The past two weeks week have been busy for the Nigerian Electricity Regulatory Commission (NERC). NERC has kept stakeholders watching with keen interest as it has had to play down the news of a hike in meter prices, renew the license of the Nigerian Bulk Electricity Trader (NBET) and propose amendments to major regulations affecting consumers.
On the issue of the renewal of the license of NBET, opinions have varied on the decision of NERC. The NBET was initially set up as a bulk trader for electricity from the Generation Companies (GenCos); the NBET was to run for ten years, easing the transition from a newly privatised sector to a fully competitive market. But, unfortunately, the key responsibilities of the NBET have not been achieved in the last ten years owing to unresolved sector challenges, including the crippling liquidity crunch.
The NBET was capitalised with about $600 million to make up for any shortfall in invoice payments by the Distribution Companies (DisCos); this has not been the case. The DisCos currently make about 30% remittances, making it impossible for NBET to sustain shortfall payments for GenCos invoices. In addition to this, the Central Bank of Nigeria (CBN) electricity market interventions structured through the NBET have called into question the financial capability of the agency to carry out its responsibilities to the market. Now the question is, given the performance of the NBET on its duties as a bulk electricity trader, did NERC err in its decision to renew NBET’s license and what are the implications for the electricity market going forward?
The recent increase in the cost of electricity meters has received widespread attention, with stakeholders calling the regulatory agency’s decision insensitive. NERC approved the increase in the price of single and three-phased meters for electricity consumers owing to ”macroeconomic factors” beyond its control. While it is understandable that the Commission cannot sustain a price control on electricity meters, it is questionable that despite government metering interventions, including the National Mass Metering Programme (NMMP), more than 50% of electricity consumers are still unmetered. The country continues to deal with an acute shortage of electricity meters. The question that comes to mind is, why is NERC increasing the cost of meters despite the overwhelming inability of the DisCos or Meter Asset Providers (MAP) to meet the increasing demand for meters?
On a good note, the Commission also announced its review of five consumer-related regulations during the week. The regulations include the Customer Complaints Handling Standard and Procedures Regulations (2006), the Connection and Disconnection Procedures for Electricity Services (2007), the Meter Reading, Billing, Cash Collections and Credit Management for Electricity Supplies Regulations (2007), the Customer Service Standard of Performance for Distribution Companies (2007), and the Methodology for the Determination of Connection Charges for Electricity Supply Regulations (2012).