Why FG’s new metering policy will create more problems in power sector

With over 86.9 million Nigerians living in extreme poverty, transferring the burden of electricity meters to customers without proper payment plan may not adequately bridge the country’s metering gap. Indeed, as laudable as the Meter Asset Providers (MAPs) policy appears to be, stakeholders are divided over the many flaws in the programme. To them the plan could be marred in obscurity, particularly, absence of sector-wide stakeholder consultation, poor local content design, questionable contractors, ownership of asset; poor aftermarket and customer care issues; and others.
KINGSLEY JEREMIAH writes…

Electricity consumers in Nigeria, especially those, who are yet to be metered, will from May first pay N36, 991.50 or N67,055.85 to purchase a single or three phase meter under a newly introduced Meter Asset Providers (MAPs) of the Federal Government. The payment is expected to be a one-off, covering cost and installation of the asset.

MAPs, which came into effect on April, 2018 brought in a set of operators in the power sector to eliminate estimated billing, attract private investment into the provision of metering services, and close the metering gap through accelerated meter roll-out but at the expense of the consumer.

In November 2013, when the Federal Government privatised the power sector, the country’s 11 electricity distribution companies also called DisCos were mandated to bridge metering gap hovering around 4.92 million meters within three years. But only 201,756 meters have been supplied as of 2017 according to industry regulator; Nigerian Electricity Regulatory Commission (NERC). In that arrangement, Nigerians were to be metered freely according the vision under the privatisation arrangement.

Reportedly, the utility providers supplied 79,850 prepaid meters in 2018 bringing the total metered customers in the country to 3.7 million. There are about eight million electricity customers in Nigeria. The implication is that over four million Nigerians are billed vaguely at the discretion of the DisCos.

The development gave rise to fraud through estimated billing, lack of accountability, probity and increased financial challenges in the Nigerian Electricity Supply Industry (NESI) because of collection losses.

Seeing that the metering gap remained elusive, NERC introduced an initiative called Credit Advancement Payment for Metering Implementation (CAPMI). CAPMI allows for interested and willing customer to advance money to their electricity distribution company and in return will be given electricity credit until the cost of the meter has been recovered by the customer.

In 2016, Minister of Power, Works and Housing, Babatunde Fashola asked NERC to stop the metering scheme, stressing that the scheme was a major customer concern, which has led to contractual distrust between electricity consumers and the 11 electricity distribution companies (Discos) in the country. The Minister had said most of the DisCos that collected money from their customers to procure and install meters at their homes have mostly failed to do so.

Considering that the metering challenge persists, NERC re-modelled CAPMI by deregulating metering under Meter Assets Providers (MAP). Under the plan private sector players were introduced to supply and maintain meters. The burden of the cost of the meter therefore goes to the consumer.

Section four subsection three of the MAPs Regulation 2018 regulation requires all electricity distribution licensees to engage MAPs that would assist investors in closing the metering gap and thus eliminating the practice of estimated billing in the Nigerian Electricity Supply Industry (NESI).

If properly implement, expectations were that MAPs will encourage the development of independent and competitive meter services in NESI, eliminate estimated billing practices, attract private investment to the provision of metering services, close the metering gap through accelerated meter roll out and enhance revenue assurance. Similarly, the plan is expected to source a minimum of 30 per cent of their contracted metering volumes from local meter manufacturing companies in Nigeria.

However, as laudable as the MAPs policy appears to be, stakeholders are divided over the many flaws in the programme. To them the plan could be marred in obscurity because of poor payment plan, local content design, questionable contractors, ownership of asset; poor aftermarket and customer care issues and others.

Indeed, there are indications that the plan was hurriedly designed without proper stakeholder-wide consultation while the processes were shrouded in secrecy. Some stakeholders, who spoke with The Guardian on the issues specifically decried poor policy framework, which could undermine extant regulations. A renowned player in the sector, who pleaded that his identity be concealed said, “I don’t want to talk on these issues anymore. I am tired. They should do whatever they like.”

Experts like the Former President of the Nigerian Association of Energy Economics (NAEE), Prof. Adeola Adenikinju, former chairman of the Nigerian Electricity Regulatory Commission (NERC), Sam Amadi, President, NCPN and Member of the National Technical Investigative Panel on Power System Collapses and System Stability, Kunle Kola Olubiyo and others said there were loopholes in the regulation.

Mid 2018, the World Poverty Clock showed Nigeria had overtaken India as the country with the most extreme poor people in the world. With the development, over 86.9 million Nigerians live on less than one dollar per day. Affordability of the pre-paid meter therefore becomes a critical concern.

Similarly, stakeholders are worried that apart from the patronage of unknown firms and obscure companies, vendors and brief-case contractors without structures or warehouses or storages facilities were given preferences over and above indigenous meter manufacturers or meter assembling plants.

Apart from the fact that the development undermined local content regulations, some experts believe that the scheme was only to provide jobs for close allies of office holders, noting that the means could be designed for money laundering and capital flight.

Likewise, while the ownership of meter was conferred on the DisCos under extant regulations, the current law is yet to answer questions on the ownership of the asset. Since the customer is now to bear the cost of purchase, NERC’s new regulation was silent on ownership.

Earlier in the year, DisCos had said they have been freed from the responsibility of providing meters to power consumers under their networks because of MAPs programme. Few days after, NERC issued an objection, insisting that the obligation to ensure that all electricity consumers have meters remained with the electricity distribution companies under Meter Asset Provider Regulations 2018.

To most stakeholders, the new regulation obviously freed the DisCos from providing meter and transferred the burden on customers, thereby limiting the roles of DisCos to passive players.

Earlier in the week, Nigeria Consumer Protection Network (NCPN) told the Federal Government to ease the payment of meter with a three-year payment plan to enable poor Nigerians afford the asset.

President, NCPN and Member of the National Technical Investigative Panel on Power System Collapses and System Stability, Kunle Kola Olubiyo raised concern over the ability of Nigerians, especially the poor masses to afford the meter, considering that millions of persons live below poverty line. Indeed, the fact that the cost of the meter would not be refunded in form of energy credit will worsen the plights of the customer.

“Electricity consumers in Nigeria wish to appeal to Government of Nigeria through the Minister of Power, Works and Housing and the leadership of Nigerian Electricity Regulatory Commission (NERC) to provide two payment options; cash and carry basis for those who can afford it and installment payments of 36 months or three years for the vulnerably poor electricity consumers, who should be allowed to pay in installments due to their low disposable income.

While the MAPs policy came with local content plan, with 70 per cent of the kit to be imported, Olubiyo equally worried on the survival of local firms without government backup.

“We wish to appeal to Federal Government to provide leverages like collateralisation and securitisation in forms of single digits long term low interest loans to only those MAPs registered companies with emphasis on indigenous meters manufacturers.

Adenikinju did not dispute the good intentions of the regulation but insisted that so much was left undone, especially upfront payment plan, asset ownership, technical capacity and customer care concerns.

Though NERC is expected exercise its full powers by sanctioning defaulters under MAPs, but Adenikinju was pessimistic about keeping to terms of the regulation, considering the CAPMI policy failed on the same ground.
Amadi foresee compounded challenges under the policy, stressing that the programme could lead to policy somersault.