AS MASS METER ROLLOUT COMMENCES
In a bid to close the metering gap, the Nigerian Electricity Regulatory Commission recently introduced the Meter Asset Provider regulation. The regulation provides for third-party financing of meters, under a permit issued by the commission and repayment amortisation over a period of 10 years. The payment of metering service charge will be removed from the customer electricity bill upon the full amortisation of the meter asset over its useful life. Alternatively, the customer may elect to pay for the meter asset upfront.
The electricity DISCOs, in line with their licensing terms and conditions, are obliged to achieve their metering targets as set by NERC under the new regulation.
The commission in line with the provision of the regulation has issued 121 ‘No Objection’ permits to various service providers as of February 2019. Also, eight DISCOs with the approval of NERC have appointed 19 of the 121 approved MAPs to provide independent metering services to customers within their respective DISCOs franchise areas.
The regulation came into effect on May 1, 2019. The MAPs are expected to charge an upfront amount of N36, 991.50 for single phase meters and N67, 055.85 for three-phase meters. These costs are inclusive of supply, installation, maintenance and replacement of meters over its technical life. The regulator’s statement was silent on the financing charge for customers that opt for the financing option.
The issue with metering and revenue assurance in the sector predates the 2013 privatisation. Pre-privatisation issues in the sector included shortage of meters, faulty meter installations, meter tampering and bypassing, with the attendant consequences like: bill estimations and overbilling, high commercial losses and power theft, cash collection inefficiency and customer dissatisfaction. These are still the dominant issues five years after privatisation.
Although there have been marginal improvements in meter deployment, there are still yawning gaps in the number of unmetered customers. The NERC’s 2018 consultative paper on estimated billing put the collective customer base of customers in the 11 DISCOs at 8,292,840 with only 3,591,186 metered while 4,701,672 are unmetered, leaving about 57 per cent of the customers in NESI unmetered.
The Credit Advance Payment for Metering Implementation (CAPMI) introduced in 2013 had similar objectives with the MAP scheme. In wounding down the scheme in 2016, the Minister of Power, Works and Housing stated that there were contractual distrust between electricity consumers and the DISCOs and there were failures by the DISCOs to procure and install the meters after money has been collected. The expectation is that NERC has put in place necessary monitoring mechanism to ensure that the new scheme is not marred by such issues.
With only 19 of the 121 registered MAPs engaged by eight of the DISCOs, this can only be the first step towards the complete liberalisation of the metering sector. It is expected that relevant performance monitoring tools are in place to monitor engaged MAPs. The engagement of more MAPs with the requisite financial and technical wherewithal should be on an ongoing basis.
The Credit Risk and Repayment Risk problems with financed meters, the willingness to pay issues particularly as it affects rural and semi urban dwellers still remain sources of concern.
The 30% local content procurement proviso for locally manufactured meters should be closely monitored to ensure compliance, due to its job creation potential and the need for government to support local production.
Globally, the ownership/operatorship of electricity metering has been the distribution companies, metering companies, subnational governments, consumers and ownership not being regulated. Traditionally, meters have been owned and metering activities undertaken by distribution companies. Even with the liberalisation of the electricity markets this has been the trend. Despite this trend, some countries have embraced liberalisation competition in metering. Some opted for a combination of both the regulated and commercial markets for metering.
The distribution companies remain best placed to manage the risks associated with investing in metering, because they have better access to customer information and are more likely to develop their metering strategy along that line. However, due to the dire liquidity constrain in NESI, the need to liberalise the metering sector has become imperative.
Finally, even in countries where metering has been liberalised, the distribution companies remain accountable for the metering of consumers. The scheme should therefore not be seen as an avenue for DISCOs to neglect their primary obligation to provide electricity meters to their customers which is consistent with their licensing terms.
Idaewor Anabui Peter, PhD