Amidst scarcity, millions of meters rot at Lagos port over 35% levy 

Millions of electricity customers are being denied meters, and part of the reason is that the Nigerian Customs Service is extending application of a 35 percent levy introduced by the government on imported meters to components used for meter production, some local assemblers say.

The enforcement of the levy on both imported components and manufactured meters is causing a pile-up of containers loaded with meter parts at the ports, which local assemblers say are in the millions.

Many have criticised a levy on meters in a country where 62 percent of electricity customers lack access to meters, but the situation could worsen as even parts to manufacture millions of meters have been stranded at the ports for months because local manufacturers consider the levy prohibitive.

“Nigerian Customs are the reason Nigerians are not getting meters today,” Chantel Abdul, managing director, Mojec International Limited, a local meter assembling outfit, said by phone.

Abdul said there are hundreds of cargoes of meter components for production stuck at the ports because the Nigerian Customs is demanding a 35 percent levy before they can clear them.

Joseph Attah, spokesman of the Nigerian Customs Service, however, said the agency was merely implementing the directive of the Nigerian government.

“Customs do not determine the tariffs,” Attah said.

Electricity customers who will in June begin paying additional 21 percent on the cost of single-phase meters and a 23 percent price increase for three-phase meters, according to new guidelines released by the Nigerian Electricity Regulatory Commission (NERC), will bear the brunt of inadequate meters.

In a letter to the DisCos and Meter Asset providers, NERC said the price of single-phase meters is now N44.896.17 rather than the previous N36,991.50, and customers applying for three phase meters will now pay N82,855 instead of N67,055 due to the naira devaluation in March.

The Federal Government, as part of its import-substitution programme, last year introduced a levy of 35 percent in addition to the 10 percent import duties charged on electricity meters with the objective of encouraging local production of meters, thereby creating jobs and growing the economy.

But the Nigerian Customs apparently did not get the memo as it is subjecting both manufactured meters and meter assembling components to the same 35 percent levy.

Interactions with Customs officials show that in their view, merely importing the parts of a meter to assemble a finished product does not warrant an exemption, just as importing a car with a broken tail light does not grant it the designation of ‘accidented vehicle’ which attracts lower tariff.

Nigeria’s metering space comprises importers of meters, those who assemble Semi Knocked Down (SKD) components to assemble, and those who say they are Original Equipment Manufacturers (OEM) and develop their own software and hardware solutions.

“For us, COVID-19 and the movement restrictions have impacted our operations making it difficult to meet orders, but we are not affected by the levy since we manufacture our own meters,” said Yahaya Yahaya, company secretary, Momas Electricity Meters Manufacturing Company Ltd (MEMMCOL).

Strict enforcement of the levies on imported components and manufactured meter is causing a pile-up of containers loaded with meter parts at the ports while thousands of Nigerians each day express outrage on social media over the refusal of power distribution companies (DisCos) to meter them.

“If the government were serious about eliminating estimated billing, it would make an emergency proclamation removing duties on meter at least for a period of time,” said Chuks Nwani, an energy lawyer based in Lagos.

According to the latest report on the sector published by NERC, the metering gap for end-use customers is still a key challenge in the industry.

“The records of the Commission indicate that, of the 10,374,597 registered electricity customers, only 3,918,322 (37.77 percent) have been metered as at the end of the fourth quarter of 2019. Thus, 62.37 percent of the registered electricity customers are still on estimated billing which has contributed to customer apathy towards payment for electricity,” the commission said.

In 2018, NERC began a Meter Asset Provider programme to allow third-party investors to provide meters for customers at a fee, but the levy and the foreign exchange challenges hamper the project.

According to NERC, only 22,825 end-use customers’ meters were installed during the fourth quarter of 2019, a significant fall from the 83,768 meters installed during the third quarter.