Dhaka Electric Supply Company Limited (DESCO) is working to ensure uninterrupted electricity supply to the industries at the end of December this year and also has a plan to seek compensation from Bangladesh Energy Regulatory Commission (BERC) to cope with the losses caused by a fall in electricity sales amid the COVID-19 pandemic.
In an interview with the Daily Sun business editor Md Shamim Jahangir, DESCO Managing Director Md Kausar Ameer Ali shared the latest endeavours of DESCO and its plan to overcome unprecedented coronavirus crisis.Q: What are the challenges you faced during the Covid-19 pandemic and how did you manage to overcome the challenges?
A: The Coronavirus pandemic has become a major challenge for everyone. During the Covid-19, the power sector has been hit extensively. For instance, the electricity demand decreased, especially in commercial and industrial sectors due to the lockdown. The power demand in the industrial sector dropped to almost zero.
On the other hand, the demand in households increased significantly. Also, billing became very challenging. Hence, we couldn't measure the electricity usage for two months--- March and April. So we took the previous meter readings and created average bills for our consumers. But one per cent consumers reported absurd bill against their usage. Consequently, it created a negative impression of us. We have managed to solve all the billing issues by taking every seriously and to address those as fast as possible. Meanwhile, we also solved all the slab issues roughly for 0.1 million subscribers. Although we received direct complaints from only 4000-5000 customers, we took the opportunity to go ahead and solve 0.1 million consumers' issues. Also, we had to pay the expense and we didn't receive the expected amount from our consumers due to the coronavirus pandemic. Subsequently, we faced a significant loss in the meantime. To date, we still couldn't recover from our losses and we didn't get the expected amount of revenue as per the price fixed by Bangladesh Energy Regulatory Commission (BERC). We have decided to send a letter to BERC in this regard very soon.
Q: How are you measuring the compensation required from BERC?
A: Before sending the letter to BERC, we will conduct an in-depth analysis to get the idea about our current status. Primarily, we are not focusing on revising the electricity price at first; instead, we are expecting to get subsidized in liquid fuel. In simple words, when the electricity demand decreased, the usage of liquid fuel minimized significantly and most of the power plants run on low-cost natural gas. As a result, the overall electricity generation cost was minimized. Since we estimate the cost of bulk unit based on the power generation cost, it would reduce the overall expense if the bulk cost is revised properly and effectively.
Q: Are you going to ask for the favour to BERC only for bulk?A: As bulk controls the overall cost of liquid fuel, we are going seek the revision from BERC in this regard.
Q: Do you have any dynamic analysis in this regard? What was the generation cost during the pandemic?
A: We, as a power distributor, don't conduct this kind of analysis because the Bangladesh Power Development Board is solely responsible for making this kind of analysis.
Q: How much electricity you sold during the pandemic, and where the demand situation currently stands?
A: We had 10000 MW demand for electricity on an average in summer, which declined to 7000 MW. DESCO, in general, distributes power to the industries along with hotels and other factories in the capital. Due to the pandemic, the demand in the industry and companies decreased and even most of them couldn't even pay the due bills. However, the demand is increasing now--- which is a good sign.
Q: How would you evaluate the current situation?
A: The second wave of coronavirus is on its way. If the government imposes lockdown again, there is a chance that we might face the drastic fall in demand again. One thing that we have learnt from this coronavirus pandemic is that we should bill after reading the meter and as per the total usage.
Besides, we are striving to provide prepaid meter to all of our consumers because it allows consumers to pay the bill without manual meter reading. For example, we didn't face any issue or receive any complaint from those who have prepaid meters. And from our side, we decided not to cut off the connection and provided the uninterrupted service even if the balance were negative.
Q: You have 1 million subscribers, during the lockdown how many active subscribers you had?
A: During the lockdown, we had 0.3 million active subscribers. Of the 0.3 million consumers, 76,000 subscribers received the credit balance. Interestingly, every subscriber paid their bill on time and from our side, we didn't face any kind of disruption or complain. Unfortunately, we were not successful in postpaid metering and from this, we took the lesson that we will charge our consumers after reading the meter.
Q: When DESCO will ensure cent per cent prepaid meter system?
A: We already have taken the necessary steps to ensure 100 per cent pre-payment system. We will provide prepaid meter to 50 per cent of our subscribers by December this year and are looking forward to ensuring 100 per cent prepaid system for our subscribers by 2022.
Q: DESCO faced issues with billing during the covid-19. How did this happen?
A: DESCO had instruction on how we are going to charge our subscribers and the officials from the DESCO followed that instruction and did the billing by themselves. We found issues in lower-level meter reading process. Other than this, we didn't face any kind of issue in this regard.
Q: Have you taken any action against the over-billing issue?
A: Honestly, we never faced this kind of situation and I want to mention that while it was instructed that we should charge our subscribers based on their average usage but this was not sufficient. Although we planned to charge our consumers on average, different categories of subscribers made it challenging for us. For example, we charge average bill for 50 or 100 and there is no impact on us for this kind of billing.
Moreover, it is not possible to do average billing when the reading coming directly to our system and there is a good reason for this kind of issue. For instance, we usually balance overall charge based on the import cost and overall sell. As the coronavirus pandemic affected the overall demand, the sell decreased drastically.
Also, we had the problem that we were only allowed to bill the households instead of industries. Meanwhile, consumers were not prepared for this kind of situation as well. For instance, during the lockdown period, the electricity demand in households increased for several reasons.
Q: Can you indicate the estimated ‘reading loss’ occurred during the lockdown period?
A: Right now we are working on creating a financial analysis to understand the revenue and loss ratio took place during the lockdown period. But it is quite understandable that we used to sell 10000MW, which reduced to 7000MW during that period. It is worth mentioning that we are bound to bear a fixed cost every month. Moreover, we also didn't earn any profit from the industries because we receive most of our profit from the industrial sector as the government provides subsidy only on household usage.
Q: DPDC earlier sought subsidy to cope with the loss caused by the pandemic, what is your comment on this?
A: I believe that a company should have a minimum capability. Earlier, we used to pay Bangladesh Power Development Board (BPDB) after getting payment and during the lockdown, we couldn't do so. We had a credit line from a bank and we took Tk 2.5 billion loans from a bank to repay the loan.
Moreover, we enjoyed a positive impact on paying BPDB with the loan money; otherwise, we had to pay 1 per cent interest in the due bill. And the good news is we have already paid our loan on instalment.
Q: Has electricity demand increased lately?
A: From October this year, we have noticed an increase in demand which is more and is quite equivalent to normal days. Since the demand increased, we haven't noticed any decline in growth.
However, at present, the constant development work has become challenging for us
Q: Tell us about DESCO’s current projects
A: Currently, we have several projects involving Tk 3.47 billion. Of the projects, we have initiated the SCADA project. Also, we have aimed to bring 33kv distribution connection underground by this year and we are hopeful that we will be able to achieve our goal. This underground power distribution system will help us ensure uninterrupted electricity supply.
Other than the SCADA and underground distribution project, we have kicked-off another project to increase our capacity by 2030. We also have a project from ADB and we are expecting to start the project next year. We have decided to take the whole distribution system underground in phases, especially, in Dhaka city.
To the date, we have discussed with many also the foreign engineers regarding taking the distribution connection underground and everyone showed interest in working on this project. We are looking forward to initiating the project, even as the pilot project from next year initially in Gulshan, Banani, Purbachal Area (Bangabandhu Stadium) and Uttara.
Q: When will you launch the pilot project for taking the whole distribution systems underground?
A: We have planned to launch the pilot project in 2023 at first in Gulshan and Banani. Also, we have already sent a proposal to the Japan International Cooperation Agency (JICA). And we hope that the government will support us to run the project flawlessly.
Q: DESCO is the country’s first power distribution company that got recognition in 1996. Can you tell us the current status of DESCO?
A: To describe the current condition of DESCO, it can be said that DESCO is thriving in effective customer support and providing uninterrupted electricity supply. Gradually, we are also developing to a great extent. Our system loss has also been minimized to an acceptable level.
Q: How much due bills you have right now?
A: At present, Disaster Management owes Tk 1 billion to DESCO which was taken for Bihari Camp's electricity bill. This is the highest due payment we are expecting to receive. Other than Tk 1 billion, city corporations, WASHA also owe money to DESCO. It is worth mentioning that WASHA has agreed that they will pay the bill every month as per their monthly usage. These initiatives show that we are recovering gradually.
Q: You mentioned that your system loss has dropped to 7 per cent. How much system loss is acceptable to you?
A: Although the current system loss is 7.1 per cent, we are looking forward to minimizing it to 6 per cent. Moreover, if we can implement all the projects successfully and effectively, we can expect the system loss to become less than 6 per cent and sustain at 5 per cent. We have successfully minimized the system loss to 6.85 per cent up to June 2020.
We are expecting the system loss to decrease to 6.9 in the current month and gradually it will decrease in the coming days. One more thing I want to mention is we will take the whole distribution system underground while keeping the system loss in mind. We targeted to reach as minimum system loss as possible.
Q: What is your current capital or revenue?
A: At present we don't have any kind of profit because we are getting the amount for the amount we are selling. It became a loop--- 'expense as per the income.'
Q: How many shares do you have in the capital market?
A: We have 23 per cent shares in the capital market and recently we have given 10 per cent dividend against our shares.
Q: Do you have any plan for the Mujib Year?
A: We planned to set up Mujib Corner at our assembly, promote Mujib Year, and also bought four vans. We are going to provide face-to-face support to our subscribers and launch call centres this month to ensure maximum satisfaction of our subscribers. Our goal is to make our services more convenient and customer-oriented.
An example can illustrate our activity for our consumers. At present, consumers can subscribe and take all types of service through online.
Besides, we pledge to become more customer-oriented power distributor in the Mujib Year. We are also looking forward to making our services international standard and I believe that we will be able to achieve this goal by 2025.