- NERC reports that Nigeria’s metering rate remains at 50%, with half of the electricity customers still relying on estimated billing despite progress since 2013.
- The commission highlighted a 414% increase in monthly revenue collections from 2017 to 2024, driven by improved payment discipline and tariff reforms.
The Nigerian Electricity Regulatory Commission (NERC) has acknowledged that the country’s metering gap remains substantial despite installing 3.03 million meters since privatising the power sector in 2013. The metering rate is around 50%, leaving half of the electricity customers reliant on estimated billing.
Dr. Yusuf Ali, NERC’s Commissioner for Planning, Research, and Strategy, addressed the ongoing metering challenge during the 2024 PwC Annual Power and Utilities Roundtable. He noted that the sector’s reliance on estimated billing poses significant challenges to its liquidity and efficiency. Dr Ali also pointed out that poor customer enumeration by Distribution Companies (DisCos) exacerbates the metering issue.
During his presentation, titled “Recent Policy Reforms and NERC Orders: Exploring Their Potential to Renew Optimism in the Electric Power Sector,” Ali emphasised the importance of metering for revenue recovery, explaining that the effectiveness of tariff reforms would be undermined without proper metering.
Ali provided a breakdown of the country’s metering progress over recent years:
- In 2020, there were 11.84 million registered customers, with 4.66 million metered, yielding a metering rate of 39.36%.
- In 2021, registered customers increased to 12.86 million, with 4.69 million metered, resulting in a 36.47% metering rate.
- By 2022, there were 12.15 million registered customers, with 5.13 million metered, raising the rate to 42.22%.
- In 2023, the metering rate stood at 44.38%, with 5.84 million metered out of 13.16 million customers.
- As of 2024, 6.15 million out of 13.33 million registered customers have been metered, bringing the metering rate to 46.14%.
NERC supports several initiatives, including the Presidential Metering Initiative (PMI), the World Bank’s DISREP, and the Meter Acquisition Fund (MAF), to accelerate the deployment of meters.
Ali also reported a significant increase in monthly revenue collection, which rose from N31 billion in July 2017 to N160 billion in July 2024, reflecting a 414% increase. This surge in revenue, coupled with payment discipline initiatives that began in 2020, has led to higher remittance rates to upstream players such as Generating Companies (GenCos) and the Transmission Company of Nigeria (TCN).
The NERC Commissioner also discussed the importance of the MRO/DRO regime, which allows DisCos to charge near-cost-reflective tariffs. He highlighted that the Default Rate of Order (DRO) increased from 9% in January 2024 to 47% in April 2024. Ali emphasised that organic market collections have become the most reliable form of funding for the Nigerian Electricity Supply Industry (NESI), driving sector growth.
Additionally, NERC is working on transitioning to bilateral trading, which is expected to introduce more competition to the market, as outlined in the Electricity Act (EA) 2023. Ali noted that the NESI’s current framework for bulk energy procurement is inefficient, with a generation capacity of 5GW while around 8GW remains stranded. He pointed out that only five out of 30 plants have effective contracts, while others operate on best-effort terms. As a result, GenCos have only received an average of 40% of their 2024 invoices. Ali stressed that ineffective contracts have weakened market discipline and revenue assurance, compromising capacity recovery and sustainability.
He concluded that 80% of installed generation capacity cannot be secured unless firm contracts are established, particularly regarding gas supply.