29 June 2007

Those Casureco II prepaid meters

My column for this week's issue of Vox Bikol.

IN THE raging controversy at the Casureco II over an alleged P300,000 illegal disbursement used in the recent partylist election, one item that captured my interest is the purchase of some 100 prepaid meters by the current management, to the tune of more than P2 million, two years back.

Up to now, they remain unused, allegedly because of a software glitch.

Are we missing the forest for the trees here?

For a mere software glitch, the Casureco II management is letting a substantial capital investment, one that can bring it to stronger financial stability, rot away. This, I think, is an act more criminal than the rest.

Prepaid electricity is nothing new. Actually, it is a fact of life in such countries as Nigeria and South Africa. Tertia Albertyn, a 38-year old mom who won in the 2007 South African Blog Awards for the best writing, describes it for us:

“Pre-paid electricity…is a fairly new thing here, last 10 years or so, the older houses still have the system where you pay for your usage at the end of the month, but all the new houses have pre-paid boxes. The electricity people come and install a pre-paid meter in your house. You then buy virtual tokens for the meter, either by taking your electricity card (like a swipe credit card) to the local grocery store, or 7/11 etc, or via the internet, or via your cell phone. You decide how much you want to purchase. 10 bucks, 100 bucks, 500 bucks, whatever amount. You decide the amount and you will be issued with a 20-digit number (the virtual token) that you then have to enter into your meter. Once you hit enter on your meter (it is a small box, about A5 size, mine is in my garage), the box sends a signal via wireless radio transmission to a receiving beacon, the token is verified, and access to the purchased amount of electricity is returned to the meter. Voila! You have electricity. No mess, no fuss.”
And what are its advantages? The Tide, a Nigerian online publication, explains:
“Ordinarily, there are many reasons why a prepaid meter should be preferred. Apart from the fact that it takes away the burden of having to prepare monthly bills for consumers, the system compels consumers to develop a positive attitude towards payment. It also puts an end to the issues of over billing, wrong disconnection and reconnection fees usually associated with the current system. Prepaid system also enables consumers to imbibe a disciplined attitude towards energy consumption.

“People will no longer be careless leaving their electrical appliances on, even when they are not in use.”
The prestigious Wall Street Journal agrees in a recent article about a program pilot-testing pay-as-you-go (which is how Americans call “prepaid”) service that US utilities are experimenting on to encourage energy conservation. This only goes to show that in terms of innovations and their adoption, Americans are many times laggards than the developing world.

Actually, this concept needs no explaining, as the same principle governs prepaid cellular phone services. And here, Philippine telcos have been internationally recognized for their innovative load-sharing and mobile payment schemes: Smart’s PasaLoad and Globe’s G-Cash. And their prepaid subscribers market cannot be sneezed at: they account for 99% of PLDT’s and 95% of Globe’s mobile subscribers.

A financial manager worth his salt will see the advantages of a prepaid system a kilometer away: just imagine the cash flow benefits it brings, where payments for its service will be made up front, instead of being at the mercy of the traditional billings system. And we haven’t even considered the operational savings it will generate: from the manhours spent in printing the individual statements and distributing these to customers, to disconnecting lines when accounts are not paid by due date.

Given these realities, the people who should do a lot of explaining are the Casureco managers. What is holding them back from fixing that software glitch (assuming that indeed is the cause) and deploying these prepaid meters? Or is this continuing inability to shape up and improve efficiency part of a bigger scheme to set the coop up for eventual failure, paving the way for its sale to private interests?

Graphic nicked from WSJ.com.