• Wednesday, February 21, 2024
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BusinessDay

How past metering programmes failed

prepaid electricity meters

The unavailability of meters for customers has resulted in a significant metering gap in Africa’s largest economy.

Although efforts have been made to close the metering gap over the years, including different programmes introduced by past administrations, the initiatives failed to meet expectations.

A lot of reasons have been traced to this failure including alleged high-level corruption, weak regulation, lack of consumer awareness, regulatory and policy issues.

In 2013, the Nigerian Electricity Regulatory Commission (NERC) introduced the ‘Credited Advance Payment for Metering Implementation’ (CAPMI) policy to assist the distribution companies (DisCos) in providing alternative financing options for reducing the metering gap that was estimated to be above 50 percent.

The policy came about due to the slow pace of customer metering by the DisCos, as well as the high level of complaints received from customers and dissatisfaction with the current estimated billing practices.

CAPMI provided a platform for willing customers to gradually pay the cost of the meter into a dedicated account jointly managed by the DisCos and meter vendor/installer.

Once payment had been effected, the customer would have their meters installed within 45 days by a NERC accredited vendor/installer.

Prior to its rollout, the commission invited stakeholders including all the DisCos, meter service providers, local meter manufacturers and other importers of metering instruments to assist in articulating a scheme that would assist in reducing the suffering of customers from estimated billing.

But later in November 2016, the government, through NERC, ordered the DisCos to officially jettison the programme due to their lack of commitment – between November 2013 and June 2016, only about 500,000 meters were deployed by the 11 DisCos within their networks, with less than 35 percent of that directly done by the Discos.

Babatunde Fashola, who was the minister of power, works and housing at the time, “accused DisCos of having done badly with meter deployment even after collecting monies from consumers.”

In further attempt to close the country’s metering gap, to reduce reliance on estimated billing and scale up meter installation, the Federal Government launched the Meter Asset Providers (MAP) policy in March 2018 and the National Mass Metering Programme (NMMP) in 2020. The two programmes aimed to collectively install 6.5 million meters by the end of 2022.

These programmes however failed to deliver on target as the total electricity customers at the end of September 2023 stood at 5.7 million.

Under the MAP framework, customers are required to make upfront payment in accordance with meter purchase rates approved by NERC.

This payment will however be reimbursed by the DisCos through equal payments of energy credits, at the time of vending.

The cost of the meter shall be amortised over a period of 36 months.

The meter asset providers (MAPs) are permitted to import fully built meters. This is subject to the requirement that a minimum of 30 percent of the contracted quantity of meters to be supplied by MAPs must be sourced locally in Nigeria. The 30 percent threshold is subject to review by NERC based on proven local manufacturing capacity.

The NMMP aimed to strengthen the local meter value chain by increasing local meter manufacturing, assembly and deployment capacity, among others. Under the programme, the then President Muhammadu Buhari-led administration promised to provide over 6 million free meters to Nigerians.

The NMMP framework provides for local meter manufacturers/assemblers (LMMA) who will be engaged in the manufacturing or assemblage of meters in Nigeria.

To be eligible, the LMMA must show that the local manufacturing or assembling process is not less than the assemblage of 6 meter components at factory level in Nigeria.

The LMMA is expected to provide evidence of sufficient working capital (including stock of material and/or work in progress) for the manufacture of a minimum of 100,000 meters annually. Thus, only local meter manufacturers are permitted to participate under this framework.

Under the first phase (phase 0) of the program which was flagged off in October 2020, the federal government installed about 900,000 free prepaid meters to customers as against a target of 1 million.

After the initial phase, the programme was stalled till the end of the Buhari administration, a situation which experts blame on faulty payment plan and citizen’s distrust in government’s policies.

Commenting on the programmes, experts told BusinessDay that the implementation of the programmes was marred by poor funding plans as well as poor monitoring strategy.

Lanre Elatuyi, an Abuja-based energy analyst, said that poor monitoring affected the execution of the programme, adding that even though it was a good initiative, stakeholders, especially meter producers, were not satisfied with the government’s funding plan.

He said: “It was a good plan initially; the first phase was to give out 1 million meters to Nigerians but it was not achieved. The program is faced with several challenges including funding. The meter producers are not agreeing to the unit cost that the federal government is willing to pay per unit of the meter.

“This disagreement has affected the continuation of the programme. Many meter producers that were engaged in the first phase are yet to get back their money.”

Elatuyi highlighted the need for NERC to wake up to the responsibility of ensuring that the sector is properly regulated.

According to him, most DisCos did not fully support the NMMP as they feared it may affect their ability to make up for aggregate technical and commercial losses (AT&C), which bite into their revenues.

AT&C loss is the difference between the amount of electricity received by a DisCo from the transmission company and the amount of electricity for which it invoices its customers plus the adjusted collections loss.

“There is a need to closely check their activities to ensure that electricity consumers are not cheated. NERC has to be firm in order to ensure that customers get what they deserve. Integrity tests should be carried out on the new meters to ensure customers are charged correctly,” Elatuyi said.

A meter manufacturer, who pleaded anonymity, said: “We could not continue with the programme because there was no fund. We have not fully got the monies spent in producing the meters for the first batch.

“The changes that occurred in the leadership of some distribution companies also affected the program because most of them could not continue with the payment plans.”