NERC approves N21 billion for DisCos to acquire meters
The Nigerian Electricity Regulatory Commission (NERC) has announced the approval of N21 billion for the electricity Distribution Companies (DisCos) to provide meters for end-user customers.
The approval was contained in the NERC Order No: NERC/2024/072 on the operationalisation of “Tranche A” of the Presidential Metering Initiative Under the Framework of Meter Acquisition Fund, released on Friday.
The order which was signed by NERC chairman, Engr. Sanusi Garba, and Commissioner Legal, Dafe Akpeneye, on June 19, 2024, is with effect from June 13, 2024, and “may be amended or revoked by subsequent Orders issued by the commission.”
NERC said: “The Commission hereby approves the use of a sum of NGN21,000,000,000 (twenty one billion Naira only) apportioned pro rata to contribution by the DisCos as Tranche A of the MAF scheme.
“Attached to this Order as Schedule 1 is a breakdown of the funds available for each DisCo for the purchase of end-use customer meters.”
NERC said that the DisCos shall buy and install the meters for customers under the MAF free of charge.
“All the meters to be procured and installed under the MAF framework shall be at no cost to the customers of the DisCos,” said NERC.
According to the schedule of the MAF 1st Tranche Disbursement Allocation attached to the Order, Ikeja Electricity Distribution Company has the highest allocation of N4.35 billion (N4,358,122,421); followed by Abuja Electricity Distribution Company (AEDC) with N2.99 billion (N2,990,745,647) and Eko Electricity Distribution Company N2.92 billion (N2,921,896,285).
Others are Ibadan Electricity Distribution Company, N2,516,469,752; Enugu Electricity Distribution Company, N1,726,893,467; Benin Electricity Distribution Company, N1,571,276,806; Kano Electricity Distribution Company, N1,568,029,563; Port Harcourt Electricity Distribution Company, N1,360,944,608; Kaduna Electricity Distribution Company, N1,220,367,039; Jos Electricity Distribution Company, N521,905,774 and Yola Electricity Distribution Company, 243,348,639 NERC had introduced the Meter Asset Provider (MAP) Regulations 2018 and subsequently, the Meter Asset Provider and National Mass Metering
[“MAP&NMMR”) Regulations in 2021 to address metering challenges in the Nigerian Electricity Supply Industry (NESI).
The Regulations provided several options for metering end-use customers but the interventions, though significant, have not resulted in the closure of the national metering gap which currently stands in excess of seven million customers.
The inability of distribution companies (DisCos} to raise financing in the form of debt or additional equity was identified as the major constraint in the acquisition and deployment of end-use meters and other capital investments.
The Meter Acquisition Fund (MAF) scheme was, therefore, developed and approved by the Commission, primarily to address the challenge of DisCo creditworthiness inhibiting the deployment of end-use meter in NESI by creating a credible revenue stream from the market funds on the back of which long term financing may be secured by the utilities.
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NERC said the management of Fund Manager (FM) was based on terms and conditions negotiated by the DisCos and approved by the Commission.
According to the commission, the federal government has approved the Presidential Metering Initiative (PMI) with the overarching objective of closing the metering gap in the NESI within three years leveraging on smart metering technologies for data analytics.
The MAF shall form one of the revenue streams for the repayment of the long tenor financing for metering.
Continuing, the order revealed that “The Commission approved the deregulation of meter prices under the MAP scheme vide Order NERC/2024/040 to ensure on efficient pricing of meters while responding more quickly to changes in macroeconomic parameters.
“The Order provides that all prices of meters under the MAP scheme shall be determined through a transparent and competitive bidding process by eligible MAPs.
“A competitive bidding process was held on 21 May 2024 based on the provisions of Order NERC/2024/040 where a total of 24 (twenty-four)] MAPs participated across the 12 DisCos.
“A total of 44 bids were submitted for 10 meter specifications.”
NERC said the deployment of funds under the MAF scheme shall accelerate the deployment of meters and a closure of the current metering gap thereby reducing commercial & collection losses to DisCos, enhancing quality of service and improvement of customer satisfaction.
It also noted that while the NESI is expected to leverage on the revenue stream under the MAF framework to raise substantial capital funding for metering, there is an imperative to accelerate a closure of the metering gap for all customers currently classified under tariff Band A for the purpose of revenue protection and facilitating demand side management for the affected customers.
NERC said the DisCos shall utilise the first tranche (Tranche A”) of disbursement from the MAF scheme based on contributions made by DisCos as at the April 2024 market
settlement and attached to this Order as Schedule 1, to procure and install meters for unmetered Band ‘A’ customers within their franchise areas.
NERC said that DisCos shall, within 14 days from the effective date of this Order, conduct a transparent and competitive procurement process, for meter price determination, selection and engagement of MAPs/LMMAs for the metering of end-use customer meters under the MAF scheme.
The order also directed that a report containing details of the process undertaken for the selection of
MAPs/LMMA:s, including meter price, meter specifications, and the list of customers to be metered shall be sent to the Commission for approval, within 20 days from the effective date of this Order.
It added that upon approval of the Commission, the DisCo shall enter into contracts with selected MAPs/LMMAs on one of the following terms:
“(i} Where an Advance Payment Guarantee (“APG”) issued by a commercial bank in Nigeria is provided by a qualifying MAP/LMMA, 30 per cent of the contract sum shall be paid by the FM on behalf of the DisCo to the MAP/LMMA upon execution of the contract.
A further two milestone payments shall be made upon the completion of 60 per cent of contracted quantities and 100 per cent of the contract respectively, with the funds advanced against bank guarantee amortised over the payments.
“(i} Where the MAP/LMMA do not request an advance payment, the milestone payments shall be made upon the verified installation of 20 per cent, 60 per cent and 100 per cent respectively of the contracted volume of meters. A vendor may, at his option, defer payment until the completion of the installation of the contracted volumes.
“(i) DisCos shall ensure that all the necessary resources and network clearance required by the MAP/LMMA to install meters based on installation plans are provided and/or completed.”