The Nigerian government recently unveiled an ambitious plan to address the chronic metering gap in the country’s power sector. The plan involves the procurement of 3.5 million electricity metres by the end of the year, a move aimed at improving revenue collection for the cash-strapped sector, where more than half of the customers are currently billed by estimates. According to the Minister of Power, Bayo Adelabu, between 7 and 8 million customers are unmetered. To tackle this, the government has outlined a procurement strategy to acquire and install 3.5 million metres within the year. This includes 2 million metres funded by the government and an additional 1.5 million metres procured with support from the World Bank. Competitive bidding for the first batch of 1.5 million metres has been completed, with deliveries expected within months.
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Moreover, the government has allocated 20 billion naira to electricity distribution companies (DisCos) to procure metres specifically for large users, whose tariffs were recently raised. This initiative aims to ensure all large users are metered by September, thereby improving billing accuracy and customer satisfaction. Nevertheless, the magnitude of the challenge is substantial. A report compiled by PricewaterhouseCoopers (PwC) posits that the number of unmetered customers could potentially reach 38.91 million. The report emphasises that approximately 50 percent of Nigeria’s installed metres are either outmoded or malfunctioning, impacting roughly 1.7 million customers. Furthermore, it identifies 4.09 million unmetered customers and 33.1 million unconnected potential customers, underscoring the vastness of the task at hand.
Data from the Nigerian Electricity Regulatory Commission (NERC) in 2023 reveals that the overall metering rate across all DisCos was 44.51 percent. Ikeja DisCo boasted the highest metering rate at 72.0 percent, while Yola DisCo had the lowest at 18 percent. Out of 12.82 million customers, approximately 5.70 million were metered, leaving 7.11 million consumers unmetered, translating to a significant metering gap of 55.49 percent as of September 30, 2023. The consequences of this metering gap are severe. Customers without metres are required to pay a fixed, estimated charge, which often does not reflect actual usage and has led to widespread dissatisfaction and disputes. According to NERC, 57 percent of all complaints received last year were about disputed bills, highlighting the urgent need for accurate metering.
The promise of smart metering
Smart metering technology offers a compelling solution to Nigeria’s metering challenges. Unlike traditional metres, smart metres provide real-time data on electricity usage, allowing for precise billing based on actual consumption rather than estimates. This not only helps customers manage their energy use more effectively, but also assists utility companies in monitoring and managing the power grid with greater efficiency.
Smart metres can be positioned as digital products by integrating them with mobile apps and online platforms, offering consumers and utility companies an interactive and user-friendly interface. These digital tools can provide users with detailed insights into their energy consumption patterns, enabling them to make informed decisions to reduce their energy usage and costs. Additionally, smart metres can be part of a broader smart home ecosystem, connecting with other smart devices to optimise energy consumption automatically. For utility companies, the data collected by smart metres can be analysed using advanced analytics and machine learning algorithms to predict demand, detect anomalies, and improve overall grid management. This digital approach not only enhances the functionality of smart metres but also opens up new revenue streams through value-added services and improved customer engagement.
Smart metres eliminate the guesswork associated with estimated billing, ensuring customers pay only for the electricity they use. This leads to fewer billing disputes and enhances customer satisfaction. Real-time data from smart metres enables consumers to monitor their energy consumption patterns, promote energy-saving practices, and reduce waste. For utility companies, smart metres can lead to significant improvements in revenue collection by minimising losses due to inaccurate billing and electricity theft. Additionally, smart metres provide valuable data that can help in managing the power grid more effectively, reducing outages, and improving the reliability of electricity supply.
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Despite the clear benefits, the implementation of smart metering in Nigeria faces several challenges. The initial cost of procuring and installing smart metres is high. Although the government has allocated funds and secured international support, scaling this across the entire country will require substantial financial resources. Nigeria’s existing power infrastructure is outdated and may need significant upgrades to integrate smart metering technology effectively. Educating consumers about the benefits of smart metres and how to use them effectively is crucial for successful implementation.
To address the high initial cost, the government can explore public-private partnerships (PPPs) to share the financial burden and leverage private sector efficiency. International grants and loans can also be sought to subsidise the cost. To update infrastructure, a phased approach can be adopted, prioritising areas with the highest concentration of unmetered customers. Integrating smart metres into the grid can be done incrementally to spread the cost and ensure smoother implementation. Consumer education campaigns can be launched to raise awareness about the benefits of smart metres. Workshops, media campaigns, and community outreach programmes can help consumers understand how to use smart metres to manage their energy consumption effectively.
Smart metering holds the key to closing the metering gap in Nigeria and addressing the billing inefficiencies that have plagued the power sector for years. By ensuring accurate billing, enhancing revenue collection, and improving energy management, smart metres can transform the Nigerian electricity landscape. However, concerted efforts from the government, international partners, and utility companies are needed to overcome the challenges and realise the full potential of this technology. In summary, Nigeria stands on the brink of a potential energy revolution. With smart metering, the country can usher in a new era of transparency, efficiency, and customer satisfaction in the power sector. The journey towards comprehensive smart metering may be challenging, but the rewards—both economic and environmental—are well worth the effort.
Chiemeka Okeke is the Co-Founder and CFO of Powerfull Technology Limited. He addresses the intricate challenges prevalent within Nigeria’s energy sector. He underscores the potential adoption of technology, specifically smart metering as a digital product, as a viable solution to bridge the disparity in metering rates and enhance user satisfaction.
