By Siân Green
Black & Veatch is carrying out a remetering and domestic system upgrade project for AES Telasi in the Republic of Georgia. Covering nearly 350 000 customers in the Tblisi area, the project will improve the operations of AES Telasi and provide dramatic reductions in both technical and commercial losses.
In January 1999, AES, a global power company, bought a majority stake in the power distribution company serving the capital of the Republic of Georgia. Now, 18 months on, AES is well on the way to improving the performance of what was once a state-owned utility in a Soviet-controlled state.
Figure 1. Georgia’s power sector has problems typical of former Soviet-bloc countries, including poor energy efficiency
Georgia’s power system has problems typical of former Soviet-bloc states: network inefficiencies; low levels of bill payment; poor energy efficiency and lack of infrastructure maintenance. On taking control of the distribution utility, AES Telasi, AES knew that investment in the company and its assets would be needed to turn it into an efficient operation.
A major part of AES’ plans for AES Telasi is a massive remetering and domestic system upgrade project in Tblisi, Georgia’s capital. Partly financed by the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC), the project will bring accurate metering and billing of electricity consumption and will allow AES Telasi to disconnect customers for non-payment. Due for completion in 2001, the project will dramatically improve the commercial performance of AES Telasi.
AES has contracted international engineering and project management company Black & Veatch to implement the project, which began in 1999. Black & Veatch’s tasks include the design of an electric power metering system for residential and commercial consumers, and to source all the material and equipment required.
Georgia gained independence from the former Soviet Union in 1991 and during the 1990s suffered from social and economic problems as it made the transition to a market economy. In a bid to improve the operation of the power sector and boost the economy, the government of Georgia, together with international organizations, implemented a comprehensive programme for restructuring and reorganizing of the country’s power sector.
The privatization programme began in 1998 with the sell-off of a 75 per cent stake in Telasi, and was followed in 1999 with the sale of other distribution companies, hydropower facilities and thermal power plants. The most recent tender, announced in 1999, is for a five-year management contract for the dispatch and transmission functions of the wholesale electricity market. This tender should be accomplished by the end of 2000.
AES, in addition to gaining control of Telasi in early 1999, also participated in other privatization tenders in Georgia. It acquired units 9 and 10 of a thermal power plant in Gardabani, near Tblisi – now called AES Mtkvari – and also won a 25 year management contract for two hydropower plant, Khrami I and II – now known as AES Khrami.
Figure 2. The project will remeter nearly 350 000 customers in Tblisi
The privatization of Telasi was the first major step in the implementation of the country’s plans for the reorganization of its energy sector, involving the sale of energy companies and assets alongside institutional reforms throughout the whole sector. AES Silk Road, an AES subsidiary, acquired 75 per cent of Telasi shares and in January 1999 took over the management of the company.
According to AES, Telasi was an old-style state organization with a highly centralized management and bureaucratic ways. It was, says AES, a great challenge for it to explore and implement wide-scale reforms in Telasi and turn it into an AES-style operation embedded with the company’s values and principles.
AES Telasi serves the capital city of Tblisi (population 1.4 million) and the surrounding region, providing electricity mainly at the retail and small business level. It has over 380 000 customers, over 90 per cent of which are in the residential sector.
Soon after taking over Telasi, AES began to examine ways to improve the utility’s operation. An IT group began work on implementing a billing programme, and in May 1999 the first bills for electricity use were sent out. Alongside this, almost 150 payment stations were established throughout Tblisi to help customers pay their bills. These measures triggered an immediate increase in cash collection, according to AES Telasi.
AES Telasi launched a wide-scale rehabilitation of its electrical network and again, immediate results were seen, with the number of power failures reduced by 50 per cent within 1999. This rehabilitation work will continue. In the summer of 1999, AES Telasi launched its remetering programme, covering the whole city.
The remetering project is being part-financed by the EBRD and the IFC, the private sector arm of the World Bank. Each bank is lending $30 million to AES Telasi. The loans have 13-year terms, will be drawn over a two year period and have a one-year grace period. The loans will be partly used to finance initial working capital and critical investments in consumer remetering, billing and information technology.
The overall aim of the project is to create a modern, efficient and commercial electricity distribution company. It is expected to improve the efficiency, safety and reliability of distribution to the consumer and greatly improve bill collection, which is necessary for reinvestment and further modernization of the sector. Proper measurement of consumed energy will also promote energy efficiency. The project is also expected to have a wider impact, demonstrating the benefits of private management, and also providing opportunities for contributing to the evolving regulatory framework in the country.
Black & Veatch’s scope of work for the remetering project includes:
- To design a safe, secure and tamper-proof electrical power metering system for residential and commercial customers
- To source material and equipment required
- To engage the services of electrical contractors on behalf of AES Telasi and manage them during the installation work
- To coordinate the activities of all parties.
The project has used a considerable amount of local resources. While the project management staff consists of 14 expatriate managers, engineering and supervision staff, it also includes 96 Georgian engineering, administrative and supervision staff. The Georgian installation contractor resources currently consists of 16 electrical construction companies undertaking $2.3 million or orders, and over 1200 construction workers. Twelve Georgian companies have been contracted as suppliers and manufacturers, providing a total of around $3 million of material and equipment over the project’s duration.
Several major international contractors are also supplying materials and equipment, such as cabling, electrical control and protection equipment, meters and cable accessories. These include Turk Pirelli of Turkey, supplying electrical cabling, and Schlumberger Mecoindo of Indonesia, which is providing residential meters.
The number of customers that the remetering programme is covering is shown in Table 2. By the end of the project, nearly 350 000 customers will be remetered, over 60 per cent of which are residential. Black & Veatch’s target for the end of the year is to have 235 000 customers remetered.
Black & Veatch started work on the project in March 1999. After an initial assessment and design period, the first material procurement contracts were placed in June 1999, and installation work began on a pilot scheme in August 1999. The company started on an initial production target of 10 000 remetered customers per month, but AES Telasi soon asked for this to be raised.
The accelerated programme, which was activated at the end of March 2000, now produces in excess of 5000 remetered customers per week on average, and in June 2000 alone, a total of 23 743 customers were remetered.
According to Black & Veatch, 85 000 high rise building customers have been remetered, and work began on the Italian-style housing and commercial customers in June 2000.
The designs for the new installations are to IEC standards and all electrical materials and equipment have been selected to comply with IEC and/or BS standards. Safety features of the installations include:
- Protection against electric shocks
- Protection against electric fires
- Removal and replacement of dangerous existing installations
- Grounded system
- Improved supply voltage
- Regulated and controlled maintenance
- Protection of customers’ electrical equipment
- Miniature circuit breaker
To improve reliability, full copper installation is being implemented within the buildings, from the distribution boards to the final connection at customer dwellings. The old meters were either at the end of, or had surpassed their life span. New, calibrated meters will give true electrical energy consumption readings. They are Class 2 rated, accurate up to 60 A instead of the older 5-17 A or 40 A meters. Such new meters have a life span of up to 30 years with little or no maintenance required.
Reliability will also be improved by the use of correctly sized fuses in the distribution boards and refurbished transformer kiosks, so that faults will only blow a fuse and will not burn a cable as happened prior to the upgrade.