June 10, 2020 / 12:09 PM / CSL Research / Header Image Credit: BusinessDay
News reports say electricity customers will, effective June, pay an additional 21% on the cost of single-phase meters and 23% on the cost of three-phase meters. In a letter to the DisCos and Meter Asset providers, Nigerian Electricity Regulatory Commission (NERC) said a single-phase meter will now cost N44.896.17 from N36,991.50 previously while three phase meters will now cost N82,855 from N67,055 previously due to the naira devaluation in March.
In the same vein, a Business Day report says there are containers loaded with meter parts at the ports not being cleared because the Nigerian Customs Service is extending application of a 35% levy introduced by the government on imported meters to components used for meter production. The meter assemblers are of the view that the levy should not apply to meter parts.
Ineffective metering remains a major drawback to the success of power sector reforms in Nigeria. While some consumers avoid paying for power consumed through meter bypass, some other consumers are made to pay for what they haven't consumed through estimated billing by discos. According to the NERC Q3 2019 report, of the 9,674,729 registered electricity customers, only 3,895,497 (40.26%) have been metered as at the end of the third quarter of 2019. The report also showed that a review of customer complaints statistics revealed that estimated billing, metering and service interruption were the most significant areas of concerns for customers, accounting for over 64% of the total complaints in the fourth quarter of 2019. Regulatory watchdog NERC had repeatedly issued ultimatums to Discos to close the metering gap with the latest deadline being December 2021.
Though challenges in the sector run across the entire power value chain of generation, we are of the view that solving the problem of ineffective metering can be a quick win for the operators in the power sector if given the necessary attention. Distribution is the last mile in the supply chain to the end-user thus distribution tariffs are structured so that the costs of the power supply value chain are captured. Therefore, the revenue requirement for distribution is reflected by the costs of generation, transmission, retail distribution, marketing, metering and billing.