The Nigerian power sector is grappling with a host of deep-rooted issues, from chronic underfunding and dilapidated infrastructure to cumbersome regulations and operational shortcomings. These challenges have impeded progress and left the country struggling with unreliable electricity supply, hindering economic growth and development.
In an interview with Abubakar Ibrahim, an energy reporter at BusinessDay, Chantelle Abdul, the group managing director of Mojec International, delves into the complexities facing Nigeria’s power sector. Abdul sheds light on the underlying problems that have persisted for decades, discusses potential solutions, and industry insights and their journey to success.
Can you share your insights on the current state of Nigeria’s power sector? What are the key challenges and opportunities?
The Nigerian power sector is currently at a critical juncture. Despite significant potential, the sector is plagued by several challenges, including inadequate infrastructure, transmission losses, and inconsistent regulatory policies. However, there are also substantial opportunities. With the right investments in technology and infrastructure, coupled with regulatory reforms, Nigeria can harness its vast energy resources to meet the growing demand and improve electricity access for millions of Nigerians. And I strongly believe that with the policies of this present government, Nigeria is moving in the right direction.
What innovations or technologies do you believe can transform the sector and improve electricity access?
Smart grid technology and advanced metering infrastructure (AMI) are among the most promising innovations. These technologies enable real-time monitoring and management of electricity flow, improving efficiency and reducing losses. Additionally, renewable energy solutions, such as solar and wind power, can provide decentralised and sustainable energy sources, particularly for rural and underserved areas.
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The tariff hikes for Band A customers have drawn attention. Could you explain the rationale behind these adjustments?
Tariff adjustments for Band A customers are part of a strategic approach to align electricity pricing with the actual cost of service delivery. Band A customers are typically those who receive the most reliable electricity supply, often between 20 to 24 hours daily. As such, the cost of maintaining this level of service—considering generation, transmission, and distribution expenses—is higher.
The rationale behind these tariff hikes is rooted in the need to ensure the financial viability of the power sector. By adjusting tariffs for customers in Band A, who enjoy the most consistent power supply, the sector can generate the necessary revenue to fund critical infrastructure upgrades, enhance service quality, and expand access to electricity.
However, this adjustment must be carefully balanced with the urgent need to improve the overall infrastructure. While tariff increases provide immediate financial relief for utilities, the long-term solution lies in reinvesting these funds into infrastructure projects. This includes upgrading generation facilities, modernising transmission networks, and enhancing distribution systems. These improvements are essential to reduce the disparity in power supply across different customer bands and to bring more customers into higher bands over time.
We also recognise the importance of transparency in this process. Consumers need to see tangible improvements in service delivery as a result of these tariff increases. This means that utilities and regulators must be accountable for how the additional revenue is utilised, ensuring that investments are made where they will have the most significant impact.
Moreover, it’s crucial to address consumer concerns about affordability. Even within Band A, there are varying levels of consumption and income. Implementing measures like tiered tariffs, where higher consumption is charged at progressively higher rates, can help balance affordability with revenue recovery. Additionally, targeted subsidies or relief programs for vulnerable consumers can ensure that the tariff adjustments do not disproportionately affect those who may struggle to pay higher bills.
In summary, while the tariff hikes for Band A customers are necessary for the financial health of the power sector, they must be accompanied by substantial infrastructure investments and a commitment to improving service quality. Only through this balanced approach can we achieve a more sustainable and equitable electricity supply for all Nigerians.
Given that Nigeria’s peak electricity demand stands at 19,798 megawatts (MW), while the actual generation hovers around 4,000 MW, some stakeholders argue that the recent tariff hikes by NERC may be misaligned with the urgent need for infrastructure improvement.
How do you view this balance between tariff adjustments and the imperative to enhance power infrastructure?
Balancing tariff adjustments with infrastructure improvement is indeed a delicate act. While higher tariffs can provide the revenue needed for infrastructure investments, there must be a simultaneous and visible effort to improve the power supply.
Transparency and accountability in how the additional revenue is used are crucial. Investments should focus on upgrading generation capacity, modernising the transmission network, and improving distribution efficiency.
How do you think concerns for affordability for consumers would be addressed while ensuring revenue recovery for utilities?
Affordability can be addressed through targeted subsidies and social safety nets for the most vulnerable consumers. Additionally, implementing tiered tariff structures can ensure that basic electricity needs are met at lower rates, while higher consumption is charged at rates that reflect the true cost of service. Ensuring accurate billing through smart metering can also help consumers manage their usage more effectively.
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What role can smart metering play in managing tariff changes effectively?
Smart metering plays a crucial role in managing tariff changes by providing accurate and real-time data on electricity consumption. This allows for more precise billing and helps consumers understand their usage patterns, encouraging energy-saving behaviours. For utilities, smart meters reduce losses from theft and inaccuracies, ensuring better revenue collection and financial sustainability.
MOJEC has been at the forefront of bridging the metering gap in Nigeria. What strategies has your organisation employed to achieve this?
At Mojec International, our commitment to bridging the metering gap in Nigeria is driven by a multi-faceted strategy that addresses both the supply and demand sides of the equation. Our approach is comprehensive, leveraging our expertise in manufacturing, strategic partnerships, customer-centric solutions, and technological innovation.
I make bold to say that at MOJEC, we’ve made significant strides in closing the metering gap through investments in Local Manufacturing and Capacity Building. By establishing state-of-the-art meter and plastics factories in Nigeria, we’ve been able to produce high-quality meters locally, reducing dependency on imports and minimising delays associated with international supply chains. This local production not only meets the demands of the Nigerian market but also supports the broader economy by creating jobs and building local expertise.
Our factories adhere to the highest industry standards, ensuring that every meter we produce is durable, reliable, and compliant with regulatory requirements. This focus on quality has made our meters the preferred choice for both residential and commercial users across the country.
Also, recognising that affordability is a key barrier to widespread meter adoption, we’ve formed strategic partnerships with financial institutions under the Meter Asset Provider (MAP) scheme. These partnerships have been instrumental in developing innovative financing solutions that make meters more accessible to consumers.
Through these collaborations, we’ve introduced flexible payment plans that allow consumers to acquire meters with minimal upfront costs. This approach not only accelerates the deployment of meters but also eases the financial burden on households and businesses, facilitating broader adoption.
To effectively bridge the metering gap, it’s not enough to simply produce meters; we must also ensure they reach every corner of the country. Mojec International has established an extensive distribution network, coupled with a robust installation infrastructure, to ensure that meters are delivered and installed efficiently across Nigeria.
We operate in 11 out of the 12 distribution companies (Discos) across the country, providing our technical expertise to support the deployment of meters in both urban and rural areas. Our technical teams are not only skilled in installation but also in maintenance and after-sales support, ensuring that customers have a seamless experience from acquisition to long-term use.
Mojec International works closely with regulatory bodies such as the Nigerian Electricity Regulatory Commission (NERC) to ensure that our meters comply with all standards and guidelines. We actively participate in industry forums and advocate for policies that support the widespread adoption of metering solutions.
Our efforts have not gone unnoticed. Over the years, Mojec International has received numerous awards and recognitions for our contributions to the power sector. These accolades validate our approach and motivate us to continue pushing the boundaries of what’s possible in the metering industry.
How important is accurate metering in reducing losses and improving revenue collection?
Accurate metering is essential for reducing commercial losses and improving revenue collection. It ensures that electricity consumption is precisely measured, preventing energy theft and billing inaccuracies. This not only increases the revenue for utilities but also builds trust with consumers, as they are billed fairly based on their actual usage.
Are there any specific challenges you’ve encountered in deploying meters nationwide? How are you navigating it?
Deploying meters across Nigeria has several challenges, including logistical issues, regulatory hurdles, and consumer resistance. We have established robust logistics and supply chain networks to navigate these challenges to ensure timely delivery and installation.
We also engage with regulators to streamline approval processes and work on consumer education campaigns to highlight the benefits of metering. Our goal is to ensure that every Nigerian has access to reliable and accurate electricity metering.
