The electricity Distribution companies will need N299 billion to close the metering gap of about 4.1 million in Nigeria

IN order to overcome the pressure from the federal government over metering of consumers, the electricity Distribution Companies, Discos, will require N299 billion to close the 4.1 million metering gap in the country.  The Discos also seek more capital expenditure and legislative actions to establish mobile courts to swiftly tackle energy theft and meter bypassing by consumers.

During a public hearing on the Bill to Criminalise Estimated Billing at the National Assembly, the Association of Nigerian Electricity Distributors, ANED, said the Discos are making huge investments in providing meters for their customers and cutting down those on estimation.

The umbrella body of the Discos held that estimated billing methodology was standard practice in over 150 countries globally. These countries include USA, Turkey, Germany, Brazil, Chile, China, India, Indonesia, among others. Over 26 African countries including Egypt, Ethiopia, Ghana, and Cameroon also maintain this global standard.

According to a statement issued by Sunday Oduntan, director of Advocacy and Research, ANED, while the, capital expenditure, CAPEX, allowed for all the 11 Discos is N305 billion for five years to provide meters, maintain their networks and perform other obligations, the 4.1 million metering gap stands at N299 billion amounting to 98 percent of the allowed CAPEX.

ANED also noted that any new legislation would need to consider the historical challenges of the Discos which include non-cost reflective nature of the electricity tariff which has created a significant market shortfall of over N800 billion; a nascent private-led power sector worsened by macro-economic factors that is affecting the Discos’ operations and performance.

The Discos said the market shortfalls further impede their ability to access the financing necessary for operational expenditure, OPEX, CAPEX and loss reduction initiatives. While advocating for legislative action against energy theft and meter bypass, ANED said metering alone contributes to an estimated 30 percent reduction of their collection losses.

It added that the Discos lose about 40 percent of electricity monthly to energy theft. “Adequate CAPEX and OPEX provisions should be made under the electricity tariff to ensure comprehensive metering, and legislative effort should be applied to criminalising energy theft and meter bypass, and creating electricity special/mobile courts. This would assist in catalysing the desired large scale metering within the sector.”

To ensure reduction in estimated billing, ANED said its members have ensured 100 percent metering of all Maximum Demand customers (large users) in their networks; adopted check-meters to measure consumption to ensure fair bill estimation; and adjusted bills of customers where there are errors.

The Discos also noted that the proposed amendment to the Electric Power Sector Reform Act, EPSRA, 2005 by criminalising estimated billing will conflict with the Share Sale Agreement, SSA, Performance Agreement and the EPSRA. “It holds the possibility of a “Change of Law” determination that could, potentially, result in the federal government paying out an amount in excess of 5 billion dollars, in accordance with the related provision in the Performance Agreement.

“New customers may not be connected to the grid until the availability of meters, therefore denying them of service. Indeed, there would be wholesale disconnection of all the customers currently on estimated billing.”

Even Babatunde Fashola, minister of power, works and housing, has also opposed the bill, saying that such bill could destroy the entire power sector. He urged the lawmakers to first address the financial challenges of Discos.

He said though the Discos had a contractual obligation to provide meters it was not their core mandate. “And I take it that we all know what is core mandate? Their core mandate is to supply energy. My view is that let new players be licensed to have the supply of meters as their core mandate to take the load off the Discos,” he said.

According to Fashola, energy theft and meter bypass must be addressed too by prescribing heavy penalties against offenders.

– Jun. 8, 2018 @ 16:21 GMT |