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Power sector: On meter deployment and higher meter pricing

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By United Capital Plc

Metering remains one of the most pressing issues confronting Nigeria’s electricity sector. The Nigerian Electricity Regulatory Commission (NERC) estimates that as of Q2-2020, only 4.2 mn (40.3 percent of the 10.5mn registered electricity customers) had been metered vs 3.6mn in Q4-2017.

The lack of sufficient metering leads to estimated billing by Discos, which ultimately leads to unpaid receipts by customers, a key source of liquidity deficit in the Nigeria Electricity Supply Industry (NESI).

To improve liquidity in the NESI, the Central Bank of Nigeria (CBN) began its National Mass Metering Programme (NMMP) in Oct-2020 to fund local manufacturing and importation of meters by meter suppliers and Discos.

Notably, the NMMP followed the NERC’s Meter Asset Provider (MAP) program (Q1-2018), which had subdued effectiveness in closing the gap by authorizing third-party financing of meters, and amortization over a 10-year period.

To put this in context, from Jan-2019 to Nov-2020 (the most recent statistics available), a total of 508,812 meters were installed under the MAP, compared to 6.6 million contracted meters.

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This equates to 22,122 average monthly installations vs a monthly target of 166,781. In its first phase, the NNMP deployed 1.0mn meters, according to NERC.

However, only 16,308 had been installed for end-users due to labour and logistical problems as of Nov-2020.

Meter Asset Providers in Nigeria have recently demanded an increase in meter prices due to tighter economic realities such as galloping inflation, foreign exchange devaluation, and global supply chain disruptions, among others, all of which have driven a spike in input costs.
Higher meter pricing will likely weigh on the NMMP’s effectiveness, even as the majority of end-users remain unmetered and Discos continue to charge estimated bills.

The Discos appear to be on course to miss the NERC’s Dec-2021 target for compliance in closing the metering gap, having already missed installation targets.

Meanwhile, end-user frustration with estimated billing will persist in the medium term.

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