NERC, DisCos playing ping-pong with metering consumers
A German Philosopher, Arthur Schopenhauer once said that suffering by nature, or chance never seems so painful as suffering inflicted by the arbitrary will of another. If you were a Nigerian, currently experiencing the poor service delivery and gross violation of extant laws, especially the Electric Power Sector Reform (EPSRA) Act of 2005, which was designed to be implemented by the Nigerian Electricity Regulatory Commission (NERC), you would agree that “injustice and lawlessness is the greatest terror a government can ever unleash on its people.”
The inability of NERC and the nation’s power distribution companies to provide basic infrastructure, including prepaid meters to customers, years after the power sector privatisation does not only speak of the fall of the power sector, but an indication that the absolute rascality, which Nigerians have allowed to thrive in the sector hurts seriously, and amounts to utter lawlessness.
Unarguably, investors are in business to make money, but it is critical to remember that investors are first human beings. Indeed, it is worthy of note that making meaning is superior to making money because there are many, who make money, but they make no meaning.
Like other businesses, the Nigerian Electricity Supply Industry (NESI) should function well if there is adequate cost or tariff to ensure that it generates necessary revenue. But that only can be achieved when DisCos meter consumers to ensure that billing is fair, transparent and accountable. Sadly, the reverse is the situation on the ground.
In the Key Performance Indicators (KPIs) rooted in the Performance Agreement (PA) for the DisCos, the NERC, through the EPSRA Act of 2005 states that power utility companies are charged with the responsibility of metering consumers. This is the basis for Sections 32 sub-section D, and Section 76 sub-section 2 of the Act, which aims to calculate tariffs to achieve the legislation on liberalisation.
Indeed, when the question of who should provide meter resurfaced last year when NERC launched the Meter Asset Providers (MAPs) policy, the commission was quick to insist that ensuring that all electricity consumers are metered remains the responsibility of DisCos’, even under the Meter Asset Provider (MAP) Regulations 2018.
The Commission further stated that this was consistent with DisCos’ respective Licensing Terms & Conditions, and Section 4 (1) of the said regulations, which provides that, “Distribution licensee is responsible for the achievement of metering targets as specified by the Commission from time to time.”
Furthermore, Section 4 of the MAP Regulation requires that all distribution licensees shall engage the services of a Meter Asset Provider(s) towards meeting the metering targets as specified by the commission, and in accordance with the provisions of the MAP Regulations 2018. The DisCos were expected to engage MAP(s) within 120 days of coming into effect as per the regulations.
Metering Gap And Estimated Billing
Because of poor data availability, which the country is noted for, there have been discordant voices over the actual metering gap. However, the current shortfall has been put at five million.
A quarterly report on the operations of the country’s electricity market for the third quarter of 2018 by NERC, disclosed that DisCos have not effectively complied with the existing metering agreements with the Bureau of Public Enterprises (BPE) within the period under consideration.
According to the report, out of a total of 8, 310, 408 registered active electricity customers, only 3, 704, 302 (44.6 per cent) have been metered, which means that 55.4 per cent of end-use customers are still on estimated billing.
In comparison to the preceding quarter however, the number of registered customers and the metered customers grew by 4.2 per cent and 4.3 per cent respectively during the third quarter.
But despite the increase in the number of metered customers in comparison to the preceding second quarter, the report states that the total number of meters deployed by DisCos during the third quarter of 2018 is still significantly lower than the expected quarterly metering performance under the Performance Agreement. Notwithstanding the expected average deployments of 1, 640, 411 meters per annum, (i.e., a quarterly average of 410,103), only 157,173 (i.e. 38.3 per cent) meters were installed by DisCos during the third quarter. The report further stated that only three DisCos (namely Abuja, Benin, and Port-Harcourt) metered not less than 50 per cent of their registered customers as at the end of the third quarter of 2018. The metering of end-users remains a top priority to the commission,” the report claimed.
Without pre-paid meters, there has been growing apathy by customers to pay their bills, a development, which leads to huge unsettled DisCo invoices.
On the other hand, the practice of estimated billing in the industry has prevailed and is now perceived in some quarters to be the toast of the DisCos. The metering gap in the industry currently has been identified as evidence that most DisCos are not fully committed to addressing the anomaly and closing the metering gap.
The recent effort of the National Assembly to legislate against the practice of estimated billing reflects the public’s concerns relating to the inadequate end-user meters and flagrant abuse of the estimated billing process for both post-paid metered and unmetered customers.
Worried by the low level of prepaid meter deployment, the NERC recently capped the amount, otherwise known as estimated bills that distribution companies could charge unmetered consumers.
According to an order repealing existing billing regulations of 2012, NERC expressed concern that just over 10 million electricity consumers have been metered in seven years, with about 52 per cent being invoiced on estimated billing. Under the new regulation, all unmetered residential and commercial (R2 and C1) customers shall not be invoiced for the consumption of energy beyond the cap stipulated in the order, according to designated distribution companies.
While some stakeholders lauded the move, some industry players were, however, cynical, whether the plan would be successful, saying that the document lacks a proper enforcement plan.
The National President of Association of Public Policy Analysts (APPA), Princewill Okorie, said NERC has historically failed to properly implement policies, especially aspects that directly affect consumers.
According to him, releasing an order without proper plan for enforcement, education and public enlightenment at the grassroots, may not achieve projected objectives.
The Executive Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, also raised concerns about the implementation plan, stating that most consumers were unaware of their rights.
Ogaji said the current order has no monitoring template to ensure DisCos’ adherence to the plan, just as she queried those that would enforce it.
History Of Metering From NEPA to EPSRA Act
When the Federal Government was solely in charge of the power sector, through the Power Holding Company of Nigeria (PHCN), formerly the National Electric Power Authority (NEPA), there were limited efforts at ensuring that consumers were metered. The development did not generate any fuss because power was seen as a social service. This development left gaps that the DisCos were charged to bridge when they took over
However, before privatisation, the Federal Government introduced the National Prepaid Metering Programme (NPPMP). With the plan, the government-appointed Revenue Cycle Management (RCM) contractors to procure and install pre-paid meters at low cost to electricity customers. However, the NPPMP was not sustainable owing to some reasons, including the huge cost of funding the meters; lack of transparency in the appointment of RCMs; the short duration of the RCM contracts; uncoordinated meter procurement processes; the proliferation of sub-standard meters, and non-standardisation of meter technology and corruption.
To fast-track metering, NERC in 2013 mandated the electricity distribution companies to commence the implementation of Credited Advance Payment for Metering Implementation (CAPMI).
CAPMI came about due to the slow pace of customer metering by the DisCos, as well as the high level of complaints received from customers, who were dissatisfied with estimated billing practices.
It also provided a platform for willing customers to pay the cost of the meter into a dedicated account jointly managed by the DisCos and meter vendor/installer. Once payment has been effected, customers would have their meter installed within 45 days, by a NERC-accredited vendor/installer.
But that arrangement faltered following recurring customer complaints about the non-delivery of meters after full payment had been made by customers. The initiative was wound down with effect from November 1, 2016.
Despite instructing the DisCos to ensure installation, NERC wrote in a report that “many customers who have paid for meters under CAPMI have to date remained unmetered without any satisfactory justification by the distribution companies.
After the failure of CAPMI, NERC window-shopped for another policy and came up with MAP, stating that the move came against the backdrop of the renewed bid to ensure that electricity customers only pay for what they consume.
The regulation was to cater for the supply, installation, and maintenance of end-user meters, by other parties approved by the Commission.
The Meter Asset Provider (MAP) Regulation (Regulation No. NERC/R/112), which came to force on April 3, 2018, introduced meter asset providers as a new set of service providers in the Nigeria Electricity Supply Industry (NESI).
As assets with a technically useful life of 10-15 years, the regulation provides for third-party financing of meters, under a permit issued by the Commission, and amortisation over a period of 10 years.
Under the scheme, electricity distribution companies, in line with their licensing terms and conditions, are obliged to achieve their metering targets as set by the Commission under the new regulation.
In the new policy, NERC approved the cost of a single-phase meter for N36, 991.50, and N67, 055. 85 for a three-phase meter. These costs are inclusive of supply, installation, maintenance, and replacement of meters over its technical life.
Under the new plan, a customer would initiate a request for metering, by filling in all necessary details, including his/her phone number. After the application, the utility companies visit the customer’s location for site verification to determine the type of meter needed, an SMS is sent advising the customer to make a payment, the customer makes payment and must be metered within 10 working days.
Poor Implementation Despite Transferring Burden To Nigerians
The NERC had promised that it would monitor closely, the rollout plan of distribution licensees, their overall compliance with the regulation and various service agreements by the MAP, and electricity distribution licensees justified the need to transfer the cost of meter to Nigerians. The group had argued that investment on meter was part of the total value of the tariff paid.
“It is to be noted that there are no free meters even under the current tariff regime as all customers, including those on estimated billing, currently pay for a return on the investment made by electricity distribution companies on meters in their networks. Under the new MAP regulation, customer classes shall be amended to ensure that customers only pay for meters when a meter is physically installed on their premises. The electricity bill of customers provided with a meter under the new regulatory framework shall comprise of two parts – energy charge and metering service charge. The payment of metering service charge will be removed from the customer electricity bill upon the full amortisation of the meter asset over its useful life,” NERC’s Head, Public Affairs Department, Dr. Usman Abba Arabi said.
Needless to say that for an agency once accused of unilaterally fixing the salaries and allowances of its board and staff members without recourse to the National Salaries, Incomes and Wages Commission (NSIWC), as required by relevant laws, and which also reportedly spent N4.938b on salaries, post-employment benefits and other allowances for the seven commissioners and about 165 support staff, it would be difficult for it to feel, or understand what over 87 million Nigerians living below $2 per day go through every day.
Despite the economic hardship in the country, electricity consumers have had to invest in buying poles, cables, meters and sometimes, bear the cost of replacing transformers all of which they can never lay claim to as they legally belong to the distribution companies.
Even though the masses were willing to pay, the metering scheme is working as stipulated by the regulator.
A customer, Deddy Piper under the Benin Electricity Distribution Company is one of the many applicants that are waiting for meters for several months under the MAPs scheme. According to regulation, the meter should be provided within 10 working days of payment. Piper has waited for close to a year.
Another customer under Ikeja Electric, simply referred to as Moinmi, (application number withheld), lamented her ordeal thus: “I’ve paid for meter almost two months now, but NewHamspire is yet to install the meter after it took Ikeja Electric months to rectify outstanding bill.”
Adebayo, another electricity consumer summarised the situation this way: “Getting a prepaid meter from distribution companies is like applying for a visa, if not worse… issuing a prepaid meter has become rocket science.”
As of January 2020, 50.8 per cent of Nigerians in a poll conducted on Twitter said they are yet to be metered, meaning that they have continued to pay through the estimated billing, which has received nationwide condemnation.
Some customers under Enugu DisCo practically held the outfit by the jugular before their prepaid meters were installed. They barely had power supply afterward. One of them, who identified herself as Uju alleged that after all the hassles they went through to obtain the meter, they were “still in darkness now.”
In different locations, taking delivery of prepaid meters has not been as smooth as it ordinarily should be. In fact, after waiting for several months, some consumers who paid for three-phase meters were handed one-phase devices and vice versa, meaning that meters were issued to wrong application numbers.
For Olaniyan Akinlolu, if taking delivery of his prepaid meter was an arduous task, getting an activation code to activate the device was a different ball game altogether. Indeed, Oluwaseun Adetayo, who lives in Lagos State also faced a similar challenge. He said: “It took over three weeks to get an activation code for the prepaid meter to be activated. It was indeed a very sad development.”
No Prepaid Meter Installation In Adamawa, Taraba, Borno, Yobe
While the 10 private utility companies are struggling to implement MAP, the government-owned Yola DisCo, which is expected to serve Adamawa, Taraba, Borno and Yobe states is on standstill over bureaucratic processes.
Following sustained heinous activities of Boko Haram insurgents in the North East, the Federal Government took over the Yola Electricity Distribution Company (Yola DisCo), as the Senate approved the sum of N26.9b as a refund for the acquisition of the company by private investors.
Managing Director of the company Mustapha Baba Umara, had informed The Guardian earlier on that about 4,000 applicants have so far applied for prepaid meters, and that the company was awaiting approval to seal the deal to avoid legal tussles.
He disclosed that the rollout of meter would commence immediately necessary approvals were granted.
Enugu, Ikeja, Jos, Kano DisCos Unable To Account For Roll Out
The Guardian had earlier written to the Enugu, Ikeja, Jos, Kano DisCos requesting details of their meter rollout under MAPs, but there has been no response from them for over a month, despite repeated reminders.
Following a telephone conversation, The Guardian also sent a request to Emeka Ezeh, who heads the Public Relations Department of Enugu DisCo on February 4, 2020, but he has failed to respond to date. Reminders sent on February 7 and 18, were also ignored by Ezeh.
When a similar conversation was initiated with Ibrahim Shawai of Kano DisCo, he simply asked this reporter, “Where are you based?” And upon response, he said: “I will get back to you.” He never did despite reminders.
Saratu Aliyu of Jos DisCo acknowledged the request and promised to provide details. But she has failed to do so for over a month now.
When reminded after many attempts, the Head of Corporate Communications of Ikeja Electric Plc, Felix Ofulue equally failed to provide the requested information, stating on one occasion: “I spoke with the guys (department in-charge of MAP) this morning and they promised to send it to me. I guess we all forgot. I have to share with you tomorrow. He was reminded about 10 days after but failed to revert before this report was compiled.
Eko DisCo Yet To Meter 23, 000 Registered Customers
Since the scheme came on board, at least 30, 000 customers have applied for meter through Eko DisCo.
The company claimed that over 7,000 meters have been rolled out, leaving a huge disparity of 23, 000.
The General Manager, Corporate Communications of the company, Godwin Idemudia, linked the gradual implementation to the newness of the scheme. “It is a new initiative, we were keen on getting it right so as to avoid complications in the future. We hope to bridge the metering gap in three years,” he stated.
Kaduna DisCo Yet To Meter 5, 000 Applicants
While the Head of Corporate Communication, Kaduna DisCo, Abdulazeez Abdullahi, stated that over 140, 000 meters have been installed by the company in Kaduna, Kebbi, Sokoto and Zamfara states, only 2, 000 of this number have been under the MAP scheme out of the 7, 000 customers, who registered to be metered. This has left it with a gap of about 5, 000.
He admitted that MAP implementation has been slow, adding that, “we are working to sort out the cost of payment by instalments with the MAP. Hopefully, that will encourage more customers to come forward.”
Port-Harcourt DisCo Confronting Payment Challenges, 40, 000 Customers Unmetered By Ibadan DisCo
According to Port Harcourt DisCo, over 15,144 customers have registered for MAP and 14,643 customers metered. And since August 2019, the DisCos said the implementation, which has remained seamless and encouraging, is being affected by the purchasing power of the consumers.
Ibadan DisCo covers the largest franchise area in Nigeria, consisting of Oyo, Ogun, Osun, Kwara and parts of Niger, Ekiti and Kogi states. And of the over 50, 000 registered applicants under MAP, only 10, 000 customers have been metered.
Abuja DisCo Meters 81, 533 Customers
In Abuja, Niger, Nasarawa, and Kogi states, statistics from Abuja DisCo showed that 87, 059 customers have been metered under the MAP scheme out of 97, 407 that applied. In total, the DisCo said it has installed 160, 832 since inception.
The firm, which has in recent times been parading itself as the leading metering DisCo, according to its Managing Director, Ernest Mupwaya, said it is targeting the installation of 867, 291 meters by 2022.
Challenges Affecting MAPs Implementation
To most DisCos, the implementation of Map is crippling, mainly because meter assets providers have had to grapple with the issue of increased import duty, which affected their earlier plans and projections.
“As you know, many of them rely on importing these meters. That also slowed the process and customer response has also been slow perhaps, because of the cost involved,” Kaduna DisCo’s Abdullahi stated.
The import duties on the meter had moved from 15 per cent to 45 per cent, despite other bottlenecks at the ports.
While most of the DisCos are yet to introduce a finance scheme that would enable customers to pay in installments, DisCos see funding as one of the critical challenges affecting the success of the scheme.
“Many customers’ premises are not ready for metering due to the following; internal wiring, standardisation, safety hazards, loss reduction, and some customers are not willing to make upfront payments. However, we are already working on amortisation with these providers,” Idemudia said.
The Eko DisCo spokesperson also added that low availability of meters on the part of the vendors at the kick-off stage, due to increase in import tariffs and technology integration, in terms of the meters being efficiently integrated into the EKEDC system, also left the implementation hamstrung.
He called on customers with outstanding bills to come forward to enable them key into the initiative, adding that the company was willing to negotiate payment plans and other resolutions.
Some of these providers have equally decried the country’s high-interest rate, the recent increase in VAT, tying down of Money of MAP licensees, while licensees are reportedly expected to supply prepaid meters on credit, and wait for payment with no single-digit, long-term, low-interest rates facilities from the apex bank.
The licensees also maintained that they have no fiscal and non-fiscal incentives, are exposed to exchange rates volatility amid security challenges in the North East, as well as payments of MAP meters installer, transportation and logistics and others.
Local Content Challenges And Brief Case MAPs/Vendors
At the inception of the MAP policy, the NERC boasted that it would ensure its monitoring and evaluation, and also promised that over 30 per cent of the meters would be locally sourced. The Commission also stated that the selection of vendors would be based on competitive bidding.
But just like the embattled distribution companies, the capacity of companies selected to invest in the metering gap has been seriously questioned. With the obvious lack of financial, technical and personnel capacity, the NERC may need to clarify the basis upon, which it selected the companies. Indeed, while some of the companies are struggling to survive, they still have agreements with almost all the utility companies.
While the integrity of some of the supplied meters is equally being questioned, the NERC is yet to clarify why only 22 companies (including some without meters in stock) were selected after offering license of no objection to 108-meter companies, whose credentials had been verified.
On the other hand, while some licensees engaged by the NERC are struggling, there are reportedly local manufacturers, who could rise up to the challenge as thousands of meters are reportedly wasting in warehouses. Notwithstanding, NERC has mandated that about 30 per cent contract should be offered to locals manufacturers.
Metering Has Made Little Or No Progress Under MAP Scheme
The former Chairman of NERC, Sam Amadi is of the view that metering has remained as bad or even worse under MAP, even as he stated that information on MAP implementation has remained scanty.
According to him, CAPMI would have succeeded massively if the sector had kept faith with it. He, however, advised that the country should not be in a hurry to throw away MAP, noting that there was the need to diligently execute it while changing what needs to be changed and enforcing more rigorously, the provisions of the scheme.
As of today, some MAPs have one niggling complaint or the other, while all regulatory interventions have suffered initial crisis. Consequently, it is for NERC to reassess the scheme and twig it in a bid to address some of the shortcomings.
That’s is perhaps why Amadi noted that “strict regulation is imperative; you study what is happening in the scheme, identify errors of omission and commission and fix them. We should not be discarding policies that face challenges.
Directing MAPs Back To DisCos Wrong Approach
The Converner of PowerUp Nigeria, (an electricity consumer rights advocacy group) Adetayo Adegbemle, said the group has entertained a lot of complaints from customers, who have paid for meters but are yet to take delivery of such. There are others whose meters are yet to be installed, as well as customers, who have been inspected, verified and have not heard from their MAPs.
“There are also issues with MAPs, who do not have meters in stock, yet they are under the scheme. Some DisCos are even giving out bogus, unverifiable data of customers that have been metered. In all, I am not satisfied with the implementation of MAP,” he said.
According to him, NERC gave license of no objections to 108-meter companies after their credentials had been verified, but did not allow the companies to operate. He stressed that it was wrong that only 22 of the firms eventually became MAPs.
“Asking MAPs to go through the Discos is another No. We pushed for independent metering service providers so that meter providers can be part of the DisCos since the DisCos could not come up with the financial commitment in the first instance. So, it is wrong for NERC to tell MAPs to go back to the same DisCos.
“MAP is supposed to be a solution to the metering problem, which of course, cannot be solved in one day. However, we are still calling for the review of the MAP regulation, coupled with the new cap on the tariff. We might have a headway,” Adegbemle said.
Integrity Of Meters Deployed Must Be Ensured
According to the Executive Secretary of the Association of Power Generation Companies (APGC), Dr. Joy Ogaji, there is need for the NERC to come up with quality assurance structures to ensure that the meters deployed under the MAP scheme are of excellent quality, even if the intention is to promote local content involvement.
She sees the initiative as a step in the right direction, adding that NERC, however, must ensure the monitoring of its full enforcement and operationalisation; failure of which it would fail like many other initiatives in the power sector.
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