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The leadership of the Association of Nigerian Electricity Distributors (ANED), an umbrella body for all the Discos, has opened up on why power distribution companies cannot meter Nigerian electricity users according to the provisions of their agreement with the federal government in November 2013.
The Executive Director, Research and Advocacy of ANED, Sunday Oduntan, noted in Abuja recently although most banks are not willing to give out loans to the power firms, the companies are still seeking funds to meter their customers.
The group argued that when investors in the Discos took over the assets on November 1, 2013, there was no true estimate of the metering gap in Nigeria, saying “Indeed, the Discos, under their performance agreement, were only obligated to meter 1.7 million customers over a five-year period. The estimate of the metering gap, at that time, was significantly less than the currently identified four million gap”.
Oduntan said the metering gap in the power sector was a commercial challenge, adding that the cost of the meters was incorporated in the tariff, which customers were paying.
He said “So, the cost of the meter has an upward impact on the tariff. For instance, the 1.7 million meters that the Discos are obligated to provide will cost N124bn, assuming that they are three-phase meters at a cost of N73,000 each. To address the four million metering gap will cost N299bn,” he stated.
He recalled that the tariff set by NERC only allowed a total of N305bn for the 11 Discos over a five-year period to provide for capital investments such as metering, installation of transformers, distribution network expansion, building of injection substations, etc.
Oduntan argued further, saying “If you look at it in another way, metering the 1.7 million customers, as contained in the performance agreement when the Discos came along, will amount to 40 per cent of the money that was provided for every capital investment under the tariff.
“Meeting the four million metering gap will require 98 per cent of the money provided for capital investment under the tariff. Therefore, it is more important to explain that for us to be able to address all the other critical capital investments and achieve comprehensive metering, the tariff would have to go up significantly.”
On possible ways to address the challenge, ANED stated that the optimal installation of meters on a monthly basis was 20,000 meters per firm, stressing that “This is consistent with other countries that have been in a similar situation. It takes five to 10 years or more to fix, because a significant component of the meters are imported. And so, it will require ready access to foreign exchange, with the cost being impacted by the diminished value of the naira”.
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