8m households to pay more for prepaid meters as NERC deregulates sector

• Nigerians pay N113b for darkness in March as DisCos fail to remit N16b
• NERC imposes fine, insists DisCos must install meters in 10 days
• Why there is increase in electricity tariff – PHED
• Adelabu: To revive power sector, $10b needed yearly for next 10 years

About eight million Nigerians currently being billed arbitrarily by distribution companies (DisCos) may eventually get metered but at a higher price as the Nigerian Electricity Regulatory Commission (NERC) yesterday halted price control of the asset.

NERC, in an order it issued yesterday, said prices of meters would now be determined by prevailing realities, as the sector may choose between smart meters and other types, a development likely to spike prices.

While prices of the assets were last year pegged at N82,000 and N144,000 for single and three-phase meters, NERC said Meter Asset Providers (MAPs) scheme would now be determined through a competitive bidding process with customers provided with a choice of authorised vendors.

NERC also abolished the regulated pricing of meters deployed under the MAP scheme, noting that the cost of meters deployed under the MAP scheme was deregulated to enable end-use customers to acquire meters from MAPs based on competitive open market prices determined from a transparent bidding framework.

The decision is expected to take effect from tomorrow, May 1, even as MAP permit holders, according to NERC are now eligible to provide services and transact for the provision of meters and metering services with any DisCo in Nigeria.

“The lifting of the restriction on permitting to operate in all DisCos is subject to the mandatory requirement for MAPs to comply with the associated DisCo specific requirements specifications. All DisCos shall ensure the effective and seamless integration of smart meters deployed by MAPs with the DisCo’s head-end systems and meter data management systems,” NERC said.

The order signed by the chairman, Sanusi Garba, noted that meters to be deployed under the MAP scheme may include other types of meters including basic electronic meters, Internet of Things (loT) meters, DIN Rail meters and Current Limiters but subject to full compliance with the Nigerian Electricity Supply Industry Metering Code and the requirements/specifications of DisCos.

The commission added that the meter prices on offer by MAPs shall be valid for the succeeding month or until the opening of another price offer window by the Commission even as the DisCo must meter end-users 10 days after making payment or pay a fine of N500 and N1000 daily for single and three phase meters for every day they failed to install after deadline.

For over 10 years, about eight million customers have been billed arbitrarily (estimated billing), a development which usually shortchanged not only consumers but worsened the liquidity crisis in the power sector.

This has necessitated over N5.4 trillion tariff shortfall and pushed indebtedness of the power sector to the Central Bank of Nigeria (CBN) and commercial banks to record high.

After privatisation, Nigeria introduced Credited Advance Payment for Metering Implementation (CAPMI) in 2013 but the scheme was closed in 2016 as only 500,000 meters were deployed in the four years of the programme while DisCos were unable to meter customers after payment.

NERC later introduced the Meter Asset Provider (MAP) Regulation with effect from April 3, 2018. However, the initiative did not also live up to expectations as the Federal Government introduced the Mass Metering Programme, which overshadowed the MAP initiative.

Under the mass metering programme, while about 900,000 meters were said to be provided under the zero phase of the scheme, there were a series of corruption issues that forced the CBN to charge most of the metering firms to court. The Work Bank had agreed to fund the deployment of 1.2 million meters but the scheme with tender last year is yet to see the light of the day.

While the new order was silent on whether DisCos would reimburse customers for the cost of the assets, a professor of Petroleum Economics and Policy Research, Wunmi Iledare, said passing the burden of meters to consumers is unacceptable.

A stakeholder in the sector, Adetayo Adegbemle, said the country’s macroeconomy indices do not encourage stable pricing for materials that are sourced in foreign exchange. According to him, the development encourages liberalisation, adding that NERC is looking at the issue from that angle.

Former president of the Chartered Institute of Bankers of Nigeria (CIBN) and professor of Economics at Babcock University, Segun Ajibola, decried that metering remains one of the Achilles heels in the electricity chain in Nigeria.

Ajibola said: “Prepaid metering should ordinarily be available by the asking. But it has become a mafia in content and context between electricity companies and their regulators on the one hand, and the helpless and hapless Nigerians who are the consumers on the other hand.”

Despite the poor state of electricity in the country with incessant grid collapse, Nigerians were billed N133 billion in March for energy consumption. A document released by NERC showed that DisCos only collected N97 billion while a whopping N16 billion was recorded as losses, a burden that would be settled by taxpayers.

Meanwhile, the Port Harcourt Electricity Distribution Company (PHED) has attributed the recent tariff hike for Band A customers to the escalating cost of doing business in the country.

PHED’s spokesman, Olubukola Ilevbare, made this known while briefing newsmen in Port Harcourt yesterday, adding that the April 3 price adjustment was in line with the 2024 Supplementary Multi-Year Tariff Order (MYTO).

He said that the more than 200 per cent hike for Band A customers was a result of the MYTO agreement with NERC, and attributed the tariff increase to the escalating cost of doing business in the country.

“The new tariff is designed to mitigate the impact of recent changes in key economic indices like inflation rate, foreign exchange rates and gas prices. It is intended to enhance the fulfillment of various obligations across the value chain, which impact operational efficiency and ensure a reliable power supply for customers.

“Under the new tariff structure, customers on Band A feeders, receiving a minimum of 20 hours of electricity daily, will now be billed at N225 per kilowatt,” he stated.

From the Minister of Power, Adebayo Adelabu, yesterday concluded that the Federal Government needs to inject $10 billion yearly into the power sector for the next 10 years to revive the sector and put an end to the liquidity challenge.

Adelabu spoke in Abuja at a one-day investigative hearing on halting the new electricity tariff hike by NERC for onward implementation by DisCos organised by the Senate Committee on Power.

“For this sector to be revived, government must spend nothing less than $10 billion yearly in the next 10 years. This is because of the infrastructure requirement for the stability of the sector, but the government cannot afford that.

“And so, we must make this sector attractive to investors and lenders. There must be commercial pricing for it to attract investors. If the value is still at N66 and the government is not paying a subsidy, the investors will not come. But now that we have increased tariff for Band A, there are interests been shown by investors.”

The Minister said the major challenge in the sector was the absence of liquidity, adding that the sector has been operating on a subsidised tariff regime given the absence of a cost-reflective tariff.

He, however, pointed out that the subsidy had not been funded over the years as huge liabilities were being owed to the Generating Companies (GenCos) and the gas companies.

Adelabu insisted that the inability of the government to pay the outstanding N2.9 trillion subsidy was due to limited resources, hence the need to evolve measures to sustain the sector.

He appealed to the lawmakers to support the process of paying the debt owed operators across the value chain of generation, transmission and distribution.

According to him, the increase is based on supply, saying that any customer that does not receive 20 hours of power supply will not be made to pay the new tariff.

Members of the committee in their separate remarks decried the experiences of Nigerians on electricity supply over the years, despite the unbundling of the sector. Senator Lola Ashiru said Nigerians were paying for the inefficiency of power sector operators.

Ashiru, who is vice chairman of the committee, said there was a lot of inefficiency across the value chain of generation, transmission and distribution, adding that poor Nigerians must be protected, while there was a need to consider a reversal of the tariff increase until there is an appreciable improvement in supply.

Senator Solomon Lalong said there was no consultation before the increase, adding that issues of palliative should have been discussed and provided before the tariff hike.

Enyinnaya Abaribe, who is chairman of the committee, said what Nigerians wanted was a solution to the issues and ways to ensure liquidity in the sector.

He also decried the non-appearance of a company, ZIGLAKS, over the failed agreement to provide prepaid meters for Nigerians. He alleged that the firm had received N32 billion in 20 years to meter Nigerian electricity consumers.