The unending meter conundrum

The federal government has implemented several initiatives aimed at ensuring adequacy in electricity metering. These efforts have however proved to be almost ineffective even as the metering gap in the country remains at seven million. Stakeholders in the industry have since called for the liberalisation of meters sales and purchase as a way around the conundrum. Last week, the Power Minister appeared to have stirred the hornet’s nest declaring that meters under DISREP be issued and installed free of charge to consumers. The fallout has caused bickering between the DISCOS, consumers and other stakeholders- threatening over the installation of 1.5 million meters.

The Power Minister, Adebayo Adelabu, may have been a self-effacing man during his time at the Central Bank of Nigeria (CBN). However, owing to the quantum of demands and expectations of the ministry he superintends presently, the Adelabu has had to shout himself to the rooftops.

While the minister may have unwittingly been vocal, stakeholders are convinced that it may be as a result of the need to succeed by delivering power to the Nigerian public, especially at a time when patience seem to be running out.

His latest outburst on metering is one that obviously touches the raw nerves of electricity consumers as well as the utilities.

“I want to mention that it is unprecedented that these meters are to be installed and distributed to consumers free of charge—free of charge! Nobody should collect money from any consumer. It is an illegality. It is an offence for the officials of distribution companies across Nigeria to request a dime before installation; even the indirect installers cannot ask consumers for a dime. It has to be installed free of charge so that billings and collections will improve for the sector,” an elated Adelabu said last week during an on-site inspection of newly imported smart meters at APM Terminals, Apapa, Lagos.

But the statement by the Minister exposed a brewing tension in the sector, leading to divergent tunes from all stakeholders in the electricity value chain, placing the Distribution Companies (DisCos) and the Federal Government at logger heads over who pays for the cost of the meters and installation.

The metering schemes

The issue of meters in the sector remains very touchy given that efforts at ensuring adequately metering of electricity consumers have at best not yielded the desired result. To date, Nigeria has an estimated shortfall of seven million meters- a situation that has both placed a huge revenue loss on the electricity value chain as well as the consumers who are slammed bith bogus estimated billings.

There are various metering schemes initiatives by the federal government aimed at reducing the seven million metering gap in the country. These include Meter Asset Provider (MAP), as enshrined in 2018/2019 via a NERC regulation allowing third-party investors to supply and install meters. Customers under this scheme pay upfront for meters and are refunded through energy tokens over time. MAPs are companies granted approval by NERC to procure and install meters for customers of DisCos. Customers are required to make an upfront payment for the meter and the cost recovered over a period of time approved by the NERC.

In 2020, the National Mass Metering Programme (NMMP), a Federal Government initiative funded by the CBN to provide free meters to Nigerians, aiming to end estimated billing, was introduced. This intervention sought to increase metering rate, eliminate arbitrary estimated billing, strengthen the local meter manufacturing sector, job creation and reduction of collections losses. Under this scheme, meters are provided and installed at no upfront cost to the consumer.
A seed capital of ₦200 billion was invested to facilitate the Nigeria Electricity Supply Industry (NESI) revenue collections through the programme. Under Phase-0 of the NMMP, the sum of ₦59.280 billion was set aside for financing the installation of one million meters.
From inception to date, 89.96 per cent of the funds allocated for NMMP under phase 0 has been disbursed to 11 DisCos for procurement of 962,832 meters through 23 Meter Asset Providers.

The funding under Phase 0 is through the CBN/NESI; financing for the phase 1, with a procurement of 1.5 million meter units, is through the CBN/ DMBs (Deposit Money Banks), while financing for the Phase 2, with a four million meter units procurement, is from the World Bank.

Still is the Presidential Metering Initiative (PMI), established in 2023, as a five-year, 10-million-meter initiative, supported by the Nigeria Sovereign Investment Authority (NSIA) and World Bank, designed to fast-track metering. This initiative aims to close the metering gap for 60 per cent of estimated-billing customers by 2027 through the deployment of over five million smart meters to be funded by the Meter Acquisition Fund (MAF) and Federation-funded initiatives. The Meter Acquisition Fund (MAF) Tranche B, guaranteed NERC-approved funds of ₦28 billion for Discos to provide free meters specifically for Band A and B customers.

Dr. Joy Ogaji

Funding for meters under MAF is built from a pool of contributions from all 12 DisCos based on their market collections. It gives priority in tiers- with the current phase (Tranche B) focusing on completing the metering of all outstanding Band A customers before fully extending to Band B. DisCos must use these funds to procure meters through competitive bidding and complete installations by specific deadlines.

Also is the Distribution Sector Recovery Program (DISREP), a $500 million World Bank-funded initiative to deliver 3.4 million smart meters for free to consumers. It also aims to improve the financial and technical performance of the country’s electricity distribution companies (DisCos). Like the NMMP and MAP Schemes, DisCos are expected to repay the cost of these meters over a period of ten-years. DisCos are also responsible for distribution, installation and maintenance of these meters within their franchise states.

A far older metering scheme was the Credited Advance Payment for Metering Implementation (CAPMI), introduced by the NERC in 2013. The CAPMI allowed electricity customers to pay for their own meters to speed up installation and avoid estimated billing. Customers, who paid for meters directly were to be refunded through energy credits over a set period. The scheme was wound down in 2016 after it was found that only about 500,000 meters were deployed between 2013 and 2016, with many DisCos failing to fulfill their obligations despite receiving funds.

How free are meters?

Adelabu’s free meter installation directed that prepaid meters procured under the World Bank–funded DISREP, has elicited mixed reactions. While the government argued that electricity consumers will only pay for the ongoing free meter installation through deductions from their electricity tokens, the DisCos are concerned over the long period of recovery of such funds which spans over a period of 10 years. They argue that such arrangement has effects on their operations, especially cost recovery, installation expenses and the financial implications.

The position of government is understandable given that suppliers, it claimed, have already been fully paid for both the meters and the installation. Therefore, the reasoning is that Discos charging consumers again for installation would not only slow down the meter uptake, but it will also undermine the goal of the initiative.

The Minister’s team pointed to poor enumeration and inaccurate customer information as the main bottlenecks, disclosing that installers are often sent to wrong addresses or to premises that are not technically ready for metering. The Director-General, Bureau of Public Enterprises (BPE), Ayo Gbeleyi, takes the Discos’ position with a pinch of salt. Gbeleyi, who was in attendance at the N501billion bond issuance signing ceremony to settle legacy debts in the power sector, regretted that the god gesture of government in line with free metering was being antagonised by the utilities.

He maintained that claims of repayment over 10 years assertions were inaccurate and misleading, explaining that cost of meters, transformer, feeders, and other components of investments, are embedded in tariffs and recouped over time.

“We’ve had pushback. The truth is, every component of investment that goes into the DisCos gets recouped through the tariff structure. So, whether it is a feeder pillar, whether it is a transformer, or whether it is a meter, we as consumers will ultimately pay for those pieces of equipment through the tariff design,” the BPE boss clarified.

He explained further: “What they (Discos) are not telling you is that the Federal Government’s major intervention is indeed one of the best loan transactions today extended to the power sector. It is a 20-year loan facility. It comes with a five-year principal moratorium and a two-year interest moratorium to the DisCos. We have never seen any capital lending to that sector of that magnitude in the history of the power sector in Nigeria.”

A public sector analyst, Mayowa Sodipo, corroborated the position of Gbeleyi, insisting that at no point in time was meter allocation ever free of charge. For him, the while Adelabu may have played to the gallery with his statement knowing that these meters and installation costs have been factored into the electricity tariff paid by the consumer, he may have equally saved the consumers from exploitation.

“At no point was meter ever free to any consumer. You pay through your electricity purchase because it is deducted from your token over a period of time. So the Discos are not the ones even paying for the meters as they are now trying to claim, but the consumers because the cost is deducted from their electricity tariff bought. So the Discos are not paying but the consumers are paying for the meters,” Sodipo argued.

But the Discos are worried that as a business concern, the burden on payment for meters still rests with them. An official of a South West Disco who spoke on condition of anonymity depriving payment for installation is an extra burden on the Discos because this segment is contracted out to installers, who are not on the pay roll of the Discos.

“So if consumers are not paying for installation, who should? Is the minster saying that the Discos should still carrying the financial implication of this?” the official asked rhetorically.

In a submission on the development, a Kano state based social commentator, Dr. Abubakar Ibrahim, for Nigeria to close its metering gap, there is need for collaborative policy implementation between the regulators, government authorities, Discos and meter providers and installers.

“They must all agree to work together to establish a clear and sustainable funding framework that covers both meter procurement and installation. The federal government on its part must design a financial framework that will balance customers’ interest with the sector financial sustainability,” Dr. Ibrahim said.

He further said that while the federal government’s objectives is clearly to close the metering gap and ensure fair billing, however, lack of alignment with DisCos could unintentionally delay the very benefits the policy seeks to deliver.

The Executive Director, Emmanuel Egbigah Foundation, Prof Wunmi Iledare, submission in in sync with Dr. Ibrahim’s. He insisted that the development is a symptom of deeper structural and governance failures in the power sector. He said it is appalling for the Federal Government, as a part-owner of the DisCos, to publicly complain about their conduct without addressing underlying regulatory lapses, leaves more to be desired.

Way to go

Dr. Ibrahim and Prof. Iledare’s submissions summarises a critical issue in the metering scheme. Key industry stakeholders in the value chain blamed the Discos shows of apathy of Discos towards meter installation on the fact that they have not been part of the procurement process including the selection of installaters.

“For this DISREP, the federal government nominated the installers, at a low cost expecting DisCos to cover some part of the cost to mobilise the installation activities. As usual since DisCos are not part of the entire procurement and acquisition process unlike other metering mechanisms, then they will show apathy; DisCos always wanted to have a say in some of these projects.

“On paper the paper the meters are free but the last mile issues are cost burdens that the DisCos are not willing to cover. This is why the process is slow and bulk of the facilities are in stores across the DisCos,” a very senior official of a Disco, who asked to be anonymous owing to the sensitivity of the matter, revealed at the weekend.

With a recurring situation, the Managing Director / CEO/ Executive Secretary, Association of Power Generation Companies (APGC), Dr. Joy Ogaji, advocates that metering should be liberalized. To this end, Ogaji argued, both government and Discos should hands off meter matters and allow it to run like the mobile phone is run in the telecommunications sector so that consumers can freely go to the open market to buy meters.

Although she agreed that when customers buy meters from shops instead of DisCos, revenue assurance can become challenging, she nonetheless said this can be addressed through meter registration with DisCos to track usage and ownership; standardistion, by mandating the use of approved, tamper-evident meters with remote monitoring capabilities; implementing a centralised vending systems for meter top-ups, linking purchases to customer accounts and collaboration with shops and regulators to ensure compliance with industry standards, insisting that this approach helps DisCos track revenue and reduce losses

“Design the standard or specifications for the meters for various categories- 1-phase, 3phase etc; make it available in shops for anyone to purchase; train installers and only contact your Discos to inform them of synchronization. With this, no cunnundrum; everyone is happy, except there are ulterior motives,” Ogaji submitted, warning that if after 15 years of privatization of the sector, metering still remains a problem, then there is no point continuing with is the way it is being done.