Consumers’ long, tiring wait for pre-paid meters: MAPs as failing scheme?
On April 3, 2018, The Nigerian Electricity Regulatory Commission (NERC), introduced a meter asset providers (MAPs) regulation to fast-track the roll-out of meters through the engagement of third-party investors and end estimated billing. The commission had issued permits to licensed firms to begin massive roll-out of new meters by May 1. Several weeks after, consumers’ anxiety about the scheme continues to wane as many distribution companies drag implementation despite the will to pay for meters. FEMI ADEKOYA and TAYO OREDOLA write.
Many conclusions of arguments or positions about the inefficiency in the Nigerian power sector often times, refer to the faulty process in the initial unbundling of the sector through the privatisation of the Power Holding Company of Nigeria (PHCN) in November 2013.
Last weekend, the former chairman of the Nigerian Electricity Regulatory Commission (NERC), Sam Amadi reiterated the point saying the privatisation of the power sector was designed to fail.
In a series of tweets, Amadi said the privatisation process could not produce the desired results because the power assets were sold to investors who lacked the financial and technical capacity.
The sector was privatised after the unbundling of the Power Holding Company of Nigeria (PHCN) in November 2013, as private investors took over distribution and generation firms “to ensure an adequate, regular and stable supply of electricity to the consumer at a reasonable cost”.
“The power sector was designed to fail. We failed to corporatise and commercialize before privatizing; we privatize senselessly without paying attention to context and corporate governance and regulatory regime; we sold to investors who lacked capacity,” he said.
Amadi argued that the challenges in the sector go beyond tariff increase, as such move would force manufacturers off the grid.
“Cost reflective is important. but excessive tariff hike is problematic because it cannot be collected and in a country with poor supply the propensity to pay is low,” he said.
Amadi’s argument reiterates one of the reasons why consumers have been pushing back any form of tariff increase, especially when previous increments have yet to result in improved electricity supply.
With no less than 4,606,106 electricity consumers lacking meters, there are reservations about the implementation of the meter asset providers (MAPs) scheme, which was kicked off on May 1, as many households remain ignorant of the procurement process.
Indeed, the Nigerian Electricity Regulatory Commission (NERC), had issued permits to meter asset providers (MAPs), to begin the rollout of new meters by May 1, as part of measures to address issues of estimated billing by distribution companies.
Several weeks after, many consumers, despite willing to pay for the meters are yet to be provided with meters.
The MAP regulation
The MAP Regulation was unveiled in March last year, with the aim of fast-tracking the roll-out of meters through the engagement of third-party investors for the financing, procurement, supply, installation, and maintenance of electricity meters.
It introduced a new set of service providers in the power sector, called meter asset providers, to assist the distribution companies in bridging the huge metering gap in the Nigerian electricity supply industry.
According to the regulation, the distribution licensees (Discos) and the MAPs shall enter into a metering service agreement, which shall provide for the number of meters to be installed in the distribution licensee’s network over an agreed period and the recovery of the cost of meter asset plus a reasonable return over a period of 10 years, among others.
But the procurement process for the MAPs was delayed, with the regulator saying in late March that it was reviewing the MAP procurement reports.
NERC said in April that permits had been issued to the MAPs engaged by eight out of the 11 Discos, adding that the rollout of meters would commence no later than May 1, 2019.
The Discos are Abuja Electricity Distribution Company Plc, Jos Electricity Distribution Company Plc, Ikeja Electricity Distribution Company, Benin Electricity Distribution Company, Port Harcourt Electricity Distribution Plc, Yola Electricity Distribution Company Plc, Enugu Electricity Distribution Company Plc, and Ibadan Electricity Distribution Company Plc.
Discos’ progress on MAP and endless wait for meters
Though the Commission directed that the rollout of meters shall commence no later than the 1st of May 2019, implementation is far from reality.
In Lagos, consumers under the Ikeja Electricity Distribution Company (IEDC) have lamented the slow pace of the company in implementing the MAP scheme even when they were willing to pay for the meter.
Some of the consumers who spoke with The Guardian, said the company preferred to issue pre-paid meters to households with existing debts so that recovery could be easily done when credit units are procured, adding that for other households without debts, accessing pre-paid meters has become a racket for which residents pay up to N100,000 to fast-track the issuance of three-phase meters that shouldn’t cost N67,055.85 according to NERC guidelines.
One of the consumers who preferred to be identified simply as Mr Aremu under Shomolu Business Unit noted that he has yet to receive the meters he paid for, months after paying more than the required cost.
For Eko Distribution company, the pace remains equally slow, as residents lament compliance with the regulation and various service agreements by the MAP and electricity distribution licensees.
IEDC appointed Mojec International Limited- (399,790 meters), Consolidated Infrastructure Group Ltd- (397,922 meters) and New Hamshire Capital Ltd-(276,699 meters) respectively within the Ikeja Disco franchise under MAP.
Acting Chief Commercial Officer, IEDC, Ugochukwu Obi-Chukwu, at a forum recently, said the NERC mandate was for every Disco to meter all consumers under its network, saying Ikeja Disco was all out to carry out the effective implementation of the directive.
He disclosed that the target of Ikeja Electric was to meter about 30,000 consumers monthly which will be in phases, starting with customers under Shomolu, Abule-Egba and Ikorodu Business Units.
According to him, the deployment and installation of prepaid meters to customers in Ikorodu, which will be carried out by one of its MAPs, New Hampshire Capital limited, will commence on June 17, 2019, following the successful registration and subscription for meters by thousands of customers spread across Ikorodu and Epe.
“The meter rollout was supposed to start on May 1, 2019. But it has not. There have been a lot of complaints from our members across the country. They complained that even the meters that were paid for before now have not been given to them,” the President, Electricity Consumers Association of Nigeria, Chijioke James, said recently.
He said, “One week into the deadline given by the regulator, the situation seems not to have changed. So, it behoves on the regulator to ensure that all stakeholders comply with that regulation. It ought not just to bark, but also bite; that way, we can have sanity in the sector.
“Our take is that the regulator should wake up and hold the power distributors accountable to the consumers. Consumers are beginning to lose confidence in both the regulator and the Discos. Not until we see improved services, we are not going to take the regular and the Discos seriously.”
Coordinator of Electricity Consumer Advocacy Network, Akeem Balogun, expressed doubts that MAP would be able to resolve the issue of estimated billing and cover the metering gap, as NERC regulation only encourages customers to procure a meter from a third party at their own expense.
He further noted that if the government wants the regulation to work, financiers should be provided for Discos or allow them to source for their own financiers instead of allowing customers to procure themselves.
Balogun added that the cost of meters which has been added to the current tariff is like double charging customers, adding that even though people are clamouring seriously for meters, the cost of about 38,000 for a single-phase meter is too expensive for most Nigerians considering the current economic situation.
Chairman, Joint Action Congress of Electricity Distribution Company, Customers Right (JACEDCR), Amos Olawoye, stated that MAP was a good move by the government, but noted that the cost of meter which has been embedded in the current tariff, was a way to fool consumers.
He added that since customers were procuring for themselves, he is of the opinion that at the point of installation, an undertaking should be signed by the customers, discos and the meter access provider to clarify things for future purposes.
The Chairman/Chief Executive Officer, Nigerian Electricity Regulatory Commission, Prof James Momoh, said recently that since the privatisation of the power sector, there had been a constant decline in the provision of meters to existing customers by the Discos while new customers had been added steadily to their networks, contributing to a significant metering gap.
NERC, in its latest quarterly report, noted that the metering gap for customers still remained a key challenge facing the Nigerian electricity supply industry.
It said out of the 8,310,408 registered electricity customers, only 3,704,302 (about 45 per cent) had meters as of the end of the third quarter of 2018.