Forex: Meter Producers Under Pressure To Sustain Supply

The persistent foreign exchange scarcity is putting meter producers under pressure to sustain supply, with constant price fluctuations affecting its operations negatively.

The naira remains under pressure despite the government’s efforts to bring foreign-exchange trading back into public view and narrow the gap between the official and unofficial rate of its currency

This is as the Central Bank of Nigeria (CBN)  released $500 million to various sectors. This comes barely a week after the bank paid approximately $2.0 billion to settle outstanding commitments across manufacturing, aviation, and petroleum sectors.

Acting director of the corporate communications department at the CBN, Mrs Hakama Ali, said the action was in line with CBN’s determination to address the backlog of verified foreign exchange transactions, which she said the management of the CBN was committed to settling within a short time frame.

Ali reiterated the assurances of the CBN governor Olayemi Cardoso, saying the CBN had begun implementing a comprehensive strategy to improve liquidity in the Nigerian foreign exchange markets in the short, medium, and long term.

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“As the governor said, the CBN’s focus is on addressing fundamental issues that have hindered the effective operation of the Nigerian FX markets over the years,” she added.

While noting that the forex market reforms were designed to streamline and unify multiple exchange rates, foster transparency, and reduce arbitrage opportunities, Sidi Ali expressed confidence that a stable exchange rate would boost investor confidence and attract foreign investment.

She urged all participants in the market to play by the rules, stressing that transparency in the market would enable the fair determination of exchange rates and, by extension, guarantee stability for businesses and individuals alike.

Recall that the CBN, over the past few months, has released various sums in its effort to clear the backlog of foreign exchange liabilities.

Speaking under the aegis of Association of Meter Manufacturers of Nigeria (AMMON) the producers has decried foreign exchange fluctuations Nigeria has been facing foreign exchange demand pressure due to declining oil production, which is the country’s largest export

The body representing the interests of electricity meter manufacturers, therefore, urged President Bola Tinubu-led government to address the challenges posed by fluctuations of foreign exchange in the metering sector.

This is even as the association appreciated the recent establishment of the Presidential Committee on Mass Metering, under the leadership of the minister of Power, Chief Adebayo Adelabu, describing it as a bold step towards addressing the pressing challenges in the metering sector.

AMMON, which looks forward to collaborating with the committee, said that the foreign exchange fluctuations have impacted negatively on the operations in the sector.

It stated that: “AMMON has expressed her concern over the challenges posed by foreign exchange fluctuations as it impacts the continuous supply of electricity meters to the Nigerian Electricity Supply Industry(NESI). As the demand for meters continues to grow, the association emphasises the urgent need for regulatory measures to address the issue of a fixed meter price when all input costs are affected by increasing inflation and foreign exchange movements. This attention is urgently required to ensure the seamless provision of meters across the nation.

“This strategic move would not only facilitate the sustainability of the meter manufacturing industry but also ensure that end-users have access to reliable and affordable electricity meters.  As such, AMMON calls on regulatory authorities to consider the liberalisation of meter prices, allowing manufacturers to adapt to market dynamics and maintain a steady supply of meters.

“If urgent action is not taken, AMMON warns that there will be a critical shortage of meters available for installation within the next 14 days. The impact of delayed intervention could exacerbate the existing challenges faced by the NESI and hinder progress toward achieving widespread access to electricity meters.

“AMMON urgently calls on regulatory authorities and stakeholders to prioritise and expedite measures to address the impending shortage which is occasioned by a three month, and growing, supply chain gap by our estimates. If this action is taken, it will ensure the continued and uninterrupted supply of meters to meet the nation’s growing demand for reliable electricity services barring the short gap already realised.

“Furthermore, AMMON advocates for collaboration between regulatory bodies and the Nigerian Electricity Management Services Agency, NEMSA, to develop cost-effective meter specifications tailored to NESI requirements. By working closely with NEMSA, the association believes that it can contribute to the development of standards that promote affordability without compromising quality and reliability.”

It added that “AMMON remains committed to supporting the nation’s power sector and believes that these proposed measures will contribute to a more robust and resilient electricity metering ecosystem. AMMON looks forward to engaging with relevant stakeholders to implement these recommendations and address the challenges currently faced by the meter manufacturing industry in Nigeria.”