How a DISCOM achieved 100% Collection Efficiency & 90% Payments Online
Power Distribution companies (DISCOMs) continue to struggle with high commercial losses due to various factors such as theft, technical losses, poor billing, and collection efficiency. It is worthwhile to mention that commercial losses of power DISCOMs in India stood at 21.37% in 2019-20 against 24.83% in 2015-16. Although this is a significant improvement, losses are still high, and the financial health of DISCOMs remains a major concern for the power sector in India.
Poor collection efficiency is one of the main reasons for high commercial losses in DISCOMs. In India, many consumers do not pay their bills on time, and DISCOMs have limited resources to collect outstanding dues. This leads to a vicious cycle of delayed payments, increasing interest, and penalties; resulting in a huge backlog of unpaid bills.
The collection efficiency of UHBVN was 94.70% in 2015-16 when we were entrusted with a contract to provide an IT solution to collect energy and non-energy bill payments with a primary intent to improve collection efficiency. Upon analysis, it was found that one of the causes was that bills were not rendered or incorrect bills were rendered to the defaulting consumers. In certain cases, consumers had migrated to a different place and they were unable to access their bills. Then, in certain other cases, sub-divisional offices were far off, and due to the lack of time available at the disposal of the consumer, he was unable to make a payment on time. Apart from this, there were consumers who relied on agricultural income and opted to make payments after harvesting their crops.
After many deliberations, Bhugtaan was customized as per the demographics of the UHBVN and deployed. The application notified the consumers about generating their energy bill with the due date and amount due through text messages. Then, it provided a web and a mobile interface for consumers to make payments from anywhere and anytime using multiple payment options viz. credit cards, debit cards, net banking, money wallets, NEFT, RTGS, IMPS, etc. In addition, it enabled consumers to make payments from sub-divisional cash counters, post offices, neighboring retail stores, seva kendras, NLEs, and bill payment machines. Bhugtaan also came with a mobile application that enabled Nigam cashiers to carry out a door-to-door collection of bill payments. These initiatives not only enhanced the collection efficiency to 101.46% in 2021-22 but also reduced the considerable cost of collection and cost of funds.