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African Utility Week looks at cost of utilities' non-technical losses

03-01-2013 03:48 PM CET | Energy & Environment

Press release from: African Utility Week

?We all suffer when losses due to illegal activities occur?

?We all suffer when losses due to illegal activities occur?

On the last day of January this year, two trains collided outside of Pretoria, the administrative heart of South Africa.

Two people were fatally injured, 19 critically and about 300 – many of whom school children – suffered minor injuries. Passenger Rail Agency of South Africa CEO Mosengwa Mofi said at the time that the most likely cause was the theft of two 25m cables, which disrupted the automated signalling system.

The damage caused by the January crash to the trains and infrastructure was estimated to be R22 million. This excludes the cost of lost productivity due to huge delays in train arrivals resulting in workers arriving late for work.

However, the damage should not just be calculated in terms of money. Physical and psychological injuries to the passengers are unknown. This is just one example of how cable theft impacts the economy, infrastructure and society.

Billions of losses every year
It is estimated that cable theft alone in South Africa annually amounts to a loss of R5-billion per annum. This kind of theft also impacts on the telecommunications system, resulting in a loss of telephonic, internet and other forms of telecommunications connectivity. In its 2010/11 financial report, the national telecommunications provider, Telkom, reported losses due to cable theft of between R165.4 and R183.5 million.

“In certain areas, when cables are stolen four or five times, Telkom refuses to re-install cables – it simply becomes too expensive. Not only does this cut people off from communication with their families and friends, but it can also impact negatively on business and trade,” says Rens Bindeman, Technical Advisor of the Southern African Revenue Protection Association and an expert on the combating of revenue losses. “Utilities are constantly looking for alternatives to copper cables to diminish the risk of theft.”

And while it is clear that cable theft poses serious challenges to the South African economy, non-technical losses also occur in other spheres. “The power distribution network is extremely vulnerable in term of illegal connections, meter tampering, theft of transformers and other illegal activities,” says Bindeman.

Transformers at substations are frequently tapped into to drain the oil in many African countries. This leads to the overheating of the transformer, which in turn leads to power outages and even explosions.

According to Rens Bindeman, the total annual losses for South Africa could be as high as R10 billion. Eskom, the country’s national utility’s official annual figure for losses is estimated at around R4.4 billion. As with cable theft, this loss of income by power utilities impacts negatively on the economy, infrastructure and society.

Impact on society
An example of how illegal activities in the power distribution field affect the ordinary person: In September 2012 an illegal settlement bordering a school in Kayamandi, a township just outside of Stellenbosch was illegally connected to the power grid. It lead to an overload and the school was left without power and lessons were severely disrupted – something that the problem-ridden education system in the country can ill afford.

The South African media also frequently reports on deaths caused when children and adults come into contact with exposed live electrical wires, which are left on the ground when illegal connections are made.

Unfortunately communities often react with great anger when officials arrive to take action, even physically attacking these officials - as happened in 2011 in Tzaneen when Telkom workers were set upon by angry residents. Eskom spokesperson Hillary Joffe said at the time that illegal connections to the electricity grid destabilised the distribution networks leading to over-loading and wide-spread power outages.

When Eskom loses revenue through illegal activities, it looks for ways to recoup its losses. Most often this means that the already overburdened consumer has to pay even more for this service.

African Utility Week
Because of the devastating effects of non-technical losses to utilities, a number of speakers at the upcoming African Utility Week in Cape Town from 14-15 May, will discuss these issues in various conference tracks including Metering, Clean Power, Water, Large Power Users, Investment and Finance, T&D/Smart Grids and Generation.

“Globally utilities lose USD25 billion annually due to illegal activities,” says Claire Volkwyn, programme director of African Utility Week. “These huge losses mean that less money is available to render other necessary services. In South Africa the lost income could have been used to speed up electrification processes and the roll out of communication networks in areas where there is need. We all suffer when losses, due to illegal activities, occur.”

The dates for African Utility Week are:
Exhibition & Conference: 14-15 May 2013
Pre-conference Workshops: 13 May 2013
Site Visits: 16 May 2013
Location: CTICC, Cape Town

African Utility Week brings together the entire ecosystem for the African water and power sector, from high level government representatives, utilities and municipalities, regulators and power pools to consultants, vendors, service providers and energy intensive power users for the purpose of sharing and determining the future development of Africa’s power industry.

Communications manager: Annemarie Roodbol
Office: +27 21 700 3558
Mobile: +27 82 562 7844
Email: annemarie.roodbol@clarionevents.com
Website: www.african-utility-week.com
Postal address: PO Box 321, Steenberg, 7947, South Africa

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