Wednesday, June 23, 2021 / 09:58 AM / By United Capital Research / Header Image Credit: Comparelight
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 4.2mn (40.3% 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.
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. 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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