The Chairman of the Nigerian Electricity Regulatory Commission (NERC), Professor James Momoh, has projected that about N200 billion would be required to close the huge metering gap in the electricity industry.
He however, said the amount is likely going to rise as new consumers are being captured in the system. Momoh, told LEADERSHIP exclusively that the latest information submitted by all the Distribution Companies (DisCos), indicated a metering gap of about 55 per cent adding that about 4,950,000 customers are not yet metered. He however said that the statistic is changing as more consumers are enumerated and brought on to the billing platform.
“As you can imagine, customers would be provided with appropriation meters taking into consideration the consumption. The amount required to fill in the metering gap depends on the type of meters being rolled by individual DisCos but an initial estimate is about N200 billion”, he said.
Momoh, said however that steps are being taken to ensure the lingering meter issues are resolved as soon as possible. One of the ways he disclosed is through the implementation of the Meter Asset provider Regulations which became effective on April 3, 2018 with a 120 day window for DisCos to complete the procurement process of Meter Asset Providers.
He said upon completion of the procurement, the DisCs would thereafter seek the consent of the Commission to proceed with the Contracting, but noted that with the tremendous interest shown by potential MAPs, and, to engender more competition, the deadline for the completion of the procurement has been extended to allow for the participation of the latest entrants.
The Commission is currently reviewing the reports of the Tender Auditors to ensure that the procurement process was on the basis of transparent and open competitive bids thus ensuring that customers get value for money in the provision of end-use meters and the Commission is working on closing on the procurement process in the first quarter of this year, the chairman disclosed.
To ensure seamless implementation process, the evaluation of proposals submitted by MAP applicants include an evaluation of Technical and Financial capacity to handle the roll-out of the meter and only investors that have demonstrated sufficient capacity to perform would be approved by the Commission
Momoh, further said that the Commission has confirmed that the several local meter manufacturers have an installed capacity well in excess of the prescribed 30 per cent local content and that the minimum local content threshold will be revised upwards to encourage local manufacture and job creation as soon as there is verifiable performance by the local manufacturers.
On the complaint by Discos that current tariff structure is not investment friendly, he said, “Section 76(2)(a) of the EPSR Act provides that prices subject to tariff regulation shall be regulated according to one or more methodologies adopted by the Commission and such tariff methodologies shall allow a licensee that operates efficiently to recover the full cost of its business activities including a reasonable return on the capital invested in the business.
All providers of services in the electricity industry are, by law, entitled to cost-reflective tariffs”. He said that the DisCos under the Performance Agreement signed with the Bureau of Public Enterprises, (BPE) have committed to a capital expenditure plan and this is taken into consideration in determining their respective tariffs.
The chairman also noted that the Transmission Company of Nigeria Plc are about to complete their medium term expansion and the detailed cost would be available after the plan is reviewed and approved by the Commission.
“The Performance Agreement signed between the investors and BPE is underpinning the obligations of both parties. The BPE have already announced that a review will be conducted in November 2019”, he said.
Also speaking with LEADERSHIP, on the issue, managing director/chief executive officer, Momas Electricity Meters Manufacturing Company Limited (MEMMCOL), Kola Balogun, said the arrangement would eliminate the estimated billing, attract private investment into the metering services and close the metering gap through accelerated meter rollout in the power sector.
He however, commended the Minister of Power, Works and Housing, Mr. Babatunde Raji Fashola and the leadership of NERC for the giant strides made in the power sector, most especially on the Meter Asset Providers Regulation, which was geared towards bridging the widening metering gap in the country’s electricity supply industry.
“The metering regulation initiated by the Nigerian Electricity Regulatory Commission (NERC) was commendable, and it is a step in the right direction. The only language electricity consumers understand currently is metering of their premises.
“The meter manufacturers have meters, but we cannot sell it directly to the consumers, so there is a big gap. Now that MAPs regulation has come up, it is another scheme that can be explored so that consumers will be metered as at when due.
“It will allow investors to invest in metering and they will be able to partner with us, the manufacturers, to inject funds into the production of meters. I want to believe that the DisCos will be willing to partner MAPs, which is the most important. I have seen that metering is part of what they (DisCos) hold as their strength to run their operations. Let’s hope that it will be easier for them so that they can face the primary responsibility of providing electricity for the consumers” he said.
Balogun further opined that that: “If the energy channeled towards the conceptualisation of the regulation is sustained during the implementation stage, I think we will have a hitch-free meter deployment for the power consumers and at the end of the day, the consumers will be totally liberated from the so-called estimated billing otherwise known as ‘crazy billing.”
On whether Nigerian banks would be able to grant facility to MAPs as the asset recovery under the new regulation is said to be between 10 and 15 years, Balogun said: “The major issue concerning investment in metering that will span 15 years has to be substituted with a foreign investment. We need major financial institutions like Central Bank of Nigeria (CBN), World Bank, African Development Bank (AfDB) and others to come into that investment profile to guarantee long-term stability.
“Most importantly, we must have sufficient headroom in terms of asset base or creditworthiness of each of us that wants to apply as a MAP and be able to enjoy long-term credit line from such financial institutions. I know this is possible. However, the good thing about this MAP policy is that, there are two ways to go about it. Consumers can as well pay for the prepaid meter willingly and as well they can opt not to pay but spread the payment over a period of time.
“The fact that there is liberty for consumers to pay and install them with prepaid meter instantly will provide liberation for consumers from depending on estimated billing. This will be a great achievement for the government and the consumers”, added Balogun.
Before this regulation, the DisCos have been unable to finance the acquisition and installation of meters, which in turn has allowed high commercial and collection losses to continue to plague Nigeria’s electricity sector.
Also, the DisCos have perpetuated the practice of billing electricity customers on an estimated basis and not on the basis of actual electricity consumed. Previous initiatives such as the Credited Advance Payment for Metering Implementation (CAPMI) Scheme have not yielded the desired result in closing the metering gap. The CAPMI Scheme permitted electricity consumers to acquire and install metres through self-finance. Although, customers made payments for the provision of meters, DisCos were still unable to provide the meters.
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