Tolulope Aderemi
Unarguably the largest economy in sub-Saharan Africa, Nigeria is constrained in its growth by inadequate power generation, distribution and consumption. This is notwithstanding its endowment with large oil, gas, hydro and solar resources. With an installed capacity of 13,496Mw, the absence of cost-reflective tariffs, a huge metering gap and a host of other challenges have continued to plague the sector. According to the Sector Regulator, the Nigerian Electricity Regulatory Commission (NERC), about 4.7 million (approximately 57 per cent) of its registered electricity customers have not been metered. This has led to about $29.3 billion in annual loss (es) due to low supply of electricity resulting from load shedding or in most cases, dilapidated infrastructure.
To reduce this monumental commercial loss, the NERC recently issued the Meter Asset Provider Regulations 2018 (‘The MAP Regulation’). The key regulatory objectives of the MAP Regulation are to encourage the development of independent and competitive metering services in the Nigerian Electricity Supply Industry (‘NESI’) and to attract private investment into the sub-sector. Suffice to add that the MAP Regulation effectively unbundles Nigeria’s electricity distribution sector, and re-allocates the responsibility for providing metering services, thereby creating a new class of market participants; – Meter Asset Providers (‘MAPs’).
An ingenious innovation of the MAP structure is that the Regulation has now effectively shifted the burden of liquidity (or the absence thereof) as it relates to the provision of metering services from the Distribution Companies to the MAPS; entities perceived to have the wherewithal to manufacture, supply and install electricity meters.
The NERC has commenced issuing MAP permits to successful MAPs and has directed full implementation of the meter roll-out by May 1, 2019. Essentially, customers may now directly approach a MAP or its designated bank for the purchase of single and three-phased meters. According to the Regulation, once payment is made, the MAP must have the meters installed within a maximum period of 10 (ten) days. Payment for the meters could either be upfront or through a credit financing arrangement with individual MAPS and Banks. As this is a new regulation with potentially far reaching implications, a careful understanding of its salient parts is crucial; particularly the rights of customers under the MAP arrangement as well as the MAPs’ obligations. The Regulation allows customers to either make up-front payment of the sum of N36,000+ for a single-phased meter or about N67,000+ for a three-phased meter. In other words, a customer may simply apply to a MAP, pay the total cost of the meter and have the same delivered and installed in the premises within a period of 10 (ten) working days.
Customers may also purchase meters and make payment over a period of time. In other words, where a customer is not able to make an upfront meter cost payment, the Regulation also provides for these customers to pay over a period of time. This is through what is known as the Meter Service Charge (MSC). The subtle challenge to this arrangement may be the security of this credit. Partner Banks have however reiterated their commitment to a more transparent and less cumbersome structure, such that a customer may not have to provide any security to access this loan.
Where a meter is damaged and upon notification to the MAP, the MAP must within a period of 2 (two) working days repair or replace the damaged meter. Where a MAP fails to repair or replace a damaged meter within two (2) working days of a report by the customer or Distribution Licensee, the customer shall not be liable for the payment of metering service charge for the billing period unless such delays were as a result of inaccessibility to the customer’s premises. It must be noted however that it is the MAP’s responsibility to establish the nature of the damage; whether damage resulting from a manufacturer’s defect or damage as a result of customer use. Where a customer is dissatisfied with the decision of a MAP regarding the cause of meter damage; i.e. due to manufacturer’s defect or otherwise, such customer has the right to fair resolution in line with the Metering Code and other applicable Regulations and the MAP shall provide a meter pending the resolution of the dispute.
Where the MAP is unable to provide a replacement meter within a billing period, an average of the last three (3) months’ billing shall be applied for the purpose of determining the customer’s energy consumption. Pursuant to the Regulation, a tenant/customer is unable to relocate his/her meter on account of a change of address. This is because meters are associated with feeders and distribution transformers. Where a customer relocates within a franchise area, the customer shall apply to the Distribution Company/Distribution Licensee (DISCO) for the transfer of services; including applicable credits for energy. However, the Regulation is silent on what happens if the customer relocates outside the franchise area. It is therefore advisable that only property owners should apply for the installation of meters.
According to the MAP Regulation, it shall be the MAP’s responsibility to periodically inspect and maintain all installed meters in the franchise area to ensure their integrity and reading accuracy. Where required, the MAP shall arrange for the testing and calibration of customer meters in line with the provisions of the Metering Code. A customer who intends to acquire meters pursuant to the credit financing scheme, shall be obliged to pay a Metering Service Charge (MSC). A Metering Service Charge is the periodic payment made by a customer to cover the cost of metering services (which includes the cost of the meter asset).
The payment for the MSC by the customer shall cease upon full amortization of the meter asset over its technical life. Where a customer fails to pay for the MSC in any given month, the cumulative MSC shall be deducted upon the subsequent payment. The Regulations place a mandatory obligation on DisCos to provide payment security within 30 days of executing a Meter Service Agreement (MSA) with a MAP. The payment assurance is essential in that it addresses the liquidity difficulty in the NESI. Quite naturally, DisCos will have to be creative in complying with this requirement in view of existing financing and security arrangements. The Regulation also places an obligation on DisCos to ring fence payments for metering services by customers to a dedicated account. Already, this option appears to be a more attractive option for the DisCos. Although it appears attractive to the DisCos, this option places no significant security on the exposure of the MAP.
Aderemi writes from Lagos
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