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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.

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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.

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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

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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.

Caleb Adebayo is an LLM Candidate, Energy and Environmental Law at New York University School of Law. His interest lies at the intersection of Energy, Environment and Finance and he is keen on the interplay between Law, Policy and Energy Markets. Prior to taking up his LLM, he worked on the Energy team of a tier 1 Nigerian law firm. A nominee for The Future Awards Prize for Lawyers, he has written widely on the subject of Energy and Environmental Law. He is also a member of the New York City Bar Energy Subcommittee

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    Business News

    FG reacts to reports of revoking 32 refinery licenses

    The FG has denied revoking 32 refinery licenses that were issued to some private companies across the country.

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    Edo Refinery and Petrochemicals Limited's operations to kick-start

    The Federal Government has denied revoking 32 refinery licenses that were issued to some private companies across the country.

    The reaction follows reports making the rounds in some section of the media that the government has revoked some refinery licenses that it had earlier issued within a period of 3 years.

    This clarification is contained in a statement issued by the Head, Public Affairs of the Department of Petroleum Resources (DPR), on behalf of the agency on Tuesday, April 13, 2021, in Lagos.

    The DPR said that the refinery licenses have validity periods for the investors to achieve certain milestones and would become inactive after its expiration until the company reapplies.

    READ: Nigeria’s debt sentence: The burden of the Port Harcourt refinery

    What DPR is saying

    The DPR in its statement said, “We wish to clarify that DPR did not revoke any refinery licence. Refinery licenses, like our other regulatory instruments, have validity periods for investors to attain certain milestones.

    This implies that after the validity period for the particular milestone, the licence becomes inactive until the company reapplies for revalidation to migrate to another milestone. This does not in any way translate to revocation of the licence of the company.”

    READ: FG explains why it revoked 4 Addax Petroleum Oil Mining Licenses

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    The DPR, in line with the aspirations of the government, initiated the refinery revolution programme of the country to boost local refining capacity by enabling business and creating new opportunities for new investors with the granting of modular and conventional refinery licenses to investors.

    He emphasized that the regulatory agency would continue to support investors in the oil and gas industry in Nigeria using its regulatory instruments such as licences, permits and approvals to stimulate the economy and align with the government’s job creation initiatives.

    READ: FG to extend fuel subsidy for 6 months

    In case you missed it

    Earlier on, some media reports suggested that the DPR had revoked refinery licenses that were issued to some companies for being inactive beyond the validity period. These refineries include modular refineries and conventional plants.

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    Business News

    FG to extend fuel subsidy for 6 months

    Reports indicate that the FG plans to spend N720 billion for the next 6 months on Premium Motor Spirit (PMS) subsidies.

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    Subsidy and PIB, petrol price, PPPRA, We have sufficient PMS stock for 38 days- DPR 

    The Nigerian Government may have suspended plans to end its subsidy payments as reports indicate that the FG plans to spend N720 billion for the next 6 months on Premium Motor Spirit (PMS) subsidies.

    This was disclosed in an exclusive report by The Guardian on Sunday, citing that President Muhammadu Buhari ordered that the subsidies remain in place for the next 6 months.

    “Specifically, President Buhari has asked the Nigeria National Petroleum Corporation (NNPC) to suspend any idea on subsidy removal for five to six months so that a plan that does not harm ordinary Nigerians is evolved if the deregulation must go on,” a Government official said.

    READ: FG to meet with State Governors over electricity, fuel prices

    What you should know 

    • NNPC GMD, Mele Kyari disclosed last month that the “NNPC may no longer be in a position to carry that burden because we cannot continue to carry it in our books,” after reports of fuel imports under-recovery revealed the FG was spending N120 billion a month on subsidy.
    • Kyari also hinted that they may soon start selling PMS at market prices saying: “NNPC importing PMS at market price and selling at N162/L. The actual market price should be between N211 and N234/L. Meaning is that consumers are not paying the market price.
    • “NNPC is currently the sole importer of PMS, and we’re trying to exit the underpriced sale of PMS. Eventual exit is inevitable, when it will happen I cannot say, but engagements are ongoing because the government is cognisant of the implications.”

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