The Northern Regional Electricity Distribution Company (Nored), which supplies electricity to 90 000 customers in eight northern regions, is taking significant steps to address financial losses caused by underbilling and illegal connections.
Recent audits have revealed alarming figures that highlight the urgency of these initiatives.
In an audit of large power users, Nored discovered that 93 out of 605 meters were underreporting electricity usage. This oversight has led to an estimated loss of around N$73 million over three years.
These figures were revealed by one of Nored’s executives, Kudumo Siremo, duringthe 9th edition of the Namibia Electricity Supply Industry Forum, last week at Otjiwarongo in the Otjozondjupa region. This year’s forum which followed a successful event held in Oshakati in 2022, gathered key stakeholders from across the electricity sector. He noted that the company has managed to issue invoices totalling N$61 million to clients for the undercharged amounts. Some customers have begun to make payments, which indicates a positive response to the audit efforts.
Deepening the financial woes of Nored, the executive revealed that the company identified 379 cases of bypassing prepaid meters, resulting in fines and back-charges amounting to over N$13 million.
However, only about N$3 million has been collected so far.
This situation underscores the challenges Nored faces in recovering lost revenue and enforcing compliance among users.
“And we will keep on doing this exercise until all our meters are done. We believe we will do it correctly and make sure things are corrected, and meter technicians are trained properly because some of the errors there are based on programming and wiring. So, some of them are completely employee issues – not maybe having the right skill, or not being informed correctly,” he stated.
Good path
Meanwhile, Nored is on a promising path to recovery, showcasing significant improvements in its financial performance as it aims for a brighter future. The company’s revenue growth has surged to 22% as of June 2024, a stark contrast to the mere 1% growth recorded around the same time in 2022.
Nored’s gross profit margin has also seen a remarkable increase, climbing from 25% to 33%, while the operating margin has improved from 1% to 7%.
This upward trend in profitability is a positive sign for the company, which has faced numerous challenges in recent years.
Operational costs have been effectively reduced from N$1.34 to N$0.80, demonstrating the company’s commitment to efficiency.
Additionally, network losses have decreased significantly from 14% to 9%, with a target of maintaining losses at 10% or less. In terms of debt management, Nored has successfully halved its outstanding obligations to NamPower, with plans to settle the remaining debt by June 2025 under an agreed arrangement.
Last year, Nored stated that it was trying to find a way out of its debt crisis.
NamPower managing director Kahenge Haulofu at the time said the corporation was owed a staggering N$1.5 billion, with Nored being one of the contributors.
“We have never had a RED (regional electricity distributor) in serious debt like what we find at Nored. We are looking as to what could be the reason because we believe REDs are the solution. We are proclaiming that REDs should be established in the south to mount skills to manage the situation of the southern parts of the country better,” he stated.