Metering Gap: Discos Seek Massive CBN-funded Rollout Scheme

By Emmanuel Addeh

Electricity Distribution Companies (Discos) have called for a massive meter rollout project to be funded by the Central Bank of Nigeria (CBN) to ensure customers are adequately served before the full take-off of the proposed Service Reflective Tariff (SRT) scheduled for the first quarter of next year.

One of the representatives of the Discos, the Managing Director of Abuja Electricity Distribution Company (AEDC), Mr Ernest Mupwaya, made the call when he appeared before the House of Representatives in Abuja.

Speaking on behalf of the Discos at the public hearing on the power sector, the Discos argued that historically, the Capital Expenditure (CAPEX) provision in Nigeria’s electricity tariff had been inadequate to cover the cost of metering customers.

“Over the years, there has been insufficient investment in customer metering due, largely, to inadequate MYTO CAPEX and uneconomic tariff. The approved CAPEX for Discos has never been adequate for comprehensive metering.

“In Q1/2020, the number of registered customers in NESI passed the 10 million point. The Nigeria Electricity Supply Industry (NESI) is growing at an average rate of 75,000 new customers every month, however.

“Many are still connected without a meter. Consequently, the metering penetration has decreased from 45.5 per cent in January 2017 down to 40.3 per cent in March 2020” the Discos said.

The power distributors maintained that plugging the metering gap that is in excess of 6 million had been slow because even the recently introduced MAP regulations incorporate inappropriate meter pricing.

They argued that the system was not working as expected, especially as a result of the twin effects of the sudden increase in import duties of 35 per cent on meter and the Nigerian Electricity Regulatory Commission’s (NERC) wrong pricing which frustrated the good intentions of MAP.

The Discos added: “The recent capping of estimated billing has also reduced the incentives for consumers to obtain meters under the MAP regulation.

“Paradoxically, in their Performance Improvement Plans (PIPs), all Discos committed to meter 100 per cent of the end-users before 2024 through the MAP regulation, reflecting the regulator’s determination that Discos should hands-off actual metering. As such, Discos did not include any CAPEX allowance for metering, in case MAP regulation fails.”

The Discos thereafter recommended that since they no longer have a provision in their CAPEX for metering, the Central Bank of Nigeria (CBN) should help the electricity supply industry by providing funds for emergency mass metering projects, to take place over a period of 18 months.

They also recommended that the government should grant full waivers on the 35 per cent increased duty surcharged on meters until mass metering is achieved and that an appropriate and commercial price on meters should be put in place by NERC, to achieve mass metering.

“Given NERC’s previous approval period of three years under the MAP regulation, Discos propose capping to be introduced after massive metering rollout over the next 18 months and NERC should work with Discos to improve the methodology on estimated billing.

“This Discos proposed methodology on estimated billing should be adopted during the emergency meter roll out period” the power distributors said.