Abubakar Ibrahim, PhD
A few days ago, the Nigeria’s Minister of Power, Chief Adebayo Adelabu directed electricity consumers in Nigeria not to pay for the installation of meters. He also warned that any Distribution Company (DisCo) that violates this direction will face serious sanctions. This announcement raised a lot of controversy, with some DisCos reportedly describing it as a mare political statement. However, my main concern is, who ultimately bear the consequences? I know you must be guessing, right. Don’t worry, we will get there. There is a proverb that says, when two elephant fight, the grass suffers. In this case, the “grass” is the Nigerian electricity consumer.
To understand the situation properly, let us examine the core issue at the center of the disagreement – metering.
The Metering Framework
There are currently two major metering schemes in Nigeria.
The first is the Meter Asset Provider (MAP), this was introduced by the Nigeria Electricity Regulation (NERC) in May 2019 under the MAP regulation. The aim is to bridge the metering gap in the Nigeria Electricity Supply Industry (NESI). Under this arrangement, the customer pays upfront for the meters while the DisCo refund the cost gradually through monthly energy token. We will come back to this later!
The second is the Distribution Sector Recovery Program (DISREP) this is the free metering initiative, yes, it is free of charge. The DISREP is a $500m metering initiative funded by the World Bank and supported by the federal government of Nigeria. It aims to deliver 3.4 million smart meters nationwide at no direct cost to customers across Nigeria. However, just like the MAP Scheme, DisCos are expected to repay the cost of these meters over a period of ten-years. DisCos are also responsible for distribution, installation and maintenance of these meters within their franchise states.
It is at the installation stage that the current controversy arises!
The Core Disagreement
Do you remember the two fighting elephants? So let us get to the crux of the matter.
On Thursday, the minister of power made it clear that no consumer should be charged any meter installation fee under the DISREP metering scheme, he describes such charges as illegal. On the other hand, the DisCos fired back insisting that the minister’s comments are mare political statements. They argued that, the meters may be funded under the programme, however, installation cost remain a critical operational expense.
So when this happens, from the customer point of view it will be interpreted as the unwillingness on the part of the DisCos to meter consumers or to slow down the metering pace. From the DisCos perspective, their major challenges lies in, cost recovery and financial sustainability as well as policy consistency by the government and regulators. They argued that if meter are provided and there is no fund for installation the DisCos may likely face revenue losses which may affect their abilities to maintain infrastructure and improve service to their customers.
While the federal government objectives is clearly to close the metering gap and ensure fair billing, however, lack of alignment with DisCos could unintentionally delay the very benefits the policy seeks to deliver.
The Way Forward
For Nigeria to close it metering gap, there is need for collaborative policy implementation between the regulators, government authorities, Discos and meter providers and installers. They must all agree to work together to establish a clear and sustainable funding framework that covers both meter procurement and installation. the federal government on it part must design a financial framework that will balance customers interest with the sector financial sustainability.
The ultimate goal is to provide meter to all electricity consumer in Nigeria.
Abubakar
Ibrahim, PhD
is an electricity market analyst and
writes from Kano.
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