The distribution side of the industry involves all elements of the sale of the product to the customers from wires to the house, billing, the collection of the fees, and customer service. Besides customer relations, the main task of the distributor is keeping the local wires in good shape and adding new lines as the customer base grows. Commercial best-practices are crucial in the distribution sector, as this is where the costs of the grid are recovered from the end-users. Technical or commercial losses reduce the revenue of the distribution company and hence its ability to make good on its commitments. This involves the correct pricing of electricity sold to the consumers, not too high but certainly also not too low. It also involves efficient consumption metering and ensuring timely payments. Private sector involvement in the distribution business of electricity can contribute to overall grid solidity by introducing international best practices of commercial operations. Introducing private sector incentives can lead to cost savings and efficiency improvements. A study funded by PPIAF in 2009 analyzing the performance effects of private participation in electricity distribution finds that on average, the electricity sold per worker goes up by 32%, and the bill-collection increases on average by 45%. The resulting increase in revenue can in turn be used to enhance service or reduce prices.



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