New meter regulation excites market for local manufacturers

The new Meter Asset Provider (MAP) regulations 2018 which came into effect on March 8 is causing palpable excitement with local meter manufacturers due to a provision that allows them supply 30 percent of the required meters.

According to the Nigerian Electricity Regulatory Commission, (NERC), Nigeria has a metering gap of 4,740,275. BusinessDay calculations show that 30 percent of this translates to 1,422,082.5. Further, NERC projects it to rise N200bn in three years.

Customers would be required to pay a service charge along with the energy charge. Customers who choose to buy meters can do so through the DISCO, and upon certification of the premises, MAP shall install the meter in 10 working days. Such customer will not pay for meter service charge again. Already, 71 Metering Service Providers (MSPs) have licensed by NERC.

“It is a very big lift; it will enable the meter manufacturers to be busy and enhance their capacity. We were even agitating for 70 per cent local content. The potential is there for the local manufacturers, but the capacity utilisation is low,” Kola Balogun chairman, Momas Electricity Meters Manufacturing Company Ltd, an indigenous meter provider told journalists recently.

Balogun further said, “It will allow some investors to inject a high-value capital into the metering scheme, which will eventually lead to the liberalisation of metering, because there is an opportunity for consumers to pay and get meters immediately.”

Speaking in the same vein, the Electricity Meters Manufacturers Association of Nigeria (EMMAN) also said the move will create massive employment opportunities for Nigerians and ensure the transfer of technology to Nigeria as well as enhance Foreign Direct Investments (FDIs).

“The meter manufactures would ensure production of meters to capacity, utilise their resources very well and adequately. Not only that, it will enable them to employ more Nigerians from the teeming unemployed in the country,’’ Muideen Ibrahim, the Executive Secretary of EMMAN, who signed the release said.

The key regulatory objectives of the MAP Regulation are to encourage the development of independent and competitive metering services in the Nigerian Electricity Supply Industry (NESI) and to attract private investment in the provision of metering services in the NESI.

The MAP Regulation is significant because it effectively unbundles Nigeria’s electricity distribution sector, by re-allocating the responsibility for providing metering services, effectively creating a new class of market participants -Meter Asset Providers.

Under the MAP regulation, DISCOs are prohibited from self-dealing which means that DISCOs and their core investors, including their subsidiaries, affiliates, directors and their relatives are prohibited from setting up, owning shares or holding directorships and senior management positions in the MAP.

It also places an obligation on DISCOs to conduct an open and competitive bidding process. To ensure compliance with statutory requirements, procurement processes for metering services are now also subject to top-level review by tender auditors who will be engaged by the NERC to audit all meter service procurements

The MAP Regulations place a mandatory obligation on DISCOs to provide payment security within 30 days of executing an MSA with a MAP and the regulation adopts a framework that ensures that commercial expectations are managed and contractual obligations are enforceable between the MAPs and DISCOs.

This regulation became imperative following the inability of the DISCOs to meter their customers preferring to inflict on them estimated billings.

Between November 2013 and June 2016, only about 500,000 meters were deployed by the 11 DISCOs within their networks with less than 35 per cent of that directly done by the DISCOs according to NERC.

In 2013, NERC launched a programme called Credited Advance Payment for Metering Implementation (CAPMI), which allows electricity consumers self-finance of their meter acquisition and installation but this programme was discontinued in November 2016 because the DISCOs were unable to promptly deploy meters to customers.

Many Nigerians believe that the DISCOs’ preference for estimated billings removes any motivation to provide prepaid meters. Estimated billings allow customers the DISCOs to recover losses from areas collections are poor hence it is a preferred alternative. DISCOs have yet to provide a formal response to the regulation.

ISAAC ANYAOGU