Spotlight Stories
NESG’s allegations, malicious attempt to tarnish the economic recovery program- CBN
The Central Bank of Nigeria (CBN), has reacted to the allegations levied against it by the Nigeria Economic Summit Group (NESG) describing it a “malicious attempt by the group to tarnish the economic recovery program of the apex bank.”
The CBN, while admitting to taking extraordinary measures in order to stabilize the economy, fact-checked the issues raised by NESG.
Contrary to NESG’s allegation that the recipients of intervention funds did not go through required processes, the apex bank insisted that the beneficiaries went through an expansive process of Participating Financial Institution (PFI), and additional assessments by the CBN before disbursements.
READ: What you need to know as banks rebrand CBN intervention funds to woo borrowers
On FX, it explained that the CBN operates two windows: wholesale and retail.
It stated, “In wholesale, Banks are allocated FOREX weekly, which they allocate to their customers, reflecting customer size and distributive efficiency and that the CBN does not know the final buyers of this FX.
“In Retail, the banks scrutinize and submit a detailed list of applicants who are then allocated FX based on availability.”
The group had earlier raised concerns over some of the measures taken by CBN to support the stability of our financial system and enable faster economic recovery.
READ: CBN bars Payment Service Banks from accepting forex deposits
Backstory: The contended article titled, “Matters of Urgent Attention” signed by the CEO, NESG, Laoye Jaiyeola, pinpointed critical issues that should be urgently addressed.
- The inappropriate policy clarity with which the CBN has conducted the foreign exchange transactions, loan disbursements (intervention funds), and price-fixing
- The immunity conferred on CBN officials via the ‘repealed and re-enacted’ Bank and Other Financial Institutions (BOFAI) Act 2020 recently passed by both houses of the National Assembly
- Rate distortions caused by some distortions in the liquidity and interest rate management of our financial system
Meanwhile, in a strong response, the apex bank started by rationalizing the dire impact of the pandemic on the state of the economy, “…the imposed lockdown measures resulted in depressed economic activity in the first half of the year,” noting that except for China and Vietnam, “advanced, emerging, and frontier market economies all experienced significant negative growth in H1 2020, and some are currently in recession.”
READ: BDC operators reveal the major challenge with resumed sales of forex by CBN
Call to Action
The NESG urged the Federal Government to re-open the borders given its negative impact on trade and employment and ratify the African Continental Free Trade Agreement (AfCFTA), so Nigeria can move to full membership status and take its rightful place in subsequent negotiation rounds.
Also, an economist, Mr. Nonso Obikili, via his Twitter handle knocked the CBN stating, “on various intervention programs, in the last decade @cenbank has not published one proper academic style research on the impact of its various interventionist programs. No actual data either. The best way to demonstrate impact is with research and not press releases.”
READ: With nowhere to invest, Nigerians keep N36 trillion in banks and low yielding assets
The CBN, however, expressed disappointment at NESG’s recommendation, noting that it is not against border reopening but that the real reasons for the border closure which includes the smuggling of fake drugs, arms, and other goods; creating a viable market for the produce of our local farmers, must not be forgotten.
To read the press statement in full, click HERE
Energy
Nigeria’s long road to metering: Who bears the brunt?
While consumers remain unmetered due to the inefficiencies of the Discos, the Discos continue to charge outrageous estimated bills.
One of the many challenges facing Nigeria’s electric power sector is the issue of metering. From being a pre-privatisation problem, lack of metering has evolved to be a more sophisticated post-privatisation feature skirting the corridors of the Nigerian power sector for the last few years.
Statistics show that the number of unmetered customers across Nigeria has continued to rise. In 2016, a metering status report from the Nigerian Electricity Regulatory Commission (NERC) showed that about 3 million of the registered accounts of customers were unmetered. In 2017, this number grew as NERC reported that over 4 million unmetered customers. In 2019, a NERC report showed that over 5 million Nigerians were unmetered and this number has continued to rise.
In a bid to address the metering gap, in 2013 at the onset of the privatised electricity sector, the Credit Advance Programme for Metering Implementation (CAPMI) scheme was launched. The purpose of the scheme was to relieve the Distribution Companies (Discos) of the burden of financing the cost of the meters. As such it enabled the customer to pay for the meter upfront while the Disco amortised the cost through electricity supplied to the customer over a period of time.
READ: Nigerian firm set to raise $1.2 billion to purchase electricity meters
The CAPMI removed the initial capital outlay for financing meters from the Discos and Discos were to provide the customer with a meter within 45 days of payment. However, the scheme failed to deliver on its objective. As noted by the then Minister of Power, Works and Housing, Babatunde Fashola in 2016, “Discos that collected money from their customers to procure and install meters at their homes have mostly failed to do so”. The CAPMI was eventually discontinued in 2016, leaving the sector with at least a 50% metering gap.
In April 2018, the Meter Asset Provider (MAP) scheme was introduced by NERC in a bid to address the same problem. Under this scheme, there were to be third party meter suppliers engaged by the Discos, effectively removing the burden of providing meters from the Discos. The Discos were mandated to engage MAPs within 120 days.
READ: Consumer Complaints: DisCos received 203,116 complaints in Q2 2020 – NERC
The scheme, unlike the CAPMI, ensures that the customer received a meter from the MAP without making any upfront payment, while the payment was sculpted into the customer’s monthly electricity tariff as an energy charge until it was fully amortized. The scheme also gave customers the opportunity to choose to pay upfront and get their meters installed within 10 days in return for energy credits. It turned out that more customers were taking the alternative approach rather than the original approach as the rollout was not very favourable to those who chose to go the energy charge amortization route.
The MAP scheme has not been as successful as was hoped, with Discos missing deadlines to engage MAPs and MAPs facing the challenge of increased import tariffs and lack of local manufacturing capacity. In October last year, the Central Bank of Nigeria (CBN) launched its National Mass Metering Programme (NMMP) with a view to funding the local production, and in some, cases importation of meters by meter providers and Discos. Perhaps this was a case of putting the cart before the horse, since the facility came after the Federal Government had revised electricity tariffs upward of a 100%, not considering the fact that a teeming number of customers who had subscribed under either the CAPMI or the MAP scheme were yet to receive meters.
READ: FG to inject over N198 billion on capital projects in power sector in 2021
With the addition of the NMMP facility to CBN’s existing N213billion Nigerian Electricity Market Stabilisation Facility (NEMSF) advanced to the Discos in 2014, significant progress is yet to be seen from this facility gathering. While it is hoped that the NMMP will help close the metering gap, the brunt of the lack of metering since the privatisation of the sector has always been borne by the consumers, many of whom have had to pay exorbitant prices for meters under previous schemes, with nothing to show for it.
Interestingly, while consumers remain unmetered due to the inefficiencies of the Discos, the Discos continue to charge estimated bills even after the February 2020 NERC Order that capped estimated billing. While the Order may have merely reduced incidences of outrageous bills, Discos continue to bill customers outrageous amounts.
READ: NNPC to boost power generation with additional 5,000 megawatts to national grid
It is unfortunate that almost a decade after the privatisation of the Nigerian electricity sector, the Discos are unable to tackle one aspect of Aggregate Technical, Commercial and Collection (ATC&C) losses and continue to put the burden of metering or estimated billing on the customer, added to the increased electricity tariffs the customer has to pay in spite of epileptic power supply. NERC must really sit up in mandating compliance by the Discos in seeing that the NMMP combined with the MAP meet the December 2021 deadline of closing the metering gap.
Business
FG announces extension of work-from-home directive for GL 12 officers, below
FG has extended the work-from-home directive for civil servants from GL 12 and below until the end of March.
