• Tuesday, May 28, 2024
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BusinessDay

Band A power plan faces brick wall of 5.8m unmetered customers

The federal government’s ambitious plan to provide premium power for all citizens is seen as facing a hurdle of 5.8 million unmetered customers, according to findings by BusinessDay.

Adebayo Adelabu, minister of power, had over the weekend disclosed the federal government’s plan to convert the entire power sector into a single band from the current five in the next three years.

There are five bands – A, B, C, D and E, according to the Nigerian Electricity Regulatory Commission.

Read also: Here is how Band  A electricity tariff hike affects all Nigerians

Under Band A, customers are entitled to a minimum of 20 hours per day. Band B customers have a minimum of 16 hours of electricity per day. Band C are customers who have access to a minimum of 12 hours per day.

In category D, customers are given a minimum of eight hours of electricity per day, while Band E customers have access to a minimum of four hours per day.

“This tariff review conforms with our policy thrust of maintaining a subsidised pricing regime in the short-run or the short-term with a transition plan to achieve a full cost reflective tariff for over a period of, let us say three years,” Adelabu said during a weekly briefing last week.

However, with 5.8 million unmetered customers, experts remain sceptical about how the new strategy will achieve this target.

Tunde Osunlusi, an energy analyst in a Lagos-based investment bank, said achieving the target of putting everyone on Band A is a herculean task without making progress in metering.

“Metering is a critical element for improving power because when you talk about reducing AT&C losses or providing premium power, metering is a critical element,” Osunlusi said.

Aisha Mohammed, an energy analyst at the Lagos-based Center for Development Studies, said the progress on metering remained dismal compared to the projected objectives.

“Nigerians have decried the fact that getting a meter is an uphill task, even for people who have the money to pay upfront. It’s impossible to scale up energy access without metering,” Mohammed said.

A new electricity report released by the National Bureau of Statistics showed the number of customers who underestimated billings reduced slightly by 1.73 per cent to 5.8 million.

Read also: Growthill offers hope, pathway to sustainable living as electricity tariff surges

Recently, the Nigerian Electricity Regulatory Commission (NERC) declared that it would deduct N10,505,286,072 from the annual allowed revenues of the 11 power distribution companies (DisCos) during the next tariff review as part of sanctions over their non-compliance with the capping of estimated bills for unmetered customers.

It said the billing of unmetered customers in their various franchise areas for 2023 revealed non-compliance with the monthly energy caps issued by the commission.

NERC explained that the DisCos would pay about 10 percent of the amount they over-billed their customers between January and September 2023.

The regulator also ordered the DisCos to refund the affected customers in full and to ensure compliance in the future, stressing that to deter future occurrences, a 10 percent fine had been imposed on the utilities.

In separate orders to the DisCos, it was established that the power firms over-billed their customers to the tune of about N105 billion in the first nine months of 2023.

Abuja DisCo, for instance, overbilled its customers without meters to the tune of N17.874 billion, while Eko DisCo over-billed its unmetered customers by N13.137 billion.

Port Harcourt DisCo overbilled its customers without meters by N14.187 billion, as Kaduna Disco overbilled its customers by N1.145 billion.

The regulator ordered the DisCos to refund the affected customers in full and to ensure compliance in the future, stressing that to deter future occurrence, a 10 percent fine had been imposed on the utilities.

“The slow pace of meter deployment is exacerbated by corruption within the metering supply chain. This includes misappropriation of funds designated for new meters and imposition of unauthorised fees on customers, a clear misalignment with the regulatory provisions for meter procurement,” analysts at Energy Markets Rates and Consultants said.

“Many consumers are typically reluctant to adopt the installation of meters due to concerns about capital cost, perceived inconvenience, and apprehensions about transitioning to a new billing methodology,” they added.

BusinessDay’s findings showed as of April 2024, single-phase meters cost N82,000, while three-phase meters cost N259,000.

“Why do you say Nigerians cannot buy electricity meters for their homes? The government should focus on removing the middlemen in the value chain process,” Mohammed said.

Read also: Electricity workers threaten strike over recent tariff hike

Prior to the privatisation of the power sector, Nigeria had a huge metering gap estimated at over 3 million in 2012. At the time of taking over in November 2013, the Discos had a pact with the Bureau of Public Enterprises and NERC to bridge this gap.

This was not achieved; hence NERC approved the implementation of Credit Advance Payment for Meter Installation (CAPMI) in March 2013, where customers pay in advance for meters as credits to be recouped from future payments for electricity.

But the scheme did not work as expected. In September 2016, CAPMI was cancelled.

“Estimated billing system is outrageous and fuels inefficiency and more corruption within the supply chain of electricity,” Mohammed said.