NERC Gives Meter Providers 10 Years to Recover Investment

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Third-party investors in meter provision in Nigeria’s power sector will have about 10 years to recoup investments they make in the sector, and also earn reasonable returns on their investments, the Nigerian Electricity Regulatory Commission (NERC) has disclosed.

The NERC equally indicated that tenure of a Meter Asset Provider (MAP) permit shall be for a period of 15 years in the first instance effective from the date of issuance by it.

According to the NERC in its MAPs regulation obtained by THISDAY, approved MAPs would supply and maintain meters to customers of electricity distribution companies (Discos) in the country to help cut down the existing metering gap.

It said in the regulation that the distribution licensee and the MAP shall enter into a Metering Service Agreement (MSA) which shall provide for the number of meters to be installed by the MAP in the distribution licensee’s network over an agreed period.
According to it, recovery of the cost of meter asset plus a reasonable return shall be over a period of 10 years, with an acceptable form of securitisation of the metering service charge and timely.

NERC recently signed off MAPs for the Ikeja, Abuja, Benin and Jos Discos, disclosing that prices for meters under the MAP regulation shall be N36, 991.50 for single phase meters and N67, 055.85 for three phase meters respectively.

Furthermore, on payment securitisation within the MAP arrangement, the NERC stated that Discos shall within 30 days of the execution of the MSA with its consumers issue a payment security to the MAPs in the forms of an irrevocable direct pay Letter of Credit (LC) or other forms of security which is executable on demand to the interest of the MAP and provided by a bank and in a form acceptable to the MAP.

It equally mandated that a back-office structure mutually agreed between the parties under which all payments for metering services by customers at the time of vending shall be established and ring-fenced to a dedicated account established for the purpose of securing payment to the MAP, in addition to a securitisation framework that may be developed in collaboration with financial institutions such as development Finance Institutions (DFIs); the Central Bank of Nigeria (CBN); and Infrastructure Bank.

To avoid conflict of interest, the regulation equally stated that Discos, their core investors, subsidiaries, affiliates, directors and relatives have been barred from setting up, owning shares or holding directorships and senior management positions in any of the approved MAPs.

The commission indicated that within 120 days of the commencement of the MAPs regulation, it shall issue a regulatory order capping the bills of unmetered customers in the Discos networks to address the issue of estimated billing which has become contentious in the industry.
The Chairman of NERC, Prof. James Momoh, had said the MAPs would be approved to sell meters to Nigerians, adding that this will break the monopoly enjoyed by the distribution companies.

He had said with the unveiling, issues around estimated billings would be eliminated, as consumers would no longer receive outrageous bills since everyone will have access to purchase their own meter anywhere in the country from any of the approved providers.

Momoh had said, “Estimated billing is not something we recommend at NERC; we met it prior to assuming office. In eliminating it, we have created a technology called MAP, which will allow us to manufacture meters in Nigeria, as well as its installation and merchandising.”