By AYOOLA OLAOLUWA
The National Mass Metering Project (NMMP) set up by the Federal Government to provide prepaid metres to one million unmetered houses across the country is currently facing a major crisis that could scuttle the ambitious initiative, Business Hallmark findings can reveal.
The federal government, it would be revealed, had in October 2020 flagged off phase one of the program aimed at reducing the metering deficit of 6.5 million with the metering of one million houses across the country in six months.
Subsequently, the Central Bank of Nigeria (CBN) released the sum of N33.2 billion out of the N59.2 billion earmarked for the project to the discos.
However, domestic manufacturers under the aegis of Electricity Metre Manufacturers Association (EMMAN) are pressing federal regulators to sanction electricity distribution companies (Discos) for not adhering to terms and conditions of the financial intervention.
A director in one of the leading electricity meter companies in the country, Dr. Adebayo Tella, said electricity distribution companies, rather than patronise local manufacturers as mandated by the CBN, have been importing meters from abroad to the detriment of indigenous manufacturers.
“While Clause 4.1 of the CBN framework stated that the facility will support the procurement, installation and deployment of meters and metering infrastructure by discos, Clause 4.2 of the CBN framework explicitly prohibits the use of the facility to procure fully assembled meters from overseas, except meters imported by Meter Asset Providers (MAP) already in the country as of September 30, 2020.
“However, the discos are not adhering to the framework, and this is definitely affecting not only local meter manufacturers, but the nation as a whole.
“There are huge economic benefits to the nation if the framework of the loan is adhered to by all parties. For instance, meter manufacturers and installers are tax-paying entities. You can imagine the ripple effects it would have if at least 70 percent of the needed six million meters are sourced locally.
“Meter manufacturers will build more production and assembling lines. It takes an average of three months to set up a SKD (Semi Knock Down (SKD)/Complete Knock Down (CKD) factory. The construction industry will gain massively from the construction of the projects. They (meter manufacturers) will also need hands for the plants, so more unemployed people would be taken off the streets.
“Apart from the economy expanding, government would earn more revenues through profit and income taxes. But they (meter producers) are being allowed to die a slow death. Their factories are rotting away due to idleness and under utilisation, putting their investments under serious threat of bankruptcy.
“Rather than encourage discos to undermine the nation’s economy by frequently going abroad to bring in prepaid meters, the government should encourage them to set up factories in order to create a value chain that would provide employment opportunities to Nigerians”, Tella declared.
Also speaking, the Chairman of Momas Electricity Meters Manufacturing Limited (MEMMCOL), Mr. Kola Balogun, maintained that if the right policy was put in place, his company has the capacity to produce enough prepaid electricity meters to help close the wide metering gap in the country, adding that government could make that possible through some form of financial intervention.
“We are bold to emphatically say that we at MEMMCOL have the local capability to bridge the metering gap if the right policy is put in place. This can be by way of financial intervention by the government whereby certain agreed percentage of the cost of meter supply would be advanced to us like the importers do with the Chinese and upon completion of installation balance payment would be made to us.
“We do not even mind to furnish a bank guarantee as our own commitment in such deal”.
Balogun said that rather than encouraging the continued importation of meters to the detriment of the nation’s local industry, the federal government should identify challenges facing local manufacturers and find a way to proffer solutions to them.
“For instance, there is high tariff rates payable to imported raw materials that are not readily available in the country, the duty payable on our raw materials ranges from five per cent per to 40 per cent plus other port charges.
“These are like the ETLS of 0.5 per cent, CISS of one cent, VAT of 7.5 per cent and surcharge of seven per cent, whereas it is a one off payment of 10 per cent duty on the finished meters plus other port charges for importers and we sell at the same regulated prices.
“You will agree with me that this is not fair to the manufacturers given the amount of investments manufacturers put in place in terms of technology transfer, plant and machinery, human capital development through training and retraining, research and development,” he said.
The President of Nigeria Consumer Protection Network (NCPM), Mr. Kunle Olubiyo, called on the federal government to put in place a very strict regime of sanctions against off-takers who have refused to accept indigenous technology and made-in-Nigeria pre-paid meters.
However, energy experts who spoke with BH on the development argued that the existing capacity for local meter manufacturing and assembling of meter components are not sufficient to meet the metering gap within the projected timeframe anticipated by the national mass metering project, calling on the government to allow the continued importation of fully assembled prepaid meters by discos.
“The CBN is quite aware that the power sector cannot afford to continue to bleed revenues while waiting for one hundred percent local content in the metering implementation.
“The NMMP was set up to fast track the mass metering of electricity customers and close the metering gap. To achieve the objectives of the NMMP and the MAP Regulations, it would require a combination of importation of fully assembled prepaid meters to bridge the deficit in local meter assembly capacity, and massive investments in brown-field and green-field local meter assembly lines.
“In this regard, the CBN framework should allow importation of fully assembled prepaid meters by MAPs within a specified period. So, the Bank is within its rights to decide on the framework for any intervention it is providing”, an energy expert and lawyer, Barrister Osawese Esamah, noted.
Apart from the rift between discos and meter producers over the utilisation of the CBN grant, BH investigation further revealed that the project is being hampered by the slow disbursement of the already released fund.
Several sources within the discos disclosed that they were only able to access the CBN fund towards the end of February, about four months after the takeoff of the project.
Owing to this, the execution of the project, expected to install one million metres by April, has attained only 13 per cent implementation as at March 19, 2021, based on a data posted on the website of the Nigerian Electricity Regulatory Commission (NERC).
According to the data, while 403,000 out of the targeted one million meters had been delivered to the various DISCOs, only 127,000 have been installed, representing 13 per cent performance.
Though BH could not verify the allegation, it was gathered that a large chunk of the CBN fund may have been misappropriated by the discos with the connivance of top government officials.
Troubled by the slow pace of work, a joint committee of senate and House of Representatives on Power recently held a hearing where members expressed dismay over the 13 per cent performance of the mass metering project despite the N33.4 billion already released to discos by the CBN.
Speaking during the hearing, its’ Chairman, Senator Gabriel Suswam, berated NERC and the discos for poor performance, lamenting that the essence of the intervention may not be achieved.
“Your (NERC/Discos) performance report on the Mass Metering Project is not impressive and encouraging at all. Nigerians are not happy that with all effort being made by the Federal Government to get electricity consumers metered is being thwarted in one way or the other. Estimated billing is not acceptable and that is the reason why the intervention was made.
“In the light of this, this committee will want your Commission and the DisCos to appear before it again by the end of April to see whether the assurance given on better performance will be done or not,” Suswan directed