Nigeria: NERC - Mass Meter Rollout Stalled By Govt's 35% Import Tax

(file photo).
27 October 2020

But for the federal government's sudden introduction of an additional 35 per cent tax on imported meters, electricity users in Nigeria who still do not have meters may have gotten one, the Nigerian Electricity Regulatory Commission (NERC) has disclosed.

The NERC stated that its plan to use an improved supply framework to reduce the number of unmetered electricity users in the country's power sector was largely stalled by the government's import levy.

In its first quarter 2020 operational report on the country's power sector, the NERC explained that its Meter Assets Providers (MAP) framework which sought to improve meter deployment, reduce estimated billing and expand revenue collection capacities of the 11 electricity distributions companies (Discos) suffered a deployment setback with the government's new import levy.

As a result, the regulator also noted that 59.61 per cent of registered electricity customers in the country are still on estimated billing, adding that this contributes to customer apathy towards payment of electricity bills.

The NERC further stated that in the quarter under review, N3.88 out of every N10 worth of energy sold by the Discos remained uncollected from consumers, inferring that meters could have helped to limit the collection losses of Discos.

In March 2018, the NERC introduced the MAP framework to fast-track the roll-out of end-user meters through the engagement of third-party investors for the financing, procurement, supply, installation and maintenance of electricity meters. It also approved a number of companies that met its regulatory benchmarks as participants in the scheme.

However, it stated in the report that, "although the effective meter roll-out date started in May 2019, the performance has been below targets due to a sudden introduction of a 35 per cent additional importation levy imposed by the federal government on fully assembled meters."

It also noted that it, "is currently working with the Federal Ministry of Finance, Budget and National Planning to address this major challenge," adding that while it is important to encourage local content in the metering sector, "a case has been made by the commission for a deferral of the new import levy to allow for the roll out of meters under the framework of the MAP Regulation."

"In addition, the commission has continued to review the performance of MAPs with a view to addressing all other challenges affecting meter deployments by Discos under MAP initiative," the NERC said.

According to it, there was a slight improvement in metering in the quarter under review, but the huge metering gap for end-user customers remained a key challenge in the industry.

"The records of the commission indicate that, of the 10,477,856 registered electricity customers as at the end of the first quarter of 2020, only 4,231,940 (40.39 per cent) have been metered. Thus, 59.61 per cent of the registered electricity customers are still on estimated billing which has contributed to customer apathy towards payment of electricity bills.

"In comparison to the fourth quarter of 2019, the number of registered and metered customers increased by 1.00 per cent and 8.00 per cent respectively. The increase in registered customer population was due to the on-going customer enumeration exercise by Discos through which unregistered consumers of electricity were brought unto the Discos' billing platform. Similarly, the increase in metered customers was attributed to the roll-out of meters under the MAP scheme," it said.

The NERC also reiterated its intention to see that all Discos close their existing metering gaps in the sector by the end of December 2021 and has continued to take measures in this regard.

"To ensure speedy metering of electricity customers in line with the target of closing the metering gap in NESI by 31 December 2021, the commission continued its monitoring of Discos' implementation of and compliance with the provisions of the MAP Regulations to fast-track meter roll-out.

"The commission during the quarter approved more preferred MAPs for Discos that had finalised their MAPs procurement process, increasing the total number of approved MAPs to twenty-nine as at the end of the quarter," it noted.

The NERC equally stated that the sector's financial challenges were still huge and delaying its progress, and that Niger, Benin and Togo who owed Nigeria $13.22 million debt for electricity supplied to them within the quarter paid only $6.66 million to it.

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