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T H E S W A Z I L A N D ELECTRICITY COMPANY

FEATURE


Powering THROUGH The Swaziland Electricity Company continues to invest heavily in capital projects despite enormous economic challenges, Managing Director Pius Gumbi tells South Africa Magazine. By Ian Armitage

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www.southafricamag.com


The Swaziland Electricity Company FEATURE

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waziland has been faced with enormous economic challenges, exacerbated by a major decline in revenue from the Southern African Customs Union (SACU). Revenue from SACU – the world’s oldest customs union, comprising Botswana, Lesotho, Namibia, Swaziland and South Africa – contributed 76 percent of the Swazi government’s income in 2009 but dropped in 2010 and is expected to continue declining over the next decade. The global recession has been blamed, and it is within this new framework that the Swaziland Electricity Company (SEC) must operate. “The situation is challenging and we are dealing with a potential decline in business as a major customers result of opting for self-generation. This is due to the high increases in tariffs over the past three years, as well as the decline in the industrial base,” Managing Director Pius Gumbi tells South Africa Magazine. “Our country’s economy has come under severe pressure as a result of the significant decrease in SACU revenue. This has seen the country’s deficit increasing and has

We remain positive that once all the ongoing initiatives are implemented, they will see us remain sustainable in these arduous economic times Pius Gumbi, Managing Director

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The Swaziland Electricity Company FEATURE

forced Government to cut down on certain capital projects and expenditure. “The reduction in economic activity has also had a negative effect on our business growth. The closure of two big companies during the last financial year has had a negative impact on our business. This is reflected in a 4.1 percent decrease in our sales volume.” Despite negative macroeconomic challenges, SEC has performed exceptionally well, he adds. “We are restructuring to ensure we remain sustainable. Emerging challenges include the increasing domestic network, which puts a strain on the quality of supply as well as the decline in large customers. This is due to a proportion of them closing down, others opting for self-generation as well as a decline in the industrial base. “Some elements of the restructuring remain ongoing, in particular the remuneration review, whose objective is to address concerns about manpower costs. We remain positive that once all the ongoing initiatives are implemented, they will see us remain sustainable in these arduous economic times.” SEC is currently in the process of converting 4

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customers from the post paid to prepaid system, a process that is close to completion. It’ll help improve service, Gumbi says. “We want to ensure all of our valued customers are serviced properly,” he explains. SEC – formerly Swaziland Electricity Board – is state owned and sole provider of power in the country. It has, over the last five years, been involved in infrastructure development through out Swaziland. The projects for 2011 included the construction of new substations in Mayiwane and Lawuba and the completion of Manzini North. Manzini North Project was completed on schedule and commissioned in July 2010. The substation is expected to improve the quality of supply in the sub-region. The Mayiwane Substation and the feeder line from Sihhoye were awarded to Consolidated Power Projects (Pty) Ltd in October 2010 and the construction work began with the feeder line in February 2011. This project is expected to be completed by December 2011. SEC is also in the process of building four new depots. Gumbi says the depots will help improve the company’s turnaround time and meet customers’ needs. So far SEC has been able to secure land for such

DU-VAN DEVELOPERS Du-van Developers prides itself of being the main contractor for the SEC Regional Headquarters Building in Manzini. Du-Van Developers is well known for the major structures constructed in the kingdom of Swaziland, we are not only Building Contractors but carryout most Civil Engineering Works e.g. to Water and Sewer Reticulations, Bridges, Dams, Roads and Townships, Retaining Walls and Driveways. No job is too small. We are proud of being involved in the following major projects: •

Swaziland Government - Interministerial Office Block - Mbabane

IDM/ Simpa Campus Kwaluseni

Swaziland Pension Fund Head Quarters - Mbabane

Ministry of Defence Headquarters - Lozitha

RiverStone Mall - Manzini

Siteki Reservoirs – Lubombo Region

NERCHA Head Quarters Mbabane

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     




The Swaziland Electricity Company FEATURE

projects at Madlangemphisi and Sithobela areas. Gumbi says alongside the depots, land had been secured for the building of substations at Nkhaba and Siphofaneni. A project called system re-enforcement had started at Mayiwane where a 66/11kV substation would be built. It would be powered from an overhead line from Sihhoye, which would be constructed on steel monopoles. “These depots will assist in bringing service closer to customers and also in responding to incidents promptly,” Gumbi says. “In response to His Majesty King Mswati III’s call to lead the country towards attaining first world status, we continue to invest heavily in capital projects,” he adds. “During the last financial year, E228 million was spent on new projects, some of which were still in progress at year end. This will ensure stability in power supply.

GM Operations Meshack Kunene displaying some of the equipment at the Manzini North Substation

Construction works at the new Manzini Regional Offices

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“It is regrettable that no progress has been made on the Thermal Power Station Project due to a delay in obtaining the Mining and Exploration Licence from the relevant body. We remain hopeful that this will occur soon as all the Company’s necessary preparations have been concluded.” During 2010/11, SEC recorded a total income of E190 million, a 58 percent increase compared to the previous year. Revenue increased by 22 percent to E973 million, which is attributed to tariff increases. The stability of the local currency, the Lilangeni, against the US Dollar and the Euro helped the Company to keep foreign exchange losses to a minimum. “SEC’s customer complement grew by 13 percent, bringing the total number to 99,631 from a previous customer base of 88,182,” Gumbi says. “SEC continued to roll out the Prepayment Project resulting in 83.4 percent of SEC customers migrating to prepaid supply. “Customer growth by tariff category continued to be dominated by the domestic sector which constitutes 89 percent of SEC’s customers.” One of the biggest threats to SEC is theft. It is losing about E136 million per year as a result of people stealing electricity. Gumbi says the commercial losses of electricity being stolen through illegal connections are a great concern, as a lot of money that would otherwise reduce the cost burden on honest consumers was being lost. People steal electricity through bypassing SEC’s system, which has a negative effect on good customers who end up footing the bill because SEC also has to meet its obligation to Eskom. It is a catch-22 because one of the reasons people steal electricity is because is often expensive. SEC is currently buying units at E221.43 during peak hours and some would find


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Nifty Investments is a venture driven by a team of Swazi directors whose regional approach to business is core to the investments they have made. Nifty Investments believe there is no such thing as overnight success, but conscious determination, strategy and hard work will deliver over a period of time. The core business activities of Nifty Investments are:

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The Swaziland Electricity Company FEATURE

themselves spending in the region of E1 million on just electricity. “It’s a challenge for the country as a whole,” Gumbi says. Swaziland does not currently allocate money in its national budget to address this issue. A potential solution could be amending the Electricity Act, which does not currently have any punitive measures for people who steal electricity.

Customer growth by tariff category continued to be dominated by the domestic sector which constitutes 89 percent of SEC’s customers

POWERLINE We have been providing top quality service at competitive rates to the commercial, industrial, corporate, domestic and agricultural industries since 2002. Our main members are fully qualified with necessary registration and licence numbers, equipping us with the facility to provide our clients with compliance certificates for any installation. All installations carried out by Power Line Investments are in accordance with SANS 10142 specifications and our L.P. Gas installations are in accordance with the LP Gas Association of South Africa (SAQCC No. 501 /502)

Manzini North Sub station

SEC is able to trace people who steal through compilation of a consumption report. A red flag could be raised where someone who had been spending maybe E500 per month suddenly spends less than E50 through tampering with the prepaid meter. To learn more about SEC and the themes in the article visit www.sec.co.sz. END

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Proud to be associated with Swaziland Electricity Company Tel/Fax: (00268) 236 365 11

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VEM VUSISIZWE ENGINEERING & MAINTENANCE (PTY) LTD

VEM (registered 2007) is a multi-skilled engineering and maintenance company. We have proudly worked with SEC to help complete the conversion of conventional credit electrical meters to modern prepayment metering. Contact us today to discuss how our skilled workers can complete your projects. King Mswati III Ave West Smithco Complex P.O. Box 2033 MATSAPHA.

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SEC FEATURE  

SA Mag - Issue 18 - SEC FEATURE

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