Are electricity meters free?
Claim: The Minister of Power, Abubakar D. Aliyu, recently claimed that electricity meters are provided to consumers for free in a bid to ensure a large chunk of the Nigerian electricity consumers are metered and saved from the wanton prices of Distribution Companies.
Verdict: The claim is false. Available records show that two out of the three schemes made by the federal government to shield electricity consumers from exorbitant billings of DisCos would see them pay to get the meters.
Full text
On Thursday March 3rd, the Minister of Power, Abubakar D. Aliyu, during the weekly ministerial briefing organised by the Presidential Communication Media Team at the Presidential Villa said meters are provided for free to electricity consumers as parts of efforts to see that the commodity is available in every part of the country.
According to him, electricity meter is a source of generating money, without specifying if the money to be generated is for the federal government or the private sector.
He said, “We have said these times without number that these meters are free. They are instruments for generating money, how can we be selling meters?”
Brief of Nigeria’s beleaguered power sector
Failure to deliver adequate power in the country and perceived ineffectiveness of the National Electric Power Authority (NEPA) led to its privatization through the enactment of the 2005 Electric Power Sector Reform (EPSR) Act.
The act birthed the Nigerian Electricity Regulatory Commission (NERC), to act as an independent regulatory body for the electricity industry as well as the Power Holding Company of Nigeria (PHCN) to serve as a transitional corporation before 18 successor companies took the rein of erstwhile NEPA (6 generation companies, 11 distribution companies and 1 transmission company).
Subsequently, electricity reform envisaged to rescue the country from epileptic power supply that has stifled economic growth in the country and socioeconomic development was finally concluded in 2014 with operations of the sector in the hands of the private sector with the exception of transmission.
But with a huge part of electricity consumers not metered, Nigerians began to feel the preying nature of the private sector that was supposed to provide free meters for them. Metering of customers was to be done by the DisCos but it
was done at a slow pace. Instead, estimated billing was used in charging consumers for energy consumption which was said to be extorting.
Many customers questioned the high bills brought to them despite the sector not achieving much success in ensuring stable power supply.
Verification
To address the metering gap, NERC launched the Credit Advance Programme for Metering Implementation (CAPMI) scheme. Under the scheme, customers were expected to pay for the meters upfront, thereby absolving it of financial cost and responsibility of provision of meters from the DisCos; though they are to be reimbursed by the DisCos through electricity supplied over a period of time.
According to the then Chairman of NERC, Dr. Sam Amadi, the scheme “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. Once payment has been effected, the customer will have their meter installed within 45 days by a NERC accredited Vendor/ Installer.”
The scheme also set the tune for NERC to fix the price for the cost of the meters which it said is “usually arrived at using the standard market price plus the most efficient installation costs as well as review of prices supplied by local manufacturers.”
However, the scheme was later jettisoned in 2016 by the then Minister of Power, Works and Housing, Babatunde Fashola, who asked NERC to stop the metering scheme.
He justified the suspension due to the existence of “contractual distrust between electricity consumers and the 11 electricity distribution companies (DisCos) in the country.”
He added that most of the DisCos that collected money from their customers did not procure and install the meters as required at their homes.
Later in 2018, NERC launched the ‘Meter Asset Provider Regulations 2018.’ The new scheme is referred to as MAP and brought in a third party (MAP) to provide meters for electricity consumers.
This excluded the DisCos from the provision of the meters but played a role in ensuring refund of money of unpaid meters.
Though customers can choose advance payment for the meters, like CAPMI, the meters can still be provided for free while the customer is expected to pay for it through deduction of their energy charge till it is fully paid for. This model is referred to as Metering Service Charge (MSC).
NERC stated that “the MAP Regulations was approved as a regulatory initiative towards closing the metering gap of about 10 million meters in the Nigerian Electricity Supply Investment (NESI) over a period of three years to provide for the provision and maintenance of end-use meters by third party investors based on which customers benefiting from such meters pay MSC.”
The scheme was partially stopped in 2020 as it said the MSC option “recorded limited success due to the absence of risk mitigation mechanisms for payment defaults and the inability of MAP permit holders to secure local medium/ long term financing.”
It stated that from the total of 583,733 meters installed through the scheme from 1 August 2019 to 30 June 2021, 571,835 meters were installed from upfront payments and 11,898 meters were installed on the basis of MSC payments.
With this seeming failure, the federal government launched the National Mass Metering Programme (NMMP) through the Central Bank of Nigeria (CBN).
The initiative was geared towards achieving mass metering of Nigerians by providing loan facilities to the DisCos to procure meters for its customers.
With the MAP requiring a 30 percent of the meter contents to be produced locally, NMMP gives responsibility of manufacturing and assembling of local meter manufacturers.
In 2021, the NERC made another regulation in the sector with a hybrid scheme that fused the MAP with NMMP.
Before then, the CBN intervention led to the distribution of close to 1 million metres which it said was a pilot stage to bridge the over 6 million unmetered consumers.
The new regulation did not include the MSC but electricity consumers can still pay upfront to get their meter.
According to NERC, for the financial sustainability of NESI and the success of the sector reform agenda, the Federal Government approved a policy intervention (with the support of the CBN) for the provision of long-term (10-year tenor) single digit Interest loans to Distribution Licensees strictly for the provision of Electricity meters.”
While stating that the meters were to be installed for customers on DisCos own account and without payment for the meters by customers in any form “except through end-user Tariffs”, ownership now forms part of the regulatory asset base (“RAB”) of the Distribution licensees for the purpose of rate setting.
But speaking on why consumers will still be asked to pay for meters, Executive Director, Research and Advocacy of Association of Nigerian Electricity Distributors (ANED), Barr. Sunny Oduntan, said the first phase of NMMP was concluded in October 2021, with the second phase of four million more meters expected to be installed.”
For MAP, he said customers would be refunded over a 36-month period via energy credits.
Similarly, the Special Assistant to the President on Power Regulation, Office of the Vice President, Ali Yusuf, at a recent event said implementation of the second phase is under procurement with consultants engaged to visit and assess the meter manufacturing and assembling capacity of each local meter manufacturer.
On his part, the Chairman of NERC, Sanusi Garba, in November last year announced a new price for meters.
The new price he said would see a single-phase meter from the current cost of N44,896.17 to a revised price of N58,661.69 and the three-phase meter from N82,855.19 to a revised rate of N109,684.36. all without VAT.
By implication, it means that Nigerians will pay N13,766 and N26,829 more to get the 11 DisCos to provide them with the single phase and three-phase meters, according to the new order.
Conclusion
Extant regulations by NERC indicates that meters are bought by electricity consumers and not provided for free for their usage. Also, the second phase of the federal government’s intervention to provide free meter is yet to begin with the first phase ending in 2020.