Power Firms Fail to Provide Meters for 58% of Customers

  • Power Firms Fail to Provide Meters for 58% of Customers

Electricity consumers have expressed disappointment as nine of the 11 power distribution companies in the country have not supplied meters to more than half of their customers.

The total power generation has been hovering around 3,000 megawatts in recent months on the back of gas constraints, transmission line and distribution network limitations and water management issues, leaving at least 3,000MW idle.

A new report by the Nigerian Electricity Regulatory Commission obtained by our correspondent on Saturday showed that out of the 8,135,730 registered electricity customers, only 3,434,003 (about 42 per cent) had been metered as of the end of the first quarter of this year.

“The data is disappointing; we are moving at a snail’s pace. We have the capacity to meet up the requirement if we are conscious to do what is right. Looking at those who have actually applied to have meters, more than 50 per cent of those who need meters and who have applied for them are unmetered, then we cannot actually say that we are making progress,” the President, Electricity Consumers Association of Nigeria, Mr Chijioke James, told our correspondent.

“Not until every customer that is eligible to have a meter is actually metered, then as far as we are concerned, they (electricity distribution firms) are not doing anything. A lot of people are on estimated billing and corruption is still there,” he added.

According to NERC’s first quarter 2018 report, in comparison with the last quarter of 2017, the registered customers increased by 2.37 per cent, while the metered customers declined by 3.9 per cent.

The regulator attributed the increase in the number of registered customers to the ongoing enumeration by the Discos, which it said had helped them (power distributors) to register some individuals who had previously consumed electricity through illegal connection to the networks.

“Metering still remains a key challenge facing the industry,” NERC said, adding that only two Discos, Benin and Port Harcourt, had metered up to 50 per cent of their customers as of the end of the first quarter of this year.

According to the report, three in every five registered electricity consumers are unmetered, with the Yola Disco having the lowest metering rate at 21 per cent.

“A major initiative towards improving revenue collection in the Nigerian electricity industry is the provision of meters to all end-use consumers of electricity,” the regulator stated.

It said the Meter Asset Provider Regulations’ scheme was launched recently to enable third-party meter providers to work with the Discos in bridging the metering gap in the industry.

The MAP Regulations, 2018 was introduced to eliminate estimated billing practice, attract private investments into the provision of metering services, and close the metering gap through accelerated meter rollout.

NERC said, “Notwithstanding the growth in the registered customer population during the first quarter of 2018, the incremental meter deployment by Discos is significantly lower than the targeted quarterly metering stated in the performance agreement with the Bureau of Public Enterprises. Notably, with the exception of Port Harcourt and Benin Discos, none of the remaining Discos has metered half of their registered customers.

“To this end, the commission shall continue to work relentlessly with the Discos to ensure total compliance with their respective metering targets as contained in their Performance Agreement with the BPE by enforcing the Meter Asset Provider Regulations.”

In the first quarter, the power distributors received a total of 108,874 complaints from their customers and resolved a total of 72,846, representing 67 per cent of the complaints received, according to the report.

NERC noted that customer complaints were typically on metering, estimated billing and service interruption, among others.

The regulator said, “Metering and billing dominated the customer complaints, both accounting for 64,197 (i.e. 59 per cent) of the total complaints in the first quarter of 2018.”

It said out of the N171.1bn billed customers in the first quarter, only N106.6bn was recovered, representing 62.3 per cent collection efficiency.

“Overall, the Discos’ collection efficiency remains abysmally poor, as just a little above the half of the revenue billed is recovered as at when due. The poor collection efficiency by the Discos has negatively impacted on the financial liquidity of the industry, which in turn, has led to reduced investment in the Nigerian Electricity Supply Industry,” the regulator stated.

NERC noted that a major factor contributing to low collection efficiency “is customers’ dissatisfaction with estimated billing, which often resulted in unwillingness to pay.”

The ECAN president, James, said some customers paid for meters but the Discos had yet to supply to them, adding, “If we are in a country where consumers’ rights are adequately protected, all the major distribution companies in Nigeria would have gone under by now with litigation. They don’t have any right not to meter all the consumers.

“Now, it is worse off for them that the consumers took the responsibility upon themselves to get metered; many of them paid and for the past one year, they have not been metered, and there are no sanctions. If we open a class action against the distribution companies, all of them will fold up. I am talking to my team of lawyers and we are beginning to look at it.”

The Chief Executive Officer, Association of Nigerian Electricity Distributors, an umbrella body for the Discos, Mr Azu Obiaya, in a telephone interview with our correspondent, said the lack of cost-reflective tariff was hampering the power investors’ ability to invest in the sector.

He stated, “Sooner is better than later in terms of resolution of this tariff gap. The generation companies right now are only being supported by the prepayment assurance guarantee, which is supposed to end through the end of this year. Without that buffer, we are back to a much more challenging situation in which the Discos are unable to remit the kind of money that is necessary to make the market whole, because again the tariff gap exists.

“There is an urgent need for us to put our heads together in the sector and come up with a solution to this market shortfall situation.”

According to NERC, the Discos were issued a total invoice of N163.1bn for energy received from Nigerian Bulk Electricity Trading Plc and for the services provided by the market operator in the first quarter of this year, only N51.2bn of the invoice was settled, creating a total deficit of N112bn.

“Financial illiquidity remains the most significant challenge affecting the industry’s sustainability. This serious liquidity challenge is partly attributed to non-cost-reflective tariffs and high technical and commercial losses aggravated by consumers’ apathy to payment arising from estimated billing and poor quality of supply in most load centres,” it added.

The commission said although the low remittance by Discos to the NBET and the MOs was partly due to the low collection and existing tariff shortfall, it had been observed that the Discos seemed to have capped their monthly remittances, thereby keeping more than their fair share from the market funds.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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