DisCos, Customers and the Metering Conundrum

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No issue has generated furore between electricity distribution companies (Discos) and their customers as that of metering. Although both parties are agreed that the provision of prepaid meters to every customer is critical to facilitating fair billing, the failure of Discos to make available the device to all customers over a period of time has left the distribution companies with the Hobson’s choice of estimating customers’ electricity consumption. This has, however, pitted customers against the Discos because of the former’s belief that the distribution companies deliberately foot drag on the issue of meter provision so as to continually fleece them through ‘crazy bills’ as what they are asked to pay is not a reflection of what they consume. Customers have also complained that by failing to provide them meters, the Discos have deprived them of the opportunity to effectively manage their electricity utilization.

Metering is a major challenge of the power sector. Over 50 per cent of electricity customers are unmetered. The importance of electricity meters in the power sector value chain cannot be over-emphasised; it is said to be the cashbox of the power sector industry. While electricity generation companies (Gencos) produce the electricity that is transmitted and distributed to homes, offices and industries, the revenue generation process starts from the meters installed at these locations.

Although the Discos have always promised to meet the metering need of their customers, they have been unable to do this for a number of reasons. Early in the year, Eko Electricity Distribution Company (Eko Disco) promised to roll out 200,000 meters this year but half way into the year, the company is nowhere near meeting half of what it promised. The story is not different with other Discos. Benin Disco was only able to provide 39,000 meters to its customers in 2016. The Ibadan Electricity Distribution Company (IBEDC) last year unveiled a plan to roll out 570,210 meters to its customers at the cost of N34.5billion over a five-year period. But this is like a drop in the ocean considering the need in its franchise.

Apparently to address and redress this yawning gap, the Minister of Power, Works and Housing, Fashola, last Sunday, announced a Federal Government intervention programme that would ensure the roll out of three million meters across the country.

Genesis of the metering crisis

The metering gap is not a recent development; it is an issue that has been with the industry for a while. While nearly every customer was metered during the analogue meter era, the gap began to emerge following the migration to prepaid meters due to the non-availability of the new meters.

Prior to the privatisation of the power sector, the Federal Government implemented a mass metering programme under the National Prepaid Metering Programme (NPPMP) to address the metering gap. The NPPMP was focused on the adoption of the pre-paid metering technology.

Under the NPPMP, the Federal Government appointed Revenue Cycle Management (RCM) contractors to procure and install pre-paid meters at “no cost” to electricity customers. But the NPPMP was neither sustainable nor successful as a consequence of a number of factors such as the huge funding cost for the meters which the FG was unable to provide, the lack of transparency in the appointment of RCMs, the short duration of the RCM contracts, uncoordinated meter procurement processes, proliferation of sub-standard meters, non-standardisation of meter technology, corruption and massive fraud.

In 2012, NERC introduced a new meter intervention programme called the Credited Advance Payment for Metering Implementation (CAPMI) to bridge the metering gap and address the funding issues under the NPPMP/RCM model. Under the CAPMI scheme, the customer was expected to self-finance the meter, with the meter cost amortised over a period from his/her energy charge at a 12 per cent interest rate per annum. However, this scheme was riddled with a lot of difficulties. At first, CAPMI proved to be a viable exercise but it soon became unsustainable because of the fluctuating Forex regime that has adversely affected the entire Nigerian economy. Most of the meters given to customers are imported, therefore the availability and stability of the dollar is of the essence if contractors are to be able to bring in meters for distribution. When CAPMI was launched, the rates for selling meters to customers was fixed at a price when the rate was still $1 to N195, in a short while, the cost of procuring these meters was almost double the price thus rendering the scheme unrealistic.

Speaking on the disposition of his organization to the metering issue, Managing Director of IBEDC, Mr John Donnachie, said, “Anybody who is in the business of electricity and is not metering is just deceiving him or herself, because metering is the only way you can get your revenue. So we are interested; we want to do it if possible, overnight. There are lots of people out there that are bypassing the metre, the poor, the rich and even the government. We are committed to metering everyone within the confinement of the resources at our disposal. We need about N60 billion to metre everybody. This is huge but we are not deterred.”

While acknowledging that prepaid meters help customers to monitor and manage their electricity utilisation, he said that the device does not always serve the interest of Discos very well.

He said, “Because the metre is not with IBEDC but rather with customers, people still tamper with it. It is not as if we don’t want to provide prepaid metres; but in business, one has to look at the trend and also use technology. Why are people struggling for prepaid metre, it is because they still can bypass it. A prepaid meter single phase now is almost about N35,000, whereas the non-prepaid metre goes for about N23,000. So, it is heavy in terms of investment, but prepaid just shows that you will pay before the service.

“What we are trying to do now is to leverage on technology to stop energy theft. If technology allows me to read you well, why do I need prepaid metres? So because of the investment required, we are thinking about new technologies. With the new technology, we can take a whole area, remove all their metres and put new metres there. Those new metres can be read from anywhere. When I read that, I can then download from there straight to your billing platform and you get your exact bill. So if that is possible, why do I need to go for prepaid meter that has higher investment value and doesn’t give real value and yet people are still able to bypass. The question of bypass is common, whether it is prepaid or post paid.”

Going forward

Will the decision of the government to roll out prepaid meters put an end to the long wait of Nigerian electricity consumers for meters? Experts do not think so.

According to Dr Segun Ajisebutu, an energy economist, while the intervention is good, it is not sustainable because its continuation is a function of various factors. He added that the best thing is to emplace a system that will run on its own. He is of the opinion that reviewing the aspect of the agreement with Discos that gives them the responsibility for meter provision will help the industry. He opined that given the liquidity challenge that all the Discos face, rolling out meters for customers cannot be their priority.

He said, “Meter production is a huge investment and loading the Discos with that responsibility will not serve our purpose as a nation. The Discos have shown that while they have good intentions, they lack the capacity to deliver on this. So, it is best to allow other sub-sectors of the electricity industry to handle the production and distribution of meters. If that is done, the Discos will be able to face their primary responsibility of electricity distribution.”

He added that with the current arrangement, the meter is seen as the property of the Discos. “That is wrong, every customer should own his own meter and be responsible for its maintenance.”

Speaking in a similar vein, former Power Minister, Professor Barth Nnaji, said the Discos should be freed from the responsibility of meter distribution so that they can devote their resources to power distribution which is their core responsibility. He also argued that the non-cost reflective tariff operational in the industry is muzzling the operators and deterring investors from the sector. He said for the industry to attract the kind of investment that will give Nigeria uninterrupted power supply, the tariff must be cost-reflective.

Source:Nigerian Tribune

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