Despite the promise of free meters under the National Mass Metering Programme (NMMP) announced by the federal government in 2020, electricity consumers are still finding it difficult to obtain meters, whether free or paid for, as massive racketeering is putting a drag on the scheme.
LEADERSHIP findings have revealed that one year after the scheme was flagged off, only 750,000 meters have so far been procured and deployed.
It was discovered that officials of distribution companies who should give out the meters have turned the scheme to a racketeering operation, issuing meters to consumers who are able to provide the highest kickbacks even after paying for the meters.
Meanwhile, a major crisis is staring at Nigeria’s unstable electricity industry following independent gas producers’ threat to cut gas supply to the sector.
LEADERSHIP independently uncovered a discussion among the producers that exporting their produced gas appears to be the only profitable option following the decision of the federal government to cap gas price supplied to the sector.
As part of the process to stabilise the sector, the government has taken various measures to encourage investments in energy efficiency through policies, strategies and support provisions.
On the meter racketeering, experiences are rife of many consumers who have paid,yet their meters were not forthcoming.
An electricity consumer in Kuje Area of Abuja told LEADERSHIP that after paying the official amount for eight meters, he was told the meters were not available. But after he offered a kickback to the official, the meters materialised.
Another person who narrated her experience said she paid for the meter as well as gave kickback to one manager and was told to come back another day to get the meter. By the time she went back to collect it, the manager had been redeployed and the new manager refused to release the meter, asking for his own kickback.
LEADERSHIP findings also revealed that many consumers are still paying for meters even though they should receive the meters for free under the NMMP.
However, the Nigerian Electricity Regulatory Commission (NERC) justified the payment by saying that those paying were getting their meters under the Meter Assets Provider (MAP) scheme which was introduced in 2018. NERC says that both the MAP and NMMP are running concurrently.
Under the NMMP scheme, the federal government said it would roll out six million meters for all connection points on grid without meters over the next 18 to 24 months, and was estimated to impact 30 million consumers nationwide.
Distribution of the first one million free meters in the first phase commenced in October 2020. This was to be implemented within six months and achieved by April 2021.
However, many Nigerians are yet to get meters, leaving them in the hands of power distribution companies (DisCos) who estimate their bills and, most times, overcharge them.
On January 8, 2021, NERC released a report on meter deployment status as of November 2020.
It put the number of meters contracted through the Meter Asset Providers scheme and National Mass Metering Programme at 7,588,972, indicating that over 7.5 million customers had need for meters at the time.
A combination of meter deployment by both schemes showed that about 1.26 million meters had been deployed out of the over 7.5 million unmetered customers captured by NERC.
Investigations revealed that most DisCos lack adequate capacity to meet up with the period scheduled within the first phase.
Also, there is a dearth of trained meter installers across the country and that has limited the deployment process.
President of Consumer Protection Network, Mr Kunle Olubiyo, who spoke with LEADERSHIP, lamented the slow pace of implementation of the NMMP, saying many consumers are unable to get meters.
Olubiyo said the picture of the Mass Metering programme is not clear as several millions of people are yet to be metered.
“People are ready to pay and be refunded through a token they vend monthly. Today people apply and yet they don’t get a meter. The truth is that the government needs money to do other things. The money being deployed here should be used to strengthen the grid system and improve transmission capacity while customers pay and get metered,” he suggested.
Olubiyo advised government to allow consumers to pay and procure meters as the present arrangements have shut out those who are in dire need of meters.
Chairman, Momas Electricity Meters Manufacturing Company Limited, Engr. Kola Balogun, however, said that the first phase (0) was a success story for indigenous meter manufacturers.
Balogun told our correspondent that with a target of one million meters across the country, indigenous manufacturers produced 60 per cent of the 750,000 meters that were delivered to DisCos in just under eight months.
He said the phase provided indigenous companies with the opportunity to build their capacity and were able to surpass the 30 per cent local content component under phase 0.
Balogun, however, called for forex intervention to enable them procure raw materials as the government prepares to launch phase 1 of the scheme.
He also identified lack of skilled installers as a major factor that inhibited full implementation and realisation of the target set under phase 0.
He said the scheme increased local installation capacity and called on the government to increase local content level as it prepares for the second phase (known as Phase 1) of the National Mass Metering Programme.
He said though the Nigerian electricity sector regulator, NERC, has conducted extensive consultations and stakeholder management, and has revised its metering guidelines, it is important to ensure initial challenges and gaps are closed.
On his part, Prof. Barth Nnaji, former minister of power, noted that one of the key successes of the NMMP initiative is how rapidly it has increased private sector interest in investing in the local meter assembly, manufacturing and installation space.
Nnaji said it is the responsibility of the federal government to compel the DisCos to ensure consumers are adequately metered.
He explained that it should be a contractual agreement between the consumers and DisCos which will enable electricity consumers to pay precisely what they consume.
The federal government has said it will this month move to the second phase of the mass metering programme despite failing to achieve the projected objectives in the first phase.
LEADERSHIP reports that the second phase of its National Mass Metering Programme (NMMP) is intended to get four million Nigerians connected to the grid and make electricity distribution more efficient.
The programme would ensure that consumers were billed appropriately for the electricity they consumed through the installation of free meters in unmetered households and business premises.
The NMMP is fully funded by the World Bank and the Central Bank of Nigeria
However, data from the sector indicated that in March this year, the power sector lost about N6.8 billion to challenges related to insufficient gas supply to the power generation companies, GenCos, among other constraints.
Last year the Transmission Company of Nigeria, TCN, attributed epileptic power supply in the country to gas constraints, which reduced the production capacities of generating companies (GenCos).
Some of the affected thermal power stations were Sapele NIPP, Olorunsogo NIPP, Ihovbor NIPP and Azura Edo, Egbin, Sapele, Delta, Geregu, Omotosho, Olorunsogo, Geregu NIPP, Alaoji NIPP, Omotosho NIPP, Odukpani NIPP, Okpai and Omoku power generating plants.
The latest quarterly report of NERC shows that gas supply shortage remains a challenge in the sector.
To worsen the scenario, the producers are considering exporting their gas rather than supplying at a loss to the power sector.
“Gas continues to dominate the electricity generation mix accounting for 81.53 per cent of the electricity generated during the second quarter of 2020. This implies that approximately 8.15kWh of every 10kWh of electric energy generated in Nigeria in the second quarter of 2020 came from gas,” the NERC report stated.
But Prof. Barth Nnaji sees such a decision as running contrary to Nigeria’s domestic gas utilization policy.
Nnaji, in an interview with LEADERSHIP, said the producers do not own the gas and would not decide where to sell the gas.
He said that the license to explore oil and gas is granted by government and there is a contractual agreement on the supply mechanism, and that the gas utilization and commercialization policy is to boost industrialization and generate jobs. However, he said that if pricing becomes a constraint then government and producers should find a solution.
According to him, if the government in its wisdom chooses to place a cap on the gas price, then through subsidy it can make up the shortfall the producers would likely suffer.
On her part, the executive secretary, Association of Power Generation Companies (APGC), Dr. Joy Ogaji, said the threat is misplaced in the sense that the GenCos serve as debt collectors to gas suppliers.
“I am not aware of their discussion but the GenCos do not make money from gas supply. We remit whatever supply they make based on the existing price regime. The invoice is there and whatever they supply we do collect and remit,” Ogaji stated.
During the second quarter of the year, minister of state for petroleum resources, Timipre Sylva announced a downward review of gas-to-power for domestic supply obligation (DSO) by 32 cents to $2.18/MMBtu with immediate effect.
This generated a quick response from the Nigerian Labour Congress, NLC.
According to Ayuba Wabba, NLC president, the $2.18 new gas price violates the agreement between the federal government and organised labour.
He said the price runs contrary to the submission of the technical committee which submitted its final report to the principals at the close of January 2021.
“The meeting of Principals convened on 22nd February, 2021 and discussed the report. The Principals accepted among other recommendations that “necessary actions should be taken to use efficiency to bring the gas price to below $1.50 per MMBtu,” said Wabba.
Wabba said the report was further corroborated by Chris Ngige, the minister of labour and employment, who said that electricity tariff ought to go down considerably.
“Congress also wishes the Nigerian public to know that about 80% of electric energy generated in Nigeria is from thermal stations, which are powered by natural gas,” NOC said in the statement.
“In fact, the GenCos consume over 70 per cent of domestic gas production. Whereas the GenCos are required to pay as much as $2.50 per standard cubic feet (SCF), other gas users, however, get the same at lower rates, ranging from $1.50 to $1.70 per SCF. The worn explanation for the incongruous high differential was the lack of timely payment by the GenCos for the gas supplied.
“In other words, the lack of payment discipline and certainty was implicated as a major contributing factor; that despite GenCos accounting for over 70 per cent of the consumers of domestic gas, rates are higher for power generation.”
Wabba said the NLC also rejected the denomination of domestic gas pricing to GenCos in foreign currency, stressing that the congress insisted on a payment regime in naira not only for domestic gas but also all energy associated products, which should be denominated in local currency.
Wabba explained that the government representatives at the nerngotiating meetings were convinced by the argument of the NLC and unanimously accepted that the current practice of gas pricing in US dollars would be discontinued to enable gas supply to GenCos to be made payable in naira.
“From the foregoing, Congress is increasingly hardput to repose confidence in the discussions and agreement at the meetings. The resolutions of the Principals cannot certainly be the basis for the minuscule gas price reduction announced by Minister Timipre Sylva,” Wabba noted.
“Consequently, Congress demands of the Federal Government to reduce the pricing of domestic gas supply to GenCos to less than $1.50 per SCF.
“We also demand that payment for gas by GenCos should be denominated in Naira. Furthermore, the gas companies should be included in the Central Bank of Nigeria (CBN) and Nigerian Electricity Service Industry (NESI) payment waterfall to guarantee payments for gas and contract sanctity with GenCos.
“Finally, Congress demands that the Federal Government should respect the agreement it reached with Labour on electricity tariff. Congress remains implacably committed to the ultimate reduction of electricity tariffs by N15 per kilowatt-hour by December 2021 as contained in the agreement.
“Congress hereby serves notice that the posture of the Federal Government to flout agreements is completely unacceptable and would be resisted.”
LEADERSHIP reports that the referenced price applies to gas supplied to on-grid power plants under the Domestic Gas Supply Obligation (DSO) framework managed by the Gas Aggregation Company of Nigeria (GACN) in conjunction with the Department of Petroleum Resources, DPR.
The DSO volumes are assigned to upstream producers by DPR annually, while GACN matches the producers to consumers by issuing gas purchase orders (GPOs) for the DSO volume. The producer, consumer and GACN execute GSAAs to govern gas sales and purchase under the DSO framework
However, GenCos buying gas under WSWB (willing seller willing buyer) will be under pressure to push for reduction in gas prices to preserve margins
Consequently, producers argue that the proposed gas pricing may impact negotiations with prospective gas-to-power customers who could use it as a basis for pricing
According to the producers, this will dampen investors’ appetite to invest in the domestic market and trigger increased focus on export rather than supply to the domestic market
Our correspondent reports that what this implies is that power plants will not receive sufficient gas and this will worsen the power situation in Nigeria, and producers insist on a free market regime or they explore other sources to sell their gas.
Gas to power is regulated in Nigeria by the federal government and what this means is that it fixes benchmarks for gas pricing and the cap is $2:50.
Various producers negotiate their gas price and in certain instances, some gas producers price above the benchmark based on WSWB. Gas price for industrial customers is not regulated and driven purely by WSWB. However, what the federal government’s directive is capable of doing is that while the existing contract remains, new customers may not be willing to pay above what the government has prescribed.
On his part, Kingsley Okotie, spokesman of Africa’s biggest thermal power plant, Egbin Power Plant, said he is not aware of the producers’ threat but would respond when the information is clear.