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Bloated PHCN OPEX Forces NERC to Truncate Metering Plan

24 Jan 2013

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Chairman of NERC, Dr. Sam Amadi

Chineme Okafor  
in  Abuja


The Nigeria Electricity Regulatory Commission (NERC) yesterday disclosed that it was restructuring its initial plan to guarantee comprehensive metering of eligible electricity consumers across Nigeria within 18 months following obvious lapses in revenue collection within the Nigeria Electricity Supply Industry (NESI).

NERC which announced a new cost-reflective electricity tariff within the second Multi Year Tariff Order (MYTO-2) framework in June 2012, had then directed the 11 successive Power Holding Company of Nigeria (PHCN) distribution companies to commence and conclude the provision of metering facilities to customers across the nation within 18 months, it however announced at a press briefing in Abuja that the plan has been undermined by funding deficits, after about seven months into the directive.

Chairman of NERC, Dr. Sam Amadi, stated that the commission had to tweak the initial 18-months metering plan to accommodate certain funding concerns raised by the distribution companies.

Amadi thus, explained that NERC has in this regard initiated an alternative plan aimed at encouraging self-financing of metering facilities by electricity consumers across the country.

“We have received concerns about slow deployment of meters. NERC had indicated an initial plan of metering the sector in 18 months based on assumptions of how financial viability of the sector will improve after MYTO-2, but unfortunately negotiations between labour and the Federal Government resulted in some increase in personnel costs; 50 per cent increase in salaries of PHCN workers and some of the casual staffs were regularised.

“The implication of this is that the operational cost of the discos has increased significantly and so the discos have not been very able to utilise increment in revenue collection arising from tariff review to focus on metering. So, the commission will after the meetings with discos come up with a new plan or set of initiatives to ensure that metering programmes progress significantly to meet our targets,” Amadi said.

While explaining the workings of the new metering plan, Amadi noted: “There are options available; customer financing, which is such that willing customers can advance money to the discos after which a meter will be installed in their premises within a stipulated timeframe of 45 days. In exchange for this advance, the discos will in turn reduce the customer’s electricity bills on a monthly basis to the tune of the amount originally advanced by the customer.

What the commission has come up with is to have these willing customers pay for their meters but not as it was done in the past but paying in advance for energy consumption; this is not the best option but more realistic for consumers who are been billed on estimation and as you know, we are trying to sanitise estimated billing system by proposing a methodology for estimation to avoid wide or crazy estimation but close enough to accuracy. Results from the field show adequate abuse of estimation.”

He further said: “Another aspect of the framework is that we are going to invite all vendors of meter to apply for certification from us to comply with the metering code for standardisation. The commission may accredit meter vendors to supply and install meters directly to customers after we get a certificate of “No Objection” from the Bureau of Public Procurement, so certified vendors can then install meters to customers based on the price that is captured in the MYTO and this also provides the discos an opportunity to procure meters for customers from these certified vendors in later days.”

Accordingly, NERC announced that the MYTO-2 framework provided for sufficient funds to grant metering facilities to customers who were no longer required to purchase same, thus, prompting the 18-months deadline to the discos to close the metering gap and ensure that customers are provided with meters, but it acknowledged yesterday that the sector was still experiencing huge metering gap.

It had also stated in December 2012 that an estimated N170 billion will be required to purchase and install about 2.8 million electricity meters to close-up the existing gap considering that just about 35 percent of eligible electricity consumers in the country are currently benefitting from standard metering facilities.

Tags: News, Nigeria, Featured, PHCN, NERC, Metering Plan

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