By Okoro Uche
Metering is essential to ensuring market liquidity and sustainability. In the absence of accurate metering, energy billing and collection becomes a challenge as evidenced in Nigeria’s electricity industry over the past couple of decades. Metering ensures that collection losses are minimal and adequate remittances are made across the value chain. It is necessary to improve consumers’ trust in the system and make it easier to note and appreciate changes in service level. Of the about 8 million electricity consumers in Nigeria, about 55 per cent of are currently unmetered.
One would expect that the DisCos would be the advocates of metering since it enables them to reduce collection and commercial losses. Despite the advantages being evident, the resources needed to implement metering are often unavailable. Providing meters for millions of households is a costly endeavour. It is estimated that the industry needs about ₦347 trillion to close the metering gap. DisCos do not have the financial capacity to meter all their customers. Also, reliance on government interventions has provided minimal motivation for the DisCos to meter their customers.
Attempts at Metering
As a result of these limitations, the Nigerian Electricity Regulatory Commission (NERC) came up with the CAPMI order where customers could pay for a meter and have these meters installed within 45 days. However, this scheme was largely deemed unsuccessful as the technical and financial limitations of the DisCos resulted in customers being unmetered years after paying for meters.
In a bid to address the challenges associated with metering, NERC enacted another regulatory framework for consumer metering in 2019: the Meter Asset Provider Scheme. Under this scheme, DisCos will partner with private vendors/companies called Meter Asset Providers (MAPs) to provide customers with meters timely and at a cost-effective price.
Despite the promises offered by the scheme, its implementation has been judged by stakeholders to be poor as metering has not increased at the expected pace. MAPs complained that changes in forex prices, as well as a 35 per cent hike in the import duties for meters, has made the selling price for meters agreed with NERC unfeasible. The prices set at ₦36,991 for single-phase and ₦67,055 for three-phase do not reflect the current cost of obtaining and installing meters, they argued. In response to this, NERC in June 2020 increased the prices for the meters to ₦82,855.19 for three phases and ₦44.896.16 for single-phase meters.
How Will the Suspension of Import Levy Help?
The Federal Government yesterday deferred the 35 per cent import levy imposed on electricity meters for one year. This is aimed at supporting the MAPs to roll out three million electricity meters. The levy which was imposed to encourage local meter production did not account for the inadequate local capacity to provide the number of meters needed. The import levy has delayed the rate of clearing meters at the port in recent months which in turn has reduced the spate of meter deployment.
This suspension in import levy provides the MAPs with adequate time to plan and bring in more meters. One thing that remains to be seen is if NERC would be reversing the increase in the prices for meters or reducing it significantly as one major factor that influenced the recent increase has been removed.
In all, this is a step in the right direction towards increasing market liquidity and sustainability.