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Newly electrified homes need a way to measure their consumption and Matsotso Vuso’s meter assembly plant is providing the perfect solution, writes Caiphus Kgosana.
South Africa has set itself an ambitious target of electrifying every home by 2020. Through the National Electrification Programme, run by Eskom and the department of energy, each new installation must be accompanied by a smart, prepaid meter that puts consumers in charge of their own electricity consumption and spending.
This is where Nyamezela Metering, a 100% black female-owned manufacturer of smart meters, sees the massive potential for growth.
“We are seeing huge opportunities in municipalities that Eskom is not supplying [with smart meters], and we are working on a funded model to approach those municipalities. Most don’t have capacity and don’t have the funding,” says Matsotso Vuso, managing director of the Nyamezela Group.
Her company is in the process of winding down an order with Eskom for the manufacture and supply of 450 000 smart meters. The product it supplies is a split prepaid meter, which is smart enabled. For it to be a full smart meter, however, it must be able to send data back to the utility using a data concentrator.
Although the components are manufactured in China through a deal with a technical partner, the meters are assembled at Nyamezela Metering’s plant in Robertville, western Johannesburg.
Vuso, a qualified chartered accountant, started the Nyamezela Group in 2009 as a group of companies operating in the engineering and consulting space. Its main clients were municipalities, including the City of Joburg’s power utility, City Power. That is when it saw a gap on the manufacturing side since most companies that were contracted to supply smart meters were importing them fully assembled.
“We contracted to cut-off customers that don’t pay for electricity. We did technical audits and, in some cases, installations of electricity meters for customers. That is how we developed an interest in manufacturing these meters,” she said from a plush boardroom adjacent to her office on the first floor of the assembly plant.
The plant employs 21 technicians, but is ramping up production to meet demand and is expecting to increase that number to 38 by February next year.
The staff are electrical engineering graduates sourced from universities of technology and technical colleges in Joburg, Ekurhuleni and the Vaal.
New technicians write a trade test and when they pass, are sent on a two-week training course to China as part of the contract with Nyamezela’s technical partner.
Setting up such a technical operation has not been without its headaches.
Vuso and her husband, a former civil engineer at Eskom, had to take out a bond with a bank to finance the purchase of the building that houses the assembly plant.
Once that was done, they had to fund their own initial assembly line and pay for research and development, as well as raw materials, to produce their first smart meter. They then had to pay for the smart meter to be laboratory tested and prove its capability to potential clients.
“When the tender came out, Eskom had to conduct tests of the product and do an accelerated live testing to tell them if the product would last for the duration we said it would last for and do what we said it would do,” says Vuso. “We had to pay for that ourselves.”
The company’s first break came in 2012, when it scored a contract to supply 250 000 first-generation smart meters to the power utility of Zimbabwe. But that contract came with major headaches. Nyamezela had to move operations temporarily to Zimbabwe, but no South African financial institution was willing to advance it a loan to commence operations because of the risks involved.
The Infrastructure Development Bank of Zimbabwe, which funds most of the projects undertaken by the power utility of that country, came to their rescue. But their financial assistance came at a cost.
Nyamezela had to cede to the bank its entire contract and all payments it received from the power utility until the full facility was repaid.
“The risks were many. You almost had to be based there to implement the project. Regarding cash flow, it was a strain because we had to take our resources in South Africa to go and implement a project there.”
But Nyamezela pulled it off and staff gained valuable experience from implementing a major project in Zimbabwe. It put the company on a solid footing with Eskom in South Africa.
“It profiled us as one of two companies that can supply this type of residential meter to Eskom nationally,” says Vuso.
When the tender was issued, the company was ready for it. However, the scope of the South African work required increased capacity. In addition, because Nyamezela was a new customer, Eskom was seeking full guarantees worth the value of the contract it had awarded.
As a result, Nyamezela needed a massive cash injection, and that is when it approached the Industrial Development Corporation (IDC).
“The IDC came in handy. Eskom wanted cash-covered guarantees from a bank and the IDC helped us with that,” says Vuso.
For now, its products are almost entirely installed in newly electrified homes, and Vuso believes there is still a long way to go in getting consumers to understand the value of having a smart, prepaid electricity meter. In Soweto, angry communities have often taken to the streets to protest against the installation of smart meters in their homes.
“There is a lot of misunderstanding from consumers in terms of what the product can do. If you use a conventional meter, you are faced with huge costs at the end of the month. A prepaid meter is a tool that I can control. If I know what my budget is, I can control what I consume instead of getting a surprise at the end of each month. Also, with post-paid meters, if you don’t pay, they cut you off,” she says.
Despite the challenges, Vuso is smart enough to know that there is plenty of growth to come for her company.
A project in partnership with the IDC and City Press
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