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Electricity Distribution: Why NERC Tweaked its 18-Month Metering Plan

10 Feb 2013

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Sam Amadi, NERC Chairman

Chineme  Okafor 
The reasons why the Nigerian Electricity Regulatory Commission (NERC) decided to tweak its initial plan to ensure that successor distribution companies of the Power Holding Company of Nigeria (PHCN) comprehensively provide electricity metering facilities to eligible consumers across the country within 18 months have emerged.

THISDAY gathered from a reliable source in the presidency that the somewhat unexpected change of strategy by the commission was largely due to the sustained “unholy” practices it discovered among some of the 11 PHCN distribution companies and attempts by the Ministry of Power to unduly interfere in the metering plan.

According to the source who spoke in Abuja at the weekend, NERC had expressed reservations over plans by the Ministry of Power to procure and distribute electricity meters to PHCN distribution companies, a development that ran contrary to existing market rules on application of market funds such as the Federal Government approved subsidy for the sector.

Apart from the alleged meter procurement plan by the ministry, the source also explained that the commission had initiated the new framework, which will run side by side with the existing 18-month metering plan to further checkmate obnoxious practices amongst the distribution companies which it had now directed to provide meters to customers who are willing and able to finance their meter procurement within 45 days.

“I think the question the media should be asking is: how will these discos meet up with this plan and what will happen if after 45 days a customer that has paid for meter does not get his meter? And to that, I will say that I think NERC is testing the waters.

“Remember it issued out the 18-month metering plan when it launched MYTO-2 in 2012 and effectively reviewed electricity tariff. At that point, I am aware that it was a consensus between the then Minister of Power, Prof. Bart Nnaji, CEOs of PHCN discos and NERC that within 18 months, the discos will be able to provide at least 90 percent comprehensive metering of the sector but a few days back, you heard NERC announced its review of the 18-month metering plan because operational costs of the discos had shot up that it cannot meet up with other capital projects,” the source said.

The source further explained: “NERC has gone on to say: okay, since you don’t have the money to provide meters to customers, make sure you provide meters to customers who are willing to finance their meter procurement within 45 days and then honestly make deductions from their energy consumption.

“I think these discos will be astonished with this new directive because consumers that are being billed extravagantly through estimated billing methodology now have an option of stopping such economic sabotage perpetrated by the discos; now Nigerians will wait to hear their excuses as well as NERC’s reaction if a customer does not get a meter 45 days after payment. NERC has effectively taken off their hands from the illegal pie with this and I think the media should be out to watch both NERC and the discos in this regard.”

The source, who expressed dismay at the seeming disregard for extant market rules by the ministry, said: “Are you aware that the ministry had also made attempts to procure and distribute meters to the discos with funds meant for the sector? Their overzealous attempt was, however, resisted by NERC; maybe it was the fund meant for subsidising the sector that they tried to vire for that purpose, I don’t know but I am aware that NERC was not comfortable with that arrangement and I also think it informed its decision to tweak the metering plan. Now, both the ministry and discos can either obey or disobey rules governing the sector with this new development. That is why I said that NERC may be testing the waters.”

The presidential source also reacted to a media report credited to the Secretary to the Government of the Federation (SGF), Senator Anyim Pius Anyim, in which he stated that preferred bidders of various PHCN privatised companies would take over the companies within two weeks. The report had received harsh reactions from members of PHCN labour union.

“Preferred bidders cannot assume operation of the companies within that time because the BPE is still negotiating with them and would conclude that before 25 percent initial down payments will be made and then subsequent payments; all these will not have been done within two weeks, so there is really no reason for labour agitation though,” the source noted.

Tags: Business, Electricity Distribution, Featured, Nigeria

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