Nigeria requires $900m to close electricity metering gap

Nigeria’s Electricity Supply Industry requires about $900 million to meet its electricity metering gap, operators have said.

At a panel session at the 2019 Future Energy Nigeria conference devoted to discussing the Meter Asset Provider regulation unveiled by the Nigerian Electricity Regulatory Commission (NERC), Michael Onuorah, programme manager at Mojec International, citing studies by operators, said between $700 million and $900 million was required to close a 6.2 million metering gap in Nigeria.

The MAP regulation issued by NERC took effect in May 2018 to fast-track the roll-out of end-use meters through the engagement of third-party investors for the financing, procurement, supply, installation, and maintenance of electricity meters.

The programme first ran into troubled waters when the Ministry of Finance reviewed upwards the import levy on electricity meters from 10 percent to 45 percent this year and the Nigerian Customs Service began immediate implementation of the tariff.

The consequence is that the Meter Asset Providers are unable to clear the meters at the ports as the new tariff has made their market projections obsolete. Some of the meter providers too are cash-strapped and unable to fulfil orders for meters.

According to Onuorah, this situation is further complicated by the decision of the Nigerian Electricity Management Services Agency (NEMSA), the body required to certify meters, to raise the cost of certifying meters by 33 percent and impose on operators the burden of sealing the meters to forestall tampering.

NEMSA charges about N430 for a batch of 10 meters they certify for DisCos. However, since MAPs regulation came into effect, this government agency has hiked the cost of testing by N130 for each meter tested.

This does not look like a significant increase but a meter provider who has to certify 100,000 meters could find himself paying additional N13 milion that was not captured in his projections and for which he will not be repaid from the market as the meter cost is fixed.

Prior to NEMSA raising the charges for certifying meters, the agency also carried out sealing of individual meters to avoid tampering by customers, but it has also passed on the functions to the meter providers who say it means additional costs as they now have to hire people to undertake this task.

“This situation has made the operating environment challenging for us,” said Onuorah.

But this situation creates an opportunity for local meter assembling firms who are only charged 5 percent duty for importation of semi knocked-down components (SKDs) required to assemble meters.

Local meter ‘manufacturers’ in Nigeria merely assemble SKDs for two- and three-phase prepaid meters; they also carry out injunction moulding for the manufacture of meter boxes that are mountable on electricity poles, and assemble SKDs into metal boxes.

Representatives from local meter assembling plants at the conference said the new tariff is not making life easy for them as demand is far higher than supply.

According to the terms of the MAP regulation, meter providers are required to source 70 percent of their meters outside the country while the rest 30 percent must be sourced locally.

According to NERC’s first quarter report, of the 8,840,801 registered electricity customers in Nigeria, only 3,793,895 or 42.9 percent have been metered as at the end of the period. Thus, 57 percent or over 5 million electricity customers are still on estimated billing which has contributed to customer apathy towards payment for electricity.

The regulator also said that a review of the customer population data indicates that only Abuja, Benin, and Port Harcourt DisCos had metered more than 50 percent of their registered customers as at the end of March 2019.
NERC had directed that all DisCos complete the MAP procurement process by March 31, 2019, but these challenges render this directive impractical.

 

ISAAC ANYAOGU