Lights Out, Addressing the Fundamentals?

November 25, 2021/CSL Research

High-voltage power lines. Electricity distribution station. high voltage electric transmission tower. Distribution electric substation with power lines and transformers. (Source: Africa Oil & Power Conference)

As part of President Muhammadu Buhari’s administrations move to bridge the wide gap of unmetered population in Nigeria, efforts are ongoing to commence the second phase of the National Mass Metering program (NMMP). According to the Godwin Emefiele, the Governor at the Central Bank of Nigeria, the apex bank has so far disbursed N47.66bn to Distribution Companies (DisCos), acquiring 858,026 meters in the process, stating that the previous phase made 750,000 units of Meters available to Discos in the country. A NERC report at the end of August showed that a total of 508,812 meters were deployed through the MAPs scheme, while a Punch news report at the end of August, quoting the Ministry of Power, stated that the number of meters deployed through the NMMP was 750,000, showing that both schemes have successfully deployed c.1.26m meters as of August 2021.

Despite the privatization of the power sector, the provision of meters to customers remains a key challenge. Clearly, this implies that there are many customers on estimated billing, which gives room for illegal connection to the networks and, in turn, corrupt practices. The Meter Asset Provider (MAP) Regulation, which became effective on April 3, 2018, introduced meter asset providers as a new set of service providers in the Nigerian Electricity Supply Industry. However, the request for payment before the provision and installation of Meters was a disincentive for the mass adoption of prepaid meters despite the known benefits, giving rise to the CBN sponsored mass metering plan.

The Federal Government launched the National Mass Metering Programme (NMMP) last year and the CBN, in October 2020, issued the Framework for its financing. The initiative is geared towards mass metering of Nigerians by providing loan facilities to (i) the DisCos (for the procurement of meters for its customers), and (ii) the local meter Manufacturers (for the manufacturing and assembling of meters). The schemes were launched to bridge the metering gap in the industry. The NMMP, according to a report from ESI Africa, led to the provision of 750,000 meters to DisCos in the first eight months, which fares significantly better compared with the Meter Asset Provider (MAP) program.

Ineffective metering remains a major clog to the progress of power sector reforms in the country. In our view, the provision of meters to all end users will go a long way in ameliorating the liquidity squeeze in the power sector whilst also providing cash flows to the Discos for investment in equipment. That said, there is the need for a holistic approach and concerted efforts by all players in the power sector in proffering long-lasting solutions to the myriad of issues hindering the entire value chain and commercial viability of the Nigerian power sector. There is no gainsaying that the erratic and epileptic power supply across the country has been a major obstacle to the growth and development of the nation over the years.

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