CBN Rolls Out Financing Framework for Mass Metering Programme


•Bars importation of fully assembled meters
•FG plans full deregulation of power sector

By Emmanuel Addeh

The Central Bank of Nigeria (CBN) yesterday released guidelines for accessing funding for the mass metering programme recently announced by the federal government in a bid to close the 10 million metering gap in the country.
The apex bank, however, barred the importation of fully assembled meters and prohibited bringing infrastructure from outside the country that already exists within.

The federal government has also stated that it planned to completely deregulate Nigeria Electricity Supply Industry (NESI), akin to what is happening in the downstream sector of the oil and gas industry, where it has fully removed subsidy.

According to the apex bank, the aim of the scheme is to increase Nigeria’s metering rate, eliminate arbitrary estimated billing and strengthen the local meter value chain by increasing local meter manufacturing, assembly and deployment capacity.

Other objectives of the programme, the bank said, is to support Nigeria’s economic recovery by creating jobs in the local meter value chain, reducing collection losses and increasing financial flows to achieve 100 per cent market remittance obligations of the Distribution Companies (Discos).

The CBN said the move would improve network monitoring capability and availability of data for market administration and investment decision making.

It added that the introduction of the service-based tariff (SBT) in NESI effective from September 1, 2020, emphasised the need to close the metering gap in the NESI.

The CBN explained that closing of the gap will enhance the efficiency of revenue collection by Discos and thereby facilitate meeting their obligations to other upstream market participants.

However, the bank barred the importation of fully-assembled meters and prohibited bringing infrastructure from outside the country that already exists within.

It said: “Procurement of fully assembled meters from overseas is prohibited except meters imported by Meter Asset Providers (MAP) already in the country as at September 30, 2020, and verified by NERC.

“And importation of related metering infrastructure that is currently being produced in the country is also prohibited.”

However, the apex bank explained that the framework only outlines the operational modalities of the CBN financing support to the Disco and local meter manufacturers and restricted to the procurement and deployment of meters and the associated infrastructure (software and hardware) to support the metering network.

It stated that the bank facility will only be used for procurement of NERC-approved meters, payments for installation and deployment of meters, procurement of other metering infrastructure-related production and service provision as may be prescribed by NERC in relevant orders or by prevailing rules and regulations.

The bank also listed the procurement of backend metering platform and data management systems as well as customer enumeration services as some of the areas the facility should be invested.

According to the bank, the facility shall have a maximum tenor of 10 years but not exceeding 2030, adding that there will be a moratorium on the principal amount for a period not exceeding 24 months from date of loan disbursement.

As for interest rates to be paid, CBN stated that the facility shall be administered at an “all-in” interest rate of not more than nine per cent per annum or any other rate as may be specified by the bank.

“As part of the bank’s COVID-19 relief package, the interest rate to be charged up to 28th February 2021 shall not exceed 5 per cent per annum. Interest shall be payable by the loan beneficiaries in accordance with the approved repayment schedule outlined in the transaction documents.

“The “all-in” interest rate of nine per cent to be shared as follows: Participating Financial Institution (PFIs) – six per cent while sponsor (CBN) will pay- three per cent.

“PFIs are to remit the interest due to the CBN on a quarterly basis not later than 10 days after the end of the quarter,” it stated.

It added that the amount to be accessed would be determined based on the volume and type of meters to be procured by the Disco for the contracted MAP as well as the prices at which meters are bought during the bulk procurement.

The bank added that the eligible obligors should demonstrate verifiable evidence of technical capacity, track record of experience in manufacturing of key meter components, bankable business plans acceptable to the PFIs and financial capacity.

FG Plans Full Deregulation of Power Sector

The federal government yesterday stated that it planned to completely deregulate the NESI just like it did the downstream sector of the oil and gas industry, where it has fully removed subsidy.

Minister of Power, Mr. Sale Mamman, who spoke during a virtual event organised by Siemens Energy, Germany, also noted that by 2030, 30 per cent of the whole energy mix in the country will be based on renewable.

The forum also had in attendance Minister of Energy, Benin Republic, Mr Dona Jean-Claude Houssou; Undersecretary, Ministry of Energy and Infrastructure, United Arab Emirates (UAE), Mr Sharif Al Olama and Minister of Electricity, Iraq, Mr Majid El Emara, among others.

Mamman, who was represented by the Minister of State, Power, Mr Goddy Jedy-Agba, said with the strategy put in place by the federal government, the era of full government funding of power supply and right state control was over.

He said: “In the past, the power system was state-controlled, leading to low participation. But with market restructuring, that is changing and that is with less rigid control by the government.

“The central strategy in the power sector due to the severe inadequacy of infrastructure is thus a significant development, which is hinged on harmony and active participation of various public and private stakeholders in the industry.

“Further down the line, the market will still evolve towards complete deregulation and more commercially focused partnerships, further emphasising this harmony between the public and private sector and sustainability of the industry.”

He said the partnership with Siemens will improve Nigeria’s electricity supply, adding that the federal government recently set up initiatives to bring about better energy supply to the people through vision 3030.

“This is targeted at delivering 30,000,000 watts of electricity with a 30 per cent renewable energy mix by 2030.

This is a key focus of our strategy to avail Nigeria of reliable power supply,” he stated.

According to him, the federal government is currently embarking on grid modernisation and expansion plan which will add 25,000MW of operational capacity to the bulk power system within the next six years, which will be further supported by five million solar home systems and mini-grids for underserved Nigerians.

In his comments, the Executive Vice President, Generation, Siemens Energy, Mr Karim Amin, stated that the company was set to remove all the bottlenecks in the generation and distribution of power in Nigeria.

“Nigeria has a generation capacity of 13,000mw, but only a small portion of this reaches the consumers. So, Siemens energy and the Nigerian government are working together right now on a critical project aimed at removing the roadblocks in the transmission and distribution systems.

“The eventual goal is to develop a system that can deliver 25,000 MW of electricity across the country,” Amin said.

Managing Director, Siemens Nigeria, Onyeche Tifase, who anchored the session, said it was unacceptable that over 850 million people do not have access to electricity and most of them reside in Africa, noting that Siemens is set to rectify the problem.