• Wednesday, July 17, 2024
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BusinessDay

Local meter manufacturing to boom on proposed $150m CBN fund for producers

meter

The Central Bank of Nigeria and the World Bank are providing $350 million in financing to back the Federal Government’s resolve to put an end to estimated billing, providing a critical spark to ignite local meter manufacturing industry.

In line with the President Muhammadu Buhari-led government’s import substitution policy, all the financing towards providing meters would be channelled to local meter manufacturers, a source with knowledge of the matter said.

BusinessDay had earlier reported that the World Bank was making available $200 million to fund a massive meter rollout which would be financed in the interim by the CBN with a refund due from the multilateral organisation when the money is made available.

However, new details have emerged indicating that a separate funding will be provided by the CBN as both agencies do not have the same procurement process, making a refund difficult to effect.

Since Nigeria is on the way to meeting the conditionalities required to access the World Bank $750 million power sector credit, which include a tariff that can guarantee some commercial returns, the beneficiaries of the $200 million meter financing will also enjoy a buffer, in the form of flexible terms that would make the fund easier to repay.

Metering is a thorny issue in Nigerian Electricity Supply Industry. According to a report by the Nigerian Electricity Regulatory Commission (NERC), 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.

However, the cost of meters had gone up by over 20 percent from N36,991.50 to N44,896.17 for single-phase meters and from N67,055 to N82,855 for three-phase, so to procure over 5 million meters using the cost of single-phase meter as an estimate, with installation, will cost over N300 billion.

There are currently nine meter manufacturing firms in the country with a capacity to produce about 100,000 meters monthly, according to operators.

“We can close the metering gap in less than five years,” said Yahaya Yahaya, company secretary of Momas Electricity Meters Manufacturing Company Ltd (MEMMCOL), a local meter manufacturing outfit.

There are others who import components from which they assemble meters.

Last year, NERC approved a list of 22 meter manufacturers and assemblers to provide meters for electricity customers under the Meter Asset Providers (MAPs) scheme, and these nine local manufacturers featured on the list.

However, the local meter manufacturers say the Federal Government is yet to discuss its plans with them.

“We heard too that there is some funding planned for meter manufacturing, but to the best of my knowledge, no one has spoken to us about it,” said Yahaya.

The net effect of this massive financing is that Nigeria could see a boom in meter manufacturing if it materialises with the attendant benefits of increased employment and higher productivity.

Operators have long canvassed for long-term development financing to ease the cost of acquiring new meters considering that the sector is grossly illiquid.

“With the right conditions, multilateral organisations like development banks can provide long-term, naira financing needed to fund universal metering for all electricity users,” said Kester Enwereonu, director at Enugu DisCo.

A trade group of power distribution companies also recently called on the Central Bank to provide financing so they can meter their customers.