Huge metering gap in Nigeria’s electricity market
Going by the recent announcement by the Nigerian Electricity Regulatory Commission (NERC), electricity consumers have been subjected to an increase in tariff which came to effect on June 1.
NERC, which recently approved a new electricity tariff following the review of the Multi Year Tariff Order (MYTO), expressed regret that the customer tariff will have to increase, in what is an acknowledgement of the non-justification of the increase in the tariff.
Recalling that one of the indices for the minor review is “available generation capacity”, NERC admitted that “unfortunately the well known fact today is that gross available capacity from the grid as of 31st March review date is 4306 MW. This is well below the 9061 MW that NERC had, on the basis of all information available to it, projected when MYTO2 was set in June 2012. This is a 52% reduction on projected capacity.”
It goes without saying that consumers would not have raised concerns over the proposed increase if power supply to them had significantly improved and they are being properly metered such that they pay for only what they consume.
Only on Monday, it emerged that electricity supply in some locations across the country will drop following the shutdown for the repair of Utorogu and Ughelli East gas plants. The repair is scheduled for June 2 to June 22, 2014.
Over the years, consumers have continued to suffer from rolling blackouts even when they have to pay through their nose for power they did not really enjoy, no thanks to estimated billing, which still remains the order of the day in the electricity market. There have been growing complaints from consumers about over-estimated or ‘crazy’ billing in recent times.
The metering gap in the Nigerian electricity market is very huge, with about 50 percent of consumers being without meters, according to a committee on metering set up by the NERC. And there is high demand for prepaid meters by consumers, but the new investors in the electricity distribution companies (Discos) have done very little to make prepaid meters available to the many consumers who are willing and ready to buy.
Based on the proposals submitted by the core investors in the Discos, 6.52 million new meters would be installed over the course of the next five years, meaning more than one million would be installed yearly.
While it is apparent that the financial challenge facing most of the Discos is impeding their drive to make prepaid meters available to consumers, it cannot be ruled out that some of the Discos are reluctant to deploy prepaid meters to the consumers because estimated billing is helping to shore up their revenue base for the time being.
NERC had in May 2013 introduced a new metering scheme, the Credited Advance Payment for Metering Implementation (CAPMI), to address the slow pace of customer metering by the Discos as well as the high level of complaints received from customers and dissatisfaction with the current estimated billing practices.
CAPMI provides a platform for willing customers to pay the cost of the meter into a dedicated account jointly managed by the Disco and meter vendor/installer. Under the scheme, once payment has been effected, the customers would have their meters installed within 45 days by a NERC-accredited vendor/installer.
But following the conclusion of the privatisation of the defunct Power Holding Company of Nigeria (PHCN) late last year, the new investors who took over the Discos jettisoned the scheme. Now, a number of them including Eko, Kaduna and Abuja Discos are implementing the scheme.
We urge NERC to step up its game and keep the Discos on their toes in making the necessary investment to ensure a robust metering of customers and curb the reckless estimated billing.