The South African Local Government Association (Salga) estimates that municipalities are losing a significant amount of revenue due to fraudulent meters, reports News24.
Current estimates, which do not include all municipalities, indicate that nearly a million meters are not vending electricity.
Eskom likely faces an even larger issue. Salga estimates that municipalities collectively lose more than R8.6 billion annually from fraudulent prepaid electricity meters.
This information was disclosed by Kevin Naidoo, the deputy director-general at the Department of Cooperative Governance and Traditional Affairs (Cogta), during a briefing to the Portfolio Committee on Cooperative Governance and Traditional Affairs about the progress on the Token Identifier (TID) rollover project.
He was accompanied by representatives from Salga and Eskom.
“If one has to look at the revenue loss that has been put out there, it is figures that have not been confirmed, but it is a figure of R8.6 billion that Salga has assessed as revenue lost or foregone through these meters that have been tampered with,” Naidoo told the committee.
His presentation also highlighted the five municipalities that Salga believes have the highest number of non-vending meters.
For context, there are only 260,000 municipal prepaid customers buying electricity in eThekwini, 145,000 in Nelson Mandela Bay, and 154,000 City Power customers. This suggests that between 40% and 55% of municipal prepaid customers in these metros are non-vending.
Silas Mulaudzi, a sustainable energy specialist leading the TID rollover project for Salga, told News24 that Salga has identified nearly one million non-vending meters in municipal distribution zones.
Not all municipalities have reported their non-vending meters yet, so Mulaudzi expects the number to increase.
The estimated revenue loss was calculated by multiplying the number of non-vending meters by a conservative estimated daily consumption of 10kWh and calculating the cost at current tariffs over a year.
Naidoo explained that non-vending meters are not being used to purchase electricity. This does not necessarily mean the meter owner is committing fraud, as a non-vending meter may be faulty or mistakenly listed on a municipality’s database.
However, people who have bypassed or tampered with their meters will also be non-vending.
A design quirk in the vending system of STS (standard transfer specification) prepaid electricity meters has inadvertently revealed the extent of meter fraud in South Africa.
There are over 11 million meters in the country, with roughly seven million under Eskom’s control and 4.5 million under municipalities.
On 24 November, all prepaid electricity meters that have not been updated will stop accepting new credit tokens due to the vending system’s design.
To avoid this issue, two unique 20-digit uptake tokens known as key revision numbers need to be entered into each meter to ensure they operate beyond the rollover date.
Most municipalities decided to issue the key revision numbers to customers when they bought an electricity token. Instead of receiving one 20-digit number, users were issued three: two key revision numbers and one to load the new credit.
Fortunately, most meter users have been able to enter the numbers without much hassle.
However, this system has had an interesting side effect. Because the update numbers are issued when people buy electricity, anyone who has not bought electricity has not received the update tokens. Municipalities and Eskom can track how many key revision numbers have been issued.
As time has passed since the update tokens were first sent out, many municipalities and Eskom assume that anyone who has not received their update tokens is not buying electricity.
While authorities had been estimating the scale of fraud in their distribution zones, the TID rollover has somewhat accidentally revealed the extent of the issue. Eskom has 2.7 million meters yet to be rolled over out of a base of 6.9 million, with little progress on the update for several months, suggesting a significant non-vending issue.
The TID rollover should help curb a practice known as ghost vending. Ghost vending occurs when electricity vending happens outside registered systems.
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