Nigerians bear N1tr metering burden as CBN, W’Bank backpedal - THE GUARDIAN
SEPTEMBER 19, 2023
By Kingsley Jeremiah, Abuja and Waliat Musa
Infographics illustrations of Nigeria’s metering burden. Photo Credit The Guardian
• Corruption stalls CBN, W’Bank deal
• Stakeholders call for metering subsidy amidst high price
• Worries over calibration failure, faster reading as meters undergo upgrades
Amidst a harsh economic reality and the gross failure of the Nigerian Electricity Supply Industry (NESI) to deliver basic services, it appears that the masses may have to shoulder the responsibility of providing electricity meters worth a staggering N1.005 trillion.
With hard-to-implement refundable policies amid weakening disposable income of consumers, the prevailing situation comes on backdrop of the Federal Government’s poorly planned National Mass Metering Programme, which has faced sustainability challenges due to allegations of greed and corruption even as the programme, supported by the World Bank and the Central Bank of Nigeria (CBN), now faces fresh hurdles.
One of these hurdles pertains to the planned distribution of 1.2 million meters funded by the World Bank. Unfortunately, a deadlock between the apex bank and the Meter Manufacturers and Assemblers Association of Nigeria (MMAAN) has forced the World Bank to reconsider its approach.
With the surge in the price of meters, an additional N40.8 billion would now be required for the project to proceed.
As the planned upgrade of existing five million meters by the Distribution Companies (DisCos) rapidly approaches, concerns have also arisen regarding calibration issues that could cause these meters to read consumption at a faster rate as stakeholders questioned the capacity of Nigeria Electricity Management Agency (NEMSA) to guarantee that the masses won’t be short changed in the meter upgrade which is a global standard.
Highlighting the persistent metering problems in the nation’s power sector since privatization, which have worsened liquidity and deprived consumers of transparent billing, NEMSA had admitted that it received a series of complaints after the deployment of the first phase of NMMP about fast-reading meters. Although the agency had insisted that the upgrade would be strictly monitored for safety and quality assurance.
Regrettably, only four DisCos have successfully metered at least 50 percent of their consumers, while some DisCos have achieved a mere 19 percent metering rate. Out of the 12,378,243 registered customers in the country as of March this year, only 43.31 percent (5,360,434) of them have received meters. This implies that over 7 million consumers are being billed arbitrarily.
The cost of meters has also surged, with a single-phase meter now priced at N81,975.16, up from the previous price of N58,661.69. Similarly, the cost of a three-phase meter has increased to N143,836.10 from N109,684.36. As a result, the masses are facing an expenditure value ranging from N574 billion to N767.2 billion, depending on the type of meter they require to bridge the metering gap.
The Central Bank of Nigeria (CBN) appears to have been forced to withdraw the illegal freezing of 157 accounts belonging to about 10 meter-producing companies that allegedly played roles in short-changing Nigerians during the National Mass Metering Programme, which was introduced by the Federal Government, to douse tension over electricity bill increase.
While NERC disclosed that four million meters would be provided to consumers this year, the World Bank in a bid titled DREP-PPI, Credit No 9206-NG, and project identification number P172891, would have provided 1.200 million meters to kick-start the first phase of NMMP.
In the Key Performance Indicators (KPIs) rooted in the Performance Agreement (PA) for the DisCos, the NERC, through the EPSRA Act of 2005, stated that power utility companies are charged with the responsibility of metering consumers. This is the basis for Section 32, Sub-section D, and Section 76, Sub-section 2 of the Act, which aims to calculate tariffs to achieve the legislation on liberalisation.
Indeed, when the question of who should provide meters resurfaced when NERC launched the Meter Asset Providers (MAPs) policy, the commission insisted that metering all electricity consumers remains the responsibility of DisCos even under the Meter Asset Provider (MAP) Regulations 2018.
Despite failing to meet up with the expected average deployment of 1, 640, 411 meters per annum, which would have bridged the gap in the last 10 years, a fund meant for the government-funded NMMP scheme was allegedly misappropriated as meter suppliers, the DisCos and the powers that be in the sector reportedly forged figures amidst portfolio companies that could not deliver.
The CBN, last year, approached a Federal High Court in Lokoja, Kogi State for an order to freeze 157 accounts of Meter Asset Providers for allegedly diverting intervention funds under the NMMP between January 1, 2020, to March 15, 2022.
The court documents showed that the apex bank requested 15 commercial banks and the Bank of Industry (BOI) to freeze the accounts of 157 companies for 180 days pending the outcome of its investigations.
The companies identified by the CBN were Mojec Meter Asset Management Company Limited, Integrated Power Nigeria Limited, Holley Metering Limited, Protogy Global Services Limited, Turbo Energy Limited, G Unit Engineering Limited, Koby Global Engineering Services Limited, FLT Energy Systems Limited, Smart Meters Asset Provider Company Limited and Cresthill Engineering Limited.
The Guardian learnt that while most heads of DisCos, especially those who have been ousted from the system are being trailed by the EFCC due to the metering saga, and other allegations, the team of former President Muhammadu Buhari on infrastructure pulled the string that forced the CBN to abandon the allegations.
Like the Siemens deal, some stakeholders stated that the federal Government had placed smart on NERC with the NMMP after MAPs had invested in capacity and as such saw the NMMP as a way to recoup.
While noting that the increase in metering is inevitable, a Professor of Energy and Electricity Law at the University of Lagos, Yemi Oke said the call to upgrade meters is suspicious and must be rejected.
“They don’t trust them. I don’t see why a meter that has been duly tested and calibrated needs to be upgraded,” he said.
Oke said Nigerians must not submit to the idea that their meters must be upgraded, stressing that there is no convincing evidence that the meters are faulty.
President, Nigeria Consumer Protection Network, Kunle Kola Olubiyo noted that adding the burden of metering on the consumer even if they would be refunded is below par.
“Considering the low income or disposable incomes of an average Nigerian end-user, it might be difficult for many to afford the new rates without a mechanism for refunds via electricity token and this may further increase the huge metering gaps in the electricity market,” Olubiyo said.
He also asked NERC to work out modalities that would make it possible for consumers to acquire already calibrated electricity meters at designated points under strict supervision and synergy by Standard Organisation of Nigeria (SON), Nigerian Electricity Management Services Agency (NEMSA), DisCos, meter assembling plants and representative of end-users.
“There is a higher probability of serious compromise of any post and prepaid meters in the market that’s not calibrated,” he said.
Across the world, the Standard Transfer Specification (STS) prepaid meter software is expected to expire in 2024 and unless meters are re-coded, it would be impossible to upload prepaid tokens.
Reportedly, the globally adopted STS for prepaid metering protects against the reuse of such tokens using a unique Token Identifier (TID).
On 24 November 2024, the TID value will roll back to zero and tokens generated after this date will be rejected by a meter as being an old token. All STS compliant meters are affected by this TID rollover and it is therefore imperative that all users of the technology implement a TID rollover programme.
Partner, Head Mining Sector Business Development, Habeeb Jaiyeola, said meter asset is the property of the DisCos, hence consumers shouldn’t pay for it.
He pointed out that it’s the responsibility of the DisCos to supply meters, while consumers are to purchase power, noting that all meter consumers might have paid for remains the property of the DisCos.
“No consumer has the right to claim the ownership of a meter, hence, the DisCo is supposed to provide the asset required to render power services, in the case that consumers pay for it, it would be an advanced payment on their power, which they enjoy till the amount paid get exhausted,” he said.
National Power Grid. Pix: Nairametrics
Indeed, Jaiyeola said the learning point from the first phase will impact the second phase roll out as it becomes the key aspect that needs to be considered.
“Enumeration of where exactly did the first phase covered, what are the areas across the country, especially from the DisCos’ perspective that have been metered successfully and which are yet to be metered, how would the second phase ensure that the metering gap is fully closed, what timing would this roll out viz a viz the expectations of consumers? All of these are questions and areas that should guide the strategies of how the second phase roll out should be,” he said
Lawyer and Executive Coordinator, NEPA WAHALA NG, a power sector consumer awareness and protection initiative, Emeka Ojoko, said price increment will lead to a drop in meter purchases as it will increase the incidence of extortionate estimated billing and customer dissatisfaction and this will negatively impact the ability of DisCos to fully recover revenue for energy supplied and affect the entire value chain.
He stressed that the Federal Government will have to support the electricity supply industry by subsidising meter purchases using savings from fuel subsidy removal and income from the current high crude oil prices.
Ojoko pointed out that the government needs to reinvigorate the NMMP initiative as it has been stalled.
“The process of metering is slow and tortuous, there are too many customers complaining about meters not being installed months after they paid for it, without getting any explanation for the delay from the DisCos. Meanwhile the Meter Asset Provider Regulation said that meters must be installed not less than 10 working days after payment is made to the DisCo’s account. But because there is no stipulated penalty for failure to keep to the timeline, very few DisCos respect it and NERC is mostly unresponsive to such complaints,” he said.
He advised that the regulator should be linked to the online meter installation monitoring portal to have real-time data on the ability of DisCos to keep to regulatory timelines and penalise the DisCos for not adhering to the timelines.
Ojoko said the cost of 100 per cent metering is too high to be achieved in the short-to-medium term as Nigerians are stuck with estimated billing, which is inherently unfair and done arbitrarily in the country. He noted that it should be completely abolished in NESI, which can only be achieved when all customers are metered.
On his part, National Coordinator, All Electricity Consumers Protection Forum, Adeola Samuel-Ilori, said it’s not right for consumers to pay for meters as the principle of double jeopardy sets in.
On the alternative model or approach to be adopted in addressing the challenge of insufficient metering, Samuel-Ilori said the only approach is for DisCos to supply the consumers as part of their business optics, which was embedded in the CAPEX order of their business practices.
“It’s supposed to be part of investment prognosis and fulfillment, which is part of the reasons for the increase in tariff when the need arises but this is where we found ourselves. In view of this, the best way for now is for customers to buy and get refunded.
Also, Principal Action Coordinator, Joint Action Platform for Electricity Consumers Right, Ayodele Olawoye, said none of the DisCos have implemented Section 68 (1)b of the Electricity Act of 2023 and NERC’S Regulation No. NERC-R-113-2021, section 24 (1)b and (1) stipulated that even if payment is made either upfront or by installments, such payment must be refunded to the customers by the disco through energy credit with effect from 2018 when CAPMI was introduced and still continues with the present MAP method.
Olawoye said that DisCos should be mandated to publish a monthly record of meters supplied and installed on each distribution transformer (D/T) so that consumers who receive supply from the end supply transformers can make comments which would help NERC in monitoring.
“Concerning the issue of estimated billing, I give NERC a pass mark because its present Estimated Bills Methodology called Monthly Energy Caps (Order No/NERC/307/2022 is beneficial to discos customers if not for NERC’S negligence of monitoring and enforcement, which gives DisCos the license to flout this order and lawless behaviour.
“I advise that a penalty heavier than the present one should be imposed on DisCos for acts that may violate NERC orders; also the issuance of estimated bills be criminalised since meter bypass/tampering is a criminal offence therefore it must be a criminal offence to issue an estimated bills, this will curb DisCos arrogance,” he said.