Over two years after the Nigerian Electricity Regulatory Commission (NERC) introduced the Meter Asset Provider (MAP) scheme to close the estimated 40million metering gap; it has remained a pipedream with many Nigerian households unconnected to the national grid, just as there is dearth of infrastructure, paucity of funds to achieve the NERC mandate, writes Ibrahim Apekhade Yusuf
When the Nigerian Electricity Regulatory Commission (NERC) introduced the Meter Asset Provider (MAP) scheme in 2018 expectations were high as to the level of success that could be achieved with MAP. But over two years down the line, the initial optimism that greeted the laudable objective has turned sour.
The coming of MAP
In 2018, the NERC issued the MAP regulation as a regulatory initiative to fast track the closure of the metering gap and eliminate estimated billing practices, attract private investment in the provision of metering services, enhance revenue assurance in the Nigerian Electricity Supply Industry (NESI) and promote local meter manufacturing in Nigeria.
Following the Commission’s approval of the Meter Asset Provider (MAP) Regulations 2018, applications were invited from interested investors for ‘No Objection’ from the Commission.
MAP Regulations is intended to facilitate closure of the wide metering gap in the Nigeria Electricity Supply Industry (NESI) within three years. The ‘No Objection’ is to qualify intending investors to participate in the meter procurement process in NESI.
The Regulation mandates electricity distribution companies (DISCOS) to engage meter assets providers who fund purchase, installation and replacement of meters to meet Discos metering obligations to their customers. This is to ensure that all electricity customers are metered thereby reducing incidences of estimated electricity billing to the barest minimum.
The Commission having conducted due diligence on the supporting documents to the applications submitted by interested investors, granted successful applicants ‘No Objection’ to participate in the procurement process for meter assets provision in accordance with section 8 subsection 4 of the Meter Assets Providers Regulations, 2018.
Among the companies granted ‘No Objection’ include Huawei Technology Company Nigeria Limited; Bilview Energy Limited; Chintech Electro Nigeria Limited; Holley Metering Limited; Meron Nigeria Limited; Integrated Power Limited; MBH Power Limited; Trimani Engineering Limited; Sapropel Energy Resources Limited; Megawatt Distribution International Limited; Unistar Hi-Tech Systems Limited; and MOMAS Electricity Meters Manufacturing Company Limited.
Others are Imperial Infrastructure Development Company Limited; Ratio Consulting Limited; Protogy Global Services Limited; Paktim Metering Nigeria Limited; Sabrud Consortium Nigeria Limited; Tinuten Nigeria Limited; Kayz Consortium Limited; BTS Power Limited; CIG Metering Assets Nigeria Limited and Cresthill Energy Limited.
Why MAP underachieved
From available information, the MAP scheme has suffered some setbacks. According to a consultation paper issued recently and signed by the NERC Chairman, Sanusi Garba, the regulator said only 611,231 meters have been deployed under the MAP scheme as of January 31, adding that more than half of registered electricity customers in the country remain unmetered.
Perhaps as an acknowledgement of the sorry situation, the NERC chairman hinted that the MAP was due for a review of some sorts.
Addressing newsmen, Garba said, the purpose of the review is to look at the various options to fast-track the closure of the metering gap within the implementation framework of the MAP.
Garba added that to ensure transparency in the meter roll-out as provided for in the MAP regulations, deployment of meters could not commence until August 2019 following the conclusion of competitive procurement by DisCos which was monitored by the Commission.
He said: “A total of 611,231 meters have been deployed as of 31st January 2021 under the MAP initiative since its full operation despite the COVID –19 pandemic and other extraneous factors. The challenge of closing the metering gap in NESI persists, as more than half of the registered electricity customers remain unmetered.
“The purpose of this Consultation Paper is to review the various options to fast track the closure of the metering gap within the implementation framework of the MAP Regulations and the NMMP and consider the merits and demerits of each option.
“Proposed options for metering implementation going forward is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers); and to wind down the MAP framework and allow the DisCos to procure meters directly from local manufacturers/assemblers (or as procured by the WB), and enter into new contracts for the installation and maintenance of such meters.
“The DisCos shall continue to be accountable for metering as this remains a core responsibility of utilities and a contractual obligation in their Performance Agreements with the Bureau for Public Enterprises.”
Implication of no meter
With many households yet unmetered many have continued to be charged based on estimated bills. The NERC recent report shows that 62.63% of electric customers in Nigeria were under the estimated billing package as at Q3 2020.
This was disclosed by the Commission in its 2019 to Q3, 2020 Nigerian Electricity Supply Industry (NESI) Key Financial and Operational Data, reported this week.
The NERC disclosed that metering for customers has been a challenge so far, citing that only Eko Electricity Distribution Company and Ikeja Electric Plc had metered over 50% of their customers.
Altogether, of the 11,841,819 registered electricity customers in Nigeria as at Q3 of 2020, only 4,425, 628 (37.37 %) were metered.
“Thus, 7, 416,191 representing 62.63 per cent of the registered electricity customers are still on estimated billing,” NERC said.
Divided over metering gap
According to the NERC, the electricity customer population stands at 7.48 million of which only 3.39million (45.3% of the identified customer population) are metered, leaving the unmetered population – the metering gap – at 4.09 million customers.
However, while attempting a prognosis of the challenge of metering electricity consumers, the duo of Jerry Ehanmo is a Senior Manager at PwC Nigeria and Ebere Onwuegbule, an associate at PwC Nigeria, noted that the figures presented by the NERC may have been understated.
Specifically, Ehanmo and Onwuegbule said at least 50% of the currently installed meters are either obsolete or faulty and hence require replacements.
Citing the census figures as at 2017 which put Nigeria’s population at an estimated 190.8 million they said the projected number of households in the country for the same year was 40.6 million. “This implies that only 18.4% of Nigerian households are on the distribution network. “
Aggregating these data points shows that a minimum of 1.7 million meters require replacement and 33.1 million households are either not connected to the grid or are consuming electricity illegally. Cumulatively, the overall metering gap in Nigeria based on unmetered identified customers (4.09 million), customers with obsolete meters (1.7 million) and unidentified or unconnected customers (33.1 million) is potentially a population of 38.91 million customers.
While maintaining NERC’s conservative figures of 7.48 million known electricity customers, there are at least 5.8 million unmetered and faulty/obsolete metered customers in the country. Assuming that the price of a meter based on open market rates is NGN 30,000, the cost requirements for bridging the metering gap is approximately NGN 174 billion.
However, using the unknown, unconnected, unmetered, obsolete metered customers from our analysis, the cost estimate is NGN 1.17 trillion.
Given the current realities, DisCos are faced with several deterrents which present a challenge for bridging the gap.
Although, the 11 DisCos committed to metering 1.75million customers annually on acquisition of the distribution assets, the metering capacity of the DisCos is constrained by the limited allowable capital expenditure (“CAPEX”) in the Multi-Year Tariff Order (“MYTO”). The total annual CAPEX provision of N46.3billion in the MYTO, if utilised wholly for metering is insufficient to meet the DisCos’ annual metering commitment which is estimated at N52.5 billion annually.
In the view of experts at PwC, however, it is imperative to note that metering is just one of the various CAPEX requirements for the Discos. “If 100% of the current MYTO provision is spent on metering, Discos will have capacity to meter 1.54 million customers annually. From our estimation of the actual metering gap, it will take at least 25 years to bridge the metering gap,” Ehanmo and Onwuegbule noted matter-of-factly.
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