Metering issues
Power distribution companies installed 560,965 meters in 2022, as the number of unmetered registered electricity consumers increased to…
Power distribution companies installed 560,965 meters in 2022, as the number of unmetered registered electricity consumers increased to 7,017,235, according to figures from the new fourth quarter 2022 report of the Nigerian Electricity Regulatory Commission. The regulators’ fourth, third, second and first quarter reports showed the slow pace of metering by all the 11 power distribution companies despite the various metering programmes in the power sector, The Punch reported. In the fourth, third, second and first quarters of 2022, the Discos installed 164,612, 142,887, 167,956 and 85,510 meters, respectively.
Electricity was first introduced to Nigeria in 1896, just 15 years after its introduction in England. However, to put it mildly, Nigeria’s electricity value chain (generation, transmission, and distribution) has been riddled with challenges. The success of producing and distributing electricity commercially is directly linked with electricity metering, and this is just one of a long list of areas in which Nigeria still needs to improve. Upon return to civilian rule in 1999, a power master plan was drawn up, and metering was regarded as a key success factor for the sector. However, after two decades and several iterations of planning, progress has stalled, and data shows that the gap is increasing. The inability of distribution companies to effectively regulate their customers is symptomatic of a triad of conjoined factors that will only be resolved for a while. These Siamese triplets are customer enumeration, investment, and tariff. When the DisCos bought the moribund NEPA assets, they did not have a clear idea of how many customers they were supposed to serve, thus making it impossible to know how many meters they were to order. While more than 569,000 people were metered in 2022, the customer database of the distribution companies had increased by over a million, showing the inability of the distribution companies to plan for the number of customers they registered adequately. Even the registered population reported by NERC is in dispute. The spokesperson for Eko Electric told The Punch last year that the figures reported by both the regulator and the umbrella body for distribution companies were faulty. An expert told the newspaper that the registered customer population should be as high as 20 million, saying that his company could not have supplied data, showing stagnation in its registered customer base. The most definitive reason why DisCos cannot catch up with the registered customers they have captured is that they need more capital expenditure that would allow them to meet that demand. One estimate set out by an electricity lawyer is ₦50 billion ($64.43 million) for a million customers. The distribution companies have struggled to profit and generate capital for meter purchases from the National Bulk Electricity Trading company’s invoice. Owing to a high aggregate Technical Commercial and Collection Loss of over 40%, distribution companies cannot claim the total volume of revenue they should access for the services delivered, which creates a deficit across the electricity supply industry and stunts the provision of utilities like metres. The Federal Government has repeatedly stepped in to plug these loopholes with over ₦22 trillion, according to some estimates, but that has sadly not given the power companies the means to stay buoyant enough to start earning income, and the electricity tariff is not at a level needed to earn profit and make savings. The DisCos’ attempt to increase electricity charges in response to the floating of the naira was recently pushed back. Nigeria generates over 80% of its electricity from gas, which is priced in dollars. The collapse of the I&E window with the official market will mean that the value of the electricity contracts will increase. All told transparency is key to the confidence of the paying public, especially for a utility like power. As announcements upon announcements go out on significant increases in electricity tariffs, the government must tie charging these new rates to only metered locations. Power companies can and should make the necessary investments to accelerate metering if they are keen on charging market rates because receiving such market rates places responsibility for transparent billing on them. Also, the black market and corruption around unmetered consumers have caused financial losses for electricity companies, poor quality of service, and inequity, so the government must mandate and encourage the distribution companies to embrace innovative ideas in low-cost metre design technology, standardisation, and mass production for eventual deployment across Nigeria. Nigeria’s leaders need to take urgent action to address the problem of unmetered consumers, which includes cracking down on corruption, ensuring that all consumers are metered, and educating consumers about the importance of electricity payments.