‘Nigeria needs uniform metering standard to avoid confusion in electricity market’

About seven million electricity users in Nigeria are billed arbitrarily as metering remains a challenge over a decade after the privatisation of the power sector. In this interview with KINGSLEY JEREMIAH, Managing Director of Momas Electricity Manufacturing Company Limited, Hammed Abiodun, discusses the challenges bedeviling the metering sector, the need for harmonised standard, the deregulation of the metering industry, meter importation and other cogent issues. 

Nigeria has over seven million metering gap, which has been very difficult to bridge. How can the country address this challenge?
Over the years, there hasn’t been a concerted effort to develop the metering sector in Nigeria. The solution lies in supporting local manufacturers. With the right policies, these manufacturers can drive progress. For instance, Momas pioneered the prepayment metering system in Nigeria, yet there has been limited government engagement to understand how local manufacturers can contribute. The government must listen to genuine manufacturers, who can guide policy decisions to foster development in the sector.

One idea we’ve been advocating for is the adoption of a standardised “Made in Nigeria” meter. This would not only boost local production but also drive backward integration. Production shouldn’t rest solely on one manufacturer like Momas. Other companies can contribute by producing meter components, such as plastic parts, which is a huge opportunity. By encouraging local production, the entire economy will benefit, creating jobs and boosting growth.

The government should also impose higher tariffs or bans on imported meters that can be locally produced, rather than focusing solely on filling the metering gap. The funds allocated to this gap could be better used to support local manufacturers, creating jobs and stimulating the economy.

I shared with the Honourable Minister of Power last year that imported meters often come with inferior quality and short lifespan. Foreign Original Equipment Manufacturers (OEMs) supply cheap products, but they fail to support them over time. In 2012, we experienced this with faulty meters from low-quality foreign suppliers. While we appreciate the government’s interventions, they must prioritise local manufacturers to ensure the long-term success and sustainability of the metering sector.

The meter companies mismanaged the mass metering programme and were even dragged to court by the Central Bank of Nigeria (CBN). Do you think the local meter companies are trusted and have capacity? 
When putting things in perspective, it’s important to be specific and avoid generalisation. While there were reports in the media about issues with meters, it’s critical to note that Momas was not implicated, despite being part of the National Mass Metering Programme. We supplied all our meters under that initiative, with certificates of completion and everything in order. Every meter has a unique identity number, and the Distribution Companies (DisCos) have systems in place to track these meters.

I’m not disputing the fact that there were issues with some meters, but we shouldn’t generalise and lump all manufacturers together, as it can harm legitimate and reputable companies like Momas. It’s also crucial that if there were actual cases of wrongdoing, the government should conduct thorough investigations and hold those responsible accountable. However, there hasn’t been any follow-up or conclusion on the matter in the media.

We should focus on supporting local manufacturers who have invested heavily in the sector. Before the intervention under the Buhari administration, only a few manufacturers were in the sector. The intervention encouraged more entrants, and many have made genuine investments, as confirmed by the Federal Ministry of Finance’s inspection of local manufacturing facilities last year.

It’s essential to recognise the existing capacity and technology in the local meter manufacturing industry and not discredit the sector due to isolated incidents. There is significant technical know-how in the country, and local manufacturers have been successfully supplying meters under the Meter Asset Provider (MAP) scheme for years. Rather than undermining local efforts, we should continue to support and grow the industry.

What is the operational profile of Momas and its capacity in bridging the metering gap? 
Momas Electricity Manufacturing Company Limited is a leading manufacturer in the downstream power sector and a recognised OEM by the Federal Government through the Federal Ministry of Trade, Industry and Investment. 

We’ve been at the forefront of innovation in the sector, starting from the days of NEPA, when we developed the first software billing application system. Today, we’ve pioneered various types of meters, including transformer meters and domestic meters. We also invented the dual tariff energy meter used widely across military barracks, helping to address their specific challenges. Additionally, we introduced the substation enhancement panel to solve issues at transformer points. 

These are just a few of our achievements in the power sector. Our capacity is significant, driven by a robust R&D department responsible for many of these innovations. However, it’s still untapped due to the country’s metering procurement policies. Although the recent deregulation by NERC is a positive step, further improvements are needed. Currently, our capacity allows us to produce up to 50,000 meters a month.

Players like you have been asking for a deregulated metering market. With the new regulations from NERC, do you think what the sector has been asking for has been addressed?
The deregulation introduced by NERC only affects pricing, as meter manufacturers don’t interface directly with customers; the process is handled by DisCos. The issue is that DisCos are exploiting the system. For example, if a manufacturer offers a meter at N95,000 and Momas offers it at N130,000, but the DisCos set an average price of N120,000, customers will naturally opt for the cheaper option, even though they’ve paid for the average price. This leaves a margin for middlemen, while manufacturers like Momas don’t even make such a profit margin. 

True deregulation should allow consumers to choose their meter based on quality and features, rather than being influenced by middlemen who are driven by profit. The meters are supposed to be the asset of the DisCos, not something customers should have to pay for. Local manufacturers are still at the mercy of DisCos, unable to sell directly to consumers due to policies.

Although deregulation is a step forward, there is a need to focus on the quality of meters being supplied and to support local manufacturers. The metering gap is a persistent issue, but supporting the local manufacturing sector will help bridge that gap and inject money into the local economy, rather than relying on foreign companies like those from China, which enjoy government subsidies and can sell meters cheaply. 

By investing in local manufacturing and developing policies that promote local industries, Nigeria can build a sustainable meter manufacturing sector. Momas, for instance, runs the first and only metering school in the country and has received international recognition, including a grant from the German Government to establish a skills acquisition school. This shows the potential for growth, but it requires the right policies and support to fully develop.

What’s your take on the liquidity crisis in the power sector? 
Liquidity is a significant concern for manufacturers like us. In the past, we’ve had to rely on loans from the Bank of Industry (BOI). The challenge often lies with some DisCos not fulfilling their contractual obligations, resulting in delayed payments. This impacts our financial commitments to banks and other obligations. However, it’s not entirely the fault of the DisCos, as it often stems from policy constraints affecting their operations.

Despite these challenges, the manufacturing sector holds immense potential. There are legitimate investors who want to enter the sector, but it’s crucial for those coming in whether to invest in DisCos or other areas to be genuinely committed to improving infrastructure. Investing in infrastructure such as transformers, metering and other critical components is key to ensuring efficiency and customer satisfaction.

One of the issues in the power sector is that some investors enter the market without understanding its complexities and fail to prioritise infrastructure improvements. The government should ensure proper monitoring of what DisCos and other stakeholders commit to, ensuring that their agreements lead to real improvements.

The downstream power sector, which we are part of, is crucial as it sustains the entire value chain. The revenue generated at this level supports transmission and generation, making it a critical part of the ecosystem.

Metering customers is essential for revenue generation and infrastructure investment. Once customers are metered, DisCos can explore franchising areas to other stakeholders. This allows them to meet revenue targets while improving service delivery.

In summary, there’s great potential in the sector, but investors must be genuine and committed to infrastructure improvements to unlock these opportunities.

What challenges should the country work on to put the sector on the right track? 
The challenges facing manufacturers today are deeply tied to government policies and the broader economic environment. First, creating an enabling environment for manufacturing to truly thrive is crucial. This involves addressing the fluctuating exchange rates that make it difficult for manufacturers to import components and raw materials. The government should regulate these rates in a way that supports local industries; ensuring manufacturers can access official rates for imports, which would lower costs.

Another challenge is the lack of decisiveness regarding the types of meters used in the country.

With various types available, the government needs to adopt a uniform standard for meters to streamline development and avoid confusion in the market. Additionally, the government should support middlemen, like the Meter Asset Providers (MAPs), by encouraging them to transition from assemblers to full-fledged manufacturers. A structured policy that allows assemblers to source some of their meters from established local manufacturers would foster growth across the sector.

Government interventions should also be more targeted towards local meter manufacturers. By engaging with us, understanding our challenges, and ensuring that procurement processes prioritise local production, the government could stimulate the economy rather than resorting to cheaper imports from China, which ultimately boosts foreign economies at the expense of our own.

Developing local capacity would enable a more sustainable solution to the metering gap, rather than attempting to bridge the gap with one-time interventions.

Another critical issue is the high cost of diesel, which significantly affects production costs. The government should examine this to alleviate the burden on manufacturers, as high production costs inevitably lead to higher prices for consumers. Lower production costs would make it easier to keep product prices reasonable, improving consumer purchasing power.

Finally, manufacturers need more support when importing machinery, such as better access to import duty exemption certificates. Many genuine manufacturers are unaware of these exemptions and end up paying unnecessarily high fees. Additionally, the focus of agencies like Customs should shift from pure revenue generation to fostering industrial development. The current orientation, which prioritises revenue over supporting local industries, is causing many companies to shut down because they can’t sustain the high costs.