Tuesday, December 21, 2021 / 01:23 PM / byCSL Research/ Header Image Credit: Business Standard
With the current realities, the goal to bridge thenation's metering gap does not appear to have an end in sight in the near tomedium term. The Nigerian Electricity Regulatory Commission (NERC) recentlypublished the Q2 2021 report on the Nigerian Electricity Supply Industry(NESI). In terms of commercial performance, the total billings by all 11 Discosto registered customers in Q2 was N268.97bn, out of which only N185.29bn wascollected which corresponds to a collection efficiency of 68.89% (collectionefficiency computed as collections over billings). In comparison with theprevious quarter (Q1) at 68.55%, there was a marginal improvement in collectionefficiency. However, the slight improvement was not due to an increase incollections in Q2 but rather due to a larger decline in billings compared withcollections, as both billings and the amount collected fell in Q2.
Furthermore, according to the Commission, theregistered energy customer population stood at 11.06m of which only 4.53m(40.95% of the identified customers) were metered as of June 2021, leaving theunmetered population - metering gap - at 6.53m customers (59.04% of theregistered customers). Compared to the prior quarter, the metering gap of59.04% in Q2 slightly improved from 59.85% in Q1 2021. Clearly, this validatesthe widely held view that there are a wide number of customers on estimatedbilling, which gives room for illegal connection to the networks and, in turn,corrupt practices.
Ineffective metering remains a major drawback to thesuccess of power sector reforms in Nigeria. While some consumers avoid payingfor power consumed through meter bypass, some other consumers are made to payfor what they have not consumed through estimated billing by discos. Discoshave been largely unsuccessful with metering their customers. As far asinadequate metering is concerned, Discos, over time, have used this situationto their advantage via estimated billings. As things stand, the plan by thegovernment to close the metering gap by 2023 appears unachievable.
The Meter Asset Provider (MAP) Regulation, whichbecame effective on April 3, 2018, introduced meter asset providers as a newset of service providers in the Nigerian Electricity Supply Industry. However,the request for payment before the provision and installation of Meters was adisincentive for the mass adoption of prepaid meters despite the knownbenefits, giving rise to the CBN sponsored mass metering plan. The FederalGovernment launched the National Mass Metering Programme (NMMP) last year andthe CBN, in October 2020, issued the Framework for its financing.
The initiative is geared towards mass metering ofNigerians by providing loan facilities to
(i) the DisCos (for theprocurement of meters for its customers), and
(ii) the local meterManufacturers (for the manufacturing and assembling of meters).
The schemes were launched to bridge the metering gapin the industry, but based on reported data, progress must be slow.
That said, we are also concerned about the reportednumber of identified energy customers given by the commission. First, Nigeria,the continent's most populous nation, has not less than 40 million households,and if we compare this to the 11.06m customers identified as of June 2021, itshows that over 50% of the Nigerian households are either unconnected orunaccounted for.
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