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Published On: Mon, Apr 16th, 2018

Estimated billing: FG’s ‘Meter Asset Providers’ scheme in jeopardy

…as stakeholders bicker over turf    



Trade dispute between the recently licensed 87 meter asset providers and electricity distribution companies may jeopardize the Federal Government’s resolve to bridge the metering gap in the country’s power sector, findings by Business Hallmark have revealed.

Prepaid Meters  courtesy sparkonline.com.ng

It would be recalled that the Nigerian Electricity Regulatory Commission (NERC) had on Tuesday, March 27, 2018 gave the 11 electricity distribution companies (Discos) 120 days to engage the services of the newly introduced Meter Asset Provider (MAP) to provide meters for the over 4 million unmetered electricity consumers in the country.

This is coming on the heels of the scrapping of the ‘Credited Advance Payment for Metering Implementation’ (CAPMI) set up by Nigerian Electricity Regulatory Commission (NERC) in 2012 to bridge the metering gap. Under the ill-fated CAPMI scheme, customers were expected to self-finance the meter, with the meter cost repaid over a period from their energy charge at 12 percent interest rate per annum.

However, the CAPMI scheme failed to deliver as expected as most electricity consumers who paid for the meters waited for several years before getting their meters while many unlucky customers have still not got their meters from the DISCOs.

With the failure of CAPMI, MAP was introduced in its place. According to NERC, MAP is a new set of service providers in Nigeria Electricity Supply Industry approved to supply electricity meters with a technically useful life of between 10 and 15 years.

About seven million electricity users representing 70 per cent of the 10 million registered users are still unmetered about five years after the power sector was privatised in November 2013, according to the Federal Ministry of Power, Works and Housing.

The new regulation is to encourage the development, supply, installation, and maintenance of independent and competitive end-user meters of meter services in the electricity industry. In pursuant of local content policy, investors are expected to acquire a minimum of 30 per cent of their metering volume from indigenous meter manufacturers.

The new regulation provides for third-party financing of meter production and supply, under a permit issued by NERC, with a 10 years period to pay back the cost. In line with their licensing terms and conditions, the Discos are obliged to achieve their metering targets as set by NERC under the new MAP regulation.

The customers are expected to pay for a return on the investment by electricity Discos on meters in their networks through the payment for electricity consumed under the current tariff regime.

NERC said customer classes have been amended under the new regulation to ensure customers only pay for meters when a meter is physically installed in their premises.

Besides, the electricity sector regulator said customers’ bill provided with a meter under the new regulatory framework shall consist energy charge and metering service charge. NERC however said the payment of metering service charge would be removed from the customer electricity bill upon the full recovery of the meter asset cost over its 10 to 15 years useful life.

The commission also said all faulty meters would be repaired or replaced free of charge within two working days, except where the customer was confirmed to be responsible for the damage.

Jubilant Nigerians, including stakeholders in the power industry, have all commended the new initiative, hoping that it would finally resolve the wide metering gap in the country.

However, despite the lofty intentions of the designers of the new metering scheme, information available to BH indicates that the Meter Asset Providers scheme might end up the way of its predecessor (CAPMI) without achieving its intended aims.

According to information available to BH, electricity distribution companies are not cooperating with meter asset providers. Under the new framework, all technology systems deployed by MAPs are expected to interface into the vending platforms of Discos.

However, our correspondent learnt that virtually all the Discos are refusing access into their network, raising serious concerns over the workability of the scheme. The Discos, it was also gathered, are angry with a new law that barred them from having stakes in new meter companies. According to the regulation, officials from Discos should not hold directorships and senior management positions in MAP.

Troubled by the decision of the Discos to frustrate their efforts, the approved meter asset providers, it was gathered, protested to NERC. After its investigation which found out that power distribution companies are reluctant to welcome the new metering policy direction, the regulatory body again on March 29, 2018, ordered electricity distribution companies to partner with independent meter asset providers to bridge the 7 million meter deficiency.

NERC issued a deadline of August 1, 2018 to the 11 electricity distribution companies to engage the services of meter asset providers, stressing that the move is aimed at achieving the 3-year metering target prescribed by the Commission.

A power industry expert, Dr. Idowu Adegbite, while speaking with BH in Lagos, said that there is need for a robust regulatory oversight of the MAPs and a working synergy with the Discos for the new scheme to work.

He insisted that without such move by the regulator, Discos may not look the way of the MAPs as they in reality enjoy more in ripping off Nigerians with estimated billing system than use of prepaid meters.

“The MAP approach is expected to close the metering gap in the NESI and open up another window of new investments in the sector. However, this intervention will bring its own challenges which must be resolved.

“For example, there has to be a tariff regime that will enable the Discos to fund their capex needs, including metering, given that the primary obligation to meter remains with the Disco or any other electricity supplier and not necessarily on third party contractors like MAPs.

“Without the Discos being carried along, the initiative will not work. They must be assured that they will be able to recoup their investment.

“Given the sensitivity of metering to the bottom line of Discos and the entire value chain, it is important for the Discos to take ownership of metering its customers. Otherwise, the MAP initiative, like other metering interventions may end up only barking at the problem without having the necessary bite”, he argued.

The umbrella body of the electricity distribution companies, Association of Nigerian Electricity Distributors (ANED), while raising concerns over the new third party metering draft initiated by NERC, said through its Chief Executive Officer, Mr. Azu Obiaya, “We are not happy with the regulation and there is quite a bit of it that we are not happy with. We are very concerned about the regulation. The Discos, as part of their performance obligations, have metering obligations.

“We want to be sure that whatever arrangement that comes out will allow us to ensure revenue protection and protect our customers. Meters cost money and that cost must be recovered somewhere. So, if the meter providers will be reimbursed for the cost of the meter, the question is: where does that money come from? Will it come from under a tariff that is already significantly and artificially suppressed as we speak?

“Somebody must pay, and clearly it is illogical to think that with the Discos already bleeding – because they are not allowed to recover their full costs – that you can further push them towards bankruptcy by adding another cost that they cannot recover.

“We have recently provided feedback to the regulator and I believe that there is a consultation forum coming up soon. We will continue to strongly convey our concerns to the regulator,” Obiaya said.

The Executive Director, Research and Advocacy, ANED, Mr. Sunday Oduntan, said the Discos were not carried along in the process of formulating the new meter policy.

“When people say they have carried you along, informing you that they are doing something is not the same as carrying you along. Let’s wait and see; if it works for the nation, we will be happy.

“But for now, we are studying the situation and watching as the details come in and events unfold. Anything that will positively make metering better, we will always support it. But this particular one, I can tell you we have no comment for now; we are not condemning it and we are not commending it”, he said.

Also speaking against the new meter scheme, the Managing Director, Ibadan Electricity Distribution Company (IBEDC), Mr. John Donnachie, said, “I don’t believe in it because metering is a key part of our responsibility. We cannot put meters in because we don’t have a financial foundation to go and borrow money to put the meters in. We have to work with the government to solve the problem, not bring in another party to confuse the issue further.”

According to Abayomi-Olukunle, a partner at Balogun Harold, the success of the business arrangements which the MAP regulation envisages is dependent on the availability of power supply.

“If there is no power supply, this will affect the ability of Consumers, who opt for instalment payments for meter assets, to fulfill their payment obligations. This will have implications for MAPs depending on the nature of financing which a MAP secures. Without a doubt, MAPs have to structure for revenue risks of this nature when arranging financing.

“MAPs will also need to carefully negotiate the liability for utilities disputes relating to the supply of power, within the context of the commercial issues that such disputes, will throw up in an MSA”, he said.

The Managing Director, Momas Electricity Meters Manufacturing Company Limited, Mr. Kola Balogun, described the new regulation as a relief for electricity consumers as it would enable them to get meters as quickly as possible.

“It will allow some investors to inject a high-value capital into the metering scheme. That will eventually lead to the liberalisation of metering because there is an opportunity for consumers to pay and get meters immediately. Let’s pray the implementation will be as good as the policy because most of the time, we will have good regulation but the implementation will be defective.

“Let’s hope that the Discos will be willing to partner MAPs. That is the shortcoming that I have seen might happen because it (metering) is part of what they hold as their strengths to run the Discos. Let’s hope that it will be easier for them so that they can face the primary responsibility of providing electricity for the consumers,” he said.

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