20 December 2012

Nigeria: NERC - N170 Billion Required to Close Up Metering Gap in Electricity Sector

The Nigerian Electricity Regulatory Commission (NERC) yesterday disclosed that an estimated N170 billion would be required to purchase and install about 2.8 million electricity meters to close-up existing metering gap in the Nigerian Electricity Supply Industry (NESI).

NERC said in Abuja, that the sum was derived from an estimated cost for meter procurement and installation which was submitted to it for consideration by successor distribution companies of the Power Holding Company of Nigeria (PHCN).

According to the Senior Manager, Market Competition and Rates Division of NERC, Kanneng Gwom, in her presentation at a media retreat: "The Discos have estimated that N170 billion to purchase 2.8 million meters is required to meet the metering gap in the NESI."

Gwom, however, hinted that the commission had in response to the development proffered measures to be adopted by the distribution companies in meeting up with the estimated financial costs of providing metering facilities to eligible electricity consumers.

She added that sequel to the privatisation exercise, the distribution companies were required to enter into contract with preferred bidders of PHCN distribution assets for the supply and installation of meters.

Gwom also stated that funding of such project rested squarely on the ability of the distribution companies to collect accrued revenue from the Multi Year Tariff Order (MYTO-2) framework which was initiated with consideration to cost reflective elements.

"The commission has proffered ways in which to cover this gap and they include; monthly revenue collection, capital budget from owners and external funding from maybe commercial or development banks at very low concessionary lending terms.

"The market rules and the grid code to guide the operations in the electricity industry were both approved in 2008; the market rule will come into effect in the transitional stage of the market which the commission anticipates will happen by first quarter 2013, while the grid code is in effect already. Both regulations guide the operations of the systems and market operations under the Transmission Company of Nigeria," Gwom said while emphasising on efficient revenue collection as crucial to meeting up with such funding gap.

An investigative metering committee set up by NERC had earlier in the year submitted a report that indicted officials of PHCN of indulging in corrupt practices in provision of metering facilities to electricity consumers despite provision of fund for such by the Federal Government.

The committee, which had a foremost human rights lawyer, Bamidele Aturu, as its chairman, discovered that there was a huge metering gap in NESI and that such opening was breeding the corrupt practice of overestimated billing system by PHCN.

The chairman of NERC; Dr. Sam Amadi, also said then that just only 35 per cent of Nigeria's population were benefitting from efficient metering services from PHCN, despite the provision of N2.9 billion for metering by government in 2011.

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