Prepaid meter crisis exposes big R8.6 billion problem in South Africa
The prepaid electricity meter crisis in South Africa has spotlighted a significant revenue loss issue, estimated at over R8.6 billion annually, impacting municipalities across the country.
According to the South African Local Government Association (Salga), about half of the prepaid electricity meters in certain metropolitan areas are suspected of being fraudulent or tampered with, a problem contributing to substantial financial losses for local governments.
As South Africa prepares for a major technological update to these meters, the scale of this issue has come to light, prompting concern about the long-term sustainability of revenue for essential public services.
Kevin Naidoo, the deputy director-general at the Department of Cooperative Governance and Traditional Affairs (Cogta), revealed this information during a briefing for the Portfolio Committee on Cooperative Governance and Traditional Affairs.
Representatives from Salga and Eskom accompanied him as he discussed the progress of the Token Identifier (TID) rollover project.
The issue centres around the critical need for a software update to prepaid meters that use Standard Transfer Specification (STS) technology.
This update is essential to prevent an impending system reset on November 24, 2024, a date when the Token Identifier (TID) will reset.
Without the update, prepaid meters will no longer accept new tokens, rendering them inoperative once the remaining credit runs out.
The TID rollover project, aimed at updating these meters to extend their operational life, requires each customer to input a 20-digit Key Revision Number (KRN) code, which is distributed in phases through existing electricity purchasing platforms.
During the TID rollover project, Salga discovered the larger issue of “non-vending” meters, which are prepaid meters that have not been vending electricity credits through approved channels.
According to Naidoo, the non-vending meters represent a substantial financial leakage, as many of these meters have been tampered with, contributing to the R8.6 billion in lost or foregone revenue that Salga identified.
Data collected by Salga indicates that several municipalities are particularly affected by the non-vending meter problem.
In eThekwini, for instance, 173,850 meters are classified as non-vending despite there being only 260,000 paying municipal prepaid customers.
Similarly, Nelson Mandela Bay has 171,523 non-vending meters out of 145,000 paying prepaid customers, while Johannesburg’s City Power lists 141,446 non-vending meters for 154,000 paying customers.
The municipalities of Tshwane and Maluti-a-Phofung also reported significant numbers, with 135,858 and 117,000 non-vending meters, respectively.
In these metros, the percentage of prepaid meters deemed non-vending ranges from 40% to 55%, underscoring the magnitude of the challenge facing municipalities.
It’s essential to note that a meter’s classification as non-vending does not automatically imply fraud; some meters may be faulty, or there may be data discrepancies within municipal records.
However, those meters that have been intentionally bypassed or tampered with also fall under the non-vending category, exacerbating revenue losses.
Additionally, Salga has yet to receive data from all municipalities, indicating that the number of non-vending meters—and the associated revenue loss—could be even greater than currently reported.
Salga plans to compile data from all municipalities and release a comprehensive report on the financial impact by the end of the month, shedding more light on the extent of this issue.
This situation underscores the urgency of addressing both the technical and security aspects of South Africa’s prepaid electricity system.
The non-vending meter problem not only compromises municipal revenues but also threatens the broader infrastructure funding that local governments rely on.
With the TID reset deadline approaching, municipalities and Eskom must work swiftly to complete the required updates and tackle the issue of non-vending meters, aiming to restore revenue flow and enhance system integrity.
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