promoting energy access in a sustainable and rational manner
through the provision and mobilization of fund and resources and machineries
for energy projects across the Republic.
f. Conselho Nacional de Electricidade (CNELEC): this is Mozambique’s National
Electricity Council, which is an independent advisory body for the country’s
power sector. The council service as an advisory body, consultative body, concil-
iation authority, mediation authority and arbitration authority for disputes in the
energy sector.
7.2 Mozambique 129

Moreover, according to NEA [35], the following are regulatory laws in the
Mozambique energy sector:
• Electricity Act 1997.
• Energy Policy 1998.
• Energy Strategy 2009.
• New and Renewable Energy Development Policy (2009).
• The National Energy Strategy (2014–2023).

7.2.3 Prepaid Electricity History and Current Status

According to [12], prepaid metering system was introduced to the Mozambique

electricity sector due to the following reasons; 43% total distribution losses in 1995,
bad debt from domestic and public institutions, poor quality of service, high running
costs associated with customers management and low income. Also, Baptisa [2]
stated that prepaid metering was introduced in the country to address customer debt,
eliminate electricity theft and improve the cash flow of EdM. The prepaid metering
system was introduced to Mozambique in 1995 in a Pilot Project of 500 customers
in Matola city [2, 12]. Also, in 1996, another pilot project was carried out in Maputo
city for 5,000 customers [12]. Baptisa [3] opined that the prepayment system was
compulsory for all and not targeted at poor households unlike in South Africa and
UK. According to [3], Maputo, with a population of more than one million has
approximately 93% of it’s residents using prepaid meters as of 2012. EdM [13] stated
that the prepaid system is a range of technologies that gives electricity consumers the
possibility of keeping track of their costs of electricity, giving them the autonomy
of deciding how much the consumer wants to spend on electricity over a given
period. According to the company, prepaid metering system, which is also known
as Credelec in Mozambique has the following advantages; improved management
in the consumption of electricity by customers, increased transparency in processing
electricity consumption, elimination of power disconnection due to delayed payment,
possibility of buying electricity based on the purchasing power of the customers, no
penalty due to delayed payment as experienced in post-paid era, improvement in
service delivery to customers and a strengthened relationship between EdM and the
customers. Baptisa [3] opined that prepayment system household in managing their
disposable income and to stay out of debt by consuming only what they can afford
and when they can afford.
According to the EdM [14], prepaid meters as of late 2020 have been obtained by
78% of its customers, where the electricity token can be purchased in petrol stations,
vending machines in supermarkets, Automated Teller Machine (ATM), Scratch card
(Voucher) vendors and via cellphone & internet banking. Baptisa [3] stated that the
prepaid metering system in Mozambique has led to an increase in revenue and an
upgrade in the obsolete grid left behind by the Portuguese.
130 7 Southern African Region

7.2.4 Challenges of Prepaid Metering

In a comprehensive review of the challenges of prepaid metering system, The United

States Agency for International Development (USAID) [40] stated that Mozam-
bique’s electricity utility, EdM lacks a documented metering strategy, policy, stan-
dards and roadmap that supports effective metering system in the country vis—a—
vis the goals of EdM. These documented strategies and policies will provide the
basis for meter procurement, meter handling, meter standards and requirements and
minimization of cost associated with lifecycle of meters.
Also, Baptisa [3] analyzed the politics of the artificially low prepaid electricity
tariff, where the country’s electricity utility (EdM) under government pressure has
been using the low electricity tariff as a political tool to curry goodwill against
opposition parties, thus depriving the sector of healthy competition necessary for
development.. Also, there are questions about the sovereignty of the country’s energy
sector due to the energy infrastructural dependency on South Africa and the influence
the country’s former colonial master has on the sector. Bapista [3] highlighted the
following challenges of prepaid electricity:
a. Electricity is marred by low—quality service plagued with voltage fluctuations
and constant power outage.
b. The prepaid electricity metering rate was marginally expensive than the
conventional block tariff rates.
c. The prepaid metering system retains the service fees associated with the conven-
tional post-paid metering, which has become a point of contention with many
consumers. The service fees includes; radio and television fee, collected by the
central government and the refuse fee by the municipal administration.
d. Long waiting queues due to the slowness of the sales systems.

7.2.5 Future Prognosis

The quality of electricity supply enjoyed by prepaid metering consumers is a major

concern. In addition, the quality of prepaid meters is also a challenge. In order to
ensure the continuous quality of prepaid meters, the Mozambique EdM has detailed
plans to evaluate meter performance focusing on calibrations and reliability, which
will ensure speedy meter acquisition and reduce the chances of acquiring meters
with poor performance and low durability [40]. The reports detailed the processes to
achieve better quality in metering stated below:
a. Registration of meter suppliers with EdM in ascertaining the suppliers financial
and logistics capabilities.
b. Provision of meter calibration certificates in accordance with EdM metering
standards.
c. Provision of certification of meter performance under the following extreme
conditions; humidity, temperature, voltage limits, vibration etc.
7.3 Highlights 131

7.3 Highlights

• Prepaid meters were launched in South Africa and Mozambique (two Southern
African nations) to serve as an arrearage recovery mechanism. Whilst in Mozam-
bique, it was targeted at all customer classes, South Africa initially rolled prepaid
meters for low-income customers.
• Electricity theft is still a serious problem amongst low-income households in
South Africa whilst in Mozambique, the power quality and prepaid metering
service quality still need improvement.
• Smart meters with the ability to disable itself and alert the utility upon being
tampered with should be more widely deployed in both South Africa and Mozam-
bique. Furthermore, prepaid meters should be better quality controlled, especially
in Mozambique in addition to improvement of power supply quality.

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 Part III
Policy Implications
Chapter 8
Conclusion: Lessons Learnt and Policy
Recommendations

The Fourth Industrial Revolution presents the Sub-Saharan electrical-energy

landscape with an opportunity to expand sustainably—that is, improving electricity
accessibility without compromising the socio-economic livelihood of vulnerable
households. Thus far, the rolling out of prepaid electricity meters lack the requisite
socio-economic relevance, thus rendering poor households energy impoverished.
This may ultimately affect the regions ability to play its part in the global endeavour
to achieve the set sustainability goals. Our final perspective maintains there is a need
to revisit, reconsider, and rebuild the nature and framework of prepaid electricity
meter deployment. The current model is only built to recover debt for utilities; it
fundamentally falls short of considering the ill socio-economic impacts induced by
the technology. So, while we maintain that the technology can be of benefit to society
(i.e. both public utility and household), we believe that this can be done under certain
conditions, which are mostly policy-oriented.
Below is a summated outline of ten policy recommendations, based on lessons
learnt by pioneering countries that should frame the sustainable deployment of
prepaid electricity meters in the Sub-Saharan region:
Socio-Economic Assessments: The programme of deployment of prepaid electricity
meters has to factor in the undertaking of socio-economic assessment. The assessment
will entail studying the socio-economic setting of the targeted area. This means that
a series of consultations and engagements with the targeted community is necessary.
The community is an integral stakeholder throughout the process of programme
formulation. The goal of this exercise is to build a contextual programme that speaks
to the needs of the targeted community. According to Abrahams et al. [1] “smart
electricity planning considers the immediate needs of people.” As the reality of the
renewable energy market grows in the region, so does that of having household
prosumers. Customers expect the industry to constantly engage with them and meet
their needs or expectations.

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021 137
N. Kambule and N. Nwulu, The Deployment of Prepaid Electricity Meters in Sub-Saharan
Africa, Lecture Notes in Electrical Engineering 759,
https://doi.org/10.1007/978-3-030-71217-4_8
138 8 Conclusion: Lessons Learnt and Policy Recommendations

Capacity Building: Literacy of the community is another imperative component that

is to be incorporated in the deployment programme. It should not be assumed that the
community understands the technology and its functionality. An extensive capacity
building and awareness campaign has to be prioritised. This can be done is several
ways, for example, through a planned door-to-door campaign; advertisements on
different media platforms such as radio, television, and newspapers. Social media is
currently and will futuristically stand the most powerful means that should be taken
advantage of to raise awareness and educate.
Energy Efficiency: To ensure that the region optimally benefits from prepaid elec-
tricity meters, energy efficiency has to be another component of the programme of
deployment. By proving electricity accessibility through smart prepaid electricity
meters, energy efficiency has to be considered. Energy efficiency assists households
to use as minimal electricity as possible, meaning that the units purchased can last
longer than in energy inefficient settings. This may not matter to a high-income
earner, but to an impoverished house this is important. While providing energy effi-
ciency incentives to households, the authorities also need to devise ways of driving
the energy efficiency technology prices down, by perhaps providing subsidies from
inter alia carbon tax.
Electricity Tariffs: A special prepaid electricity meter tariff can come in handy as a
way of attracting consumers to accept the technology, especially given the reality that
in some parts of the region households continue to reject the technology. Moreover,
lower tariffs during peak demand times can work in favour of the socio-economic
conditions of poor household. Albeit Sub-Saharan Africa is a warm region, authori-
ties can consider having seasonal prepaid electricity meter tariffs. Alternatively, the
customer should be given liberty to choose from different tariff packages that are
relevant to their daily lifestyle.
Incentives: The programme can include the already mentioned incentives in a form
of energy efficiency and low tariffs during peak demand times. Furthermore, payment
holidays can be institute whereby during weekends or holidays customers can
freely use a certain amount of electricity. This postures well with socio-economic
development.
Regulations: The rapid proliferation of prepaid electricity meters necessitates a
formulation of specific regulations that will govern the market. Thus far no country
has undertaken such a project [2]. However, it is pivotal that this is done because of
the established reality of the negative effect that the technology has on low-income
households. So, in order to protect poor households, regulations may be important to
formulate. This is where a socio-economic assessment becomes extremely important
as the regulations have to be aligned to household conditions.
Enforcement: Policies lose weight because authorities easily bypass or overlook
them. We propose that there be a law that holds and ensures that policy-based
regulations are carried out accordingly. This is one way of ensuring that there is
the enforcement of regulations and that the households are protected even from
authorities.
8 Conclusion: Lessons Learnt and Policy Recommendations 139

Monitoring: The aspect of monitoring implementation is important to ensure that the

project continuously yields the desired results. To do this, a monitoring committee
may be established to specifically focus on the quality assurance aspect of the project.
Ethical Leadership: Internal utility programmes geared towards training manage-
ment and employees on ethical matters are important to undertake. Heavy penalties
for workers involved in corrupt dealings of illegally connecting households should
be carried out.
Political Buy-in: The government has to lead the public by example, meaning that
they should work hand-in-hand with the utility in developing a working prepaid
electricity model and encourage the public to use the technology.
Finally, the maximum results of the prepaid electricity meter programme can only
materialise within a holistic approach. Proper and contextual planning by relevant
stakeholders is necessary from inception. A sustainable socio-economic outcome
can only be yielded under a programme that considers the foregoing aspects. In the
years to come, more scholarly rigor needs to be invested in research, development,
practice, as well as monitoring of the regional posture in the Fourth Industrial wave. It
is a civil duty of regional authorities, and even utilities, to protect the most vulnerable
and through the proposed policy recommendations this can be done effectively.

References

1. Abrahams Y, Fischer R, Martin B, McDaid L (2013) Smart electricity Planning. Project 90

2. Smart Energy International (SEI) (2017): Analysis: Prepaid electricity metering in Africa.
https://www.smart-energy.com/features-analysis/analysis-prepaid-electricity-meters-africa/.
Accessed 13 May 2020