Chineme Okafor in Abuja
The Nigerian Electricity Regulatory Commission (NERC) is considering three innovative options to improve the metering obligations of electricity distributions companies (Discos) to their customers, with a view to eliminating the regime of estimated billing of consumers by Discos.
According to a document the commission posted on its website, the three options under consideration are Meter Service Providers (MSP) scheme, modified Credited Advance Payment for Metering Implementation (CAPMI), and franchising in rural an urban settlements.
Under the MSP scheme, NERC explained that MSPs could be financial institutions, venture financiers or even Original Equipment Manufacturers (OEMs) and meter manufacturers with the capacity to provide comprehensive meter services to electricity customers.
It said the MSPs would own the metering infrastructure on a lease basis including replacement of faulty and obsolete meters, but will also enter into medium to long term meter service agreements with Discos which would then integrate in their vending systems provisions that allow the MSPs to get deductions from customers’ vending.
Likewise, it explained that guarantees for this financing option could come from the World Bank or the N39 billion metering loan recently disclosed by the federal government.
In terms of obligations within the MSPs, NERC stated that Discos would provide details of customer base for the scheme to provide financing, the MSPs would provide financing for procurement, installation and maintenance of metering infrastructure, while NERC will approve all metering agreements between Discos and MSPs.
Also, MSPs would be expected to supply meters to Discos Discos based on supply and installation contract, Discos will then own and maintain the meters. They will also retain billing and collection activities while collection accounts will be backed up by irrevocable payment orders.
The ultimate goal however would be to provide meters to consumers but with the financial burden of such venture taken off the shoulders of the Discos.
In terms of the benefits of the MSPs option, NERC said: “A large number of customers will be metered quickly in NESI, issues of electricity theft and meter bypass will be eliminated due to enhanced vigilance by MSPs, increased revenue protection for Discos due to focus on billing and collection, guaranteed repayment arrangement will encourage financiers to support MSPs.”
It however stated there were other considerations such as Discos’ reluctance to cede control over the meter as part of their assets and financiers possible request for more stringent guarantees and conditions for participation in the scheme, which could stand in the way of this option.
The other option according to NERC would be a modification of the CAPMI mechanism which it jettisoned before because of Discos’ repeated failure to comprehensively respect the terms of their engagement with customers in the CAPMI.
It explained that the scheme would be modified to have shrewd transparency in monitoring payment made by customers as well as input measures to guard against delays in meter installation and making of refunds.
On franchising, it noted that Discos would be allowed to enter franchise agreements with agents who will retail electricity at an agreed discount to consumers but in line with NERC’s regulations, codes and metering requirements.
Electricity sold within this arrangement is however expected to be bulk metered by Discos at designated energy injection points, while agents check meters for internal energy accounting.
It also said the option has benefits that included faster meter roll-out, cost-efficiency, ease of revenue collection in designated locations and less prone to incidence of theft.