Mass metering programme stalls as local manufacturers can’t produce enough
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NIGERIANS may have to wait much more longer for meters as poor coordination between the Nigerian Electricity Regulatory Commission (NERC) and meter providers weakens access for millions of citizens.
The federal government began the distribution of one million free meters in October 2020. However, many Nigerians are yet to get theirs, leaving them in the hands of power distribution companies (DisCos) who estimate their bills and most times overcharge them.
Findings by The ICIR show that many indigenous meter manufacturers lack the capacity to close the metering gap on the back of weak production, importation and logistic concerns. These factors make it difficult for them to close the metering gap in excess of over six million meters.
Indigenous meter manufacturers have not been able to produce up to 20 percent of the needed meters, according to findings, putting unmetered Nigerians under the pressure of waiting endlessly.
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“Currently, Nigeria cannot manufacture all the components of meter locally. There is still reliance on importation logistics for some of the components. Getting cargo across the ports comes with some difficulties. The issue of foreign exchange, pandemic, and Customs logistics cannot be perfect within months in terms of metering millions of Nigerians.” chairman of the Association of Nigerian Electricity Distribution (ANED) Sunday Oduntan told The ICIR.
Oduntan stressed that the over 500,000 meters had been provided through the Meter Asset Provider Policy of NERC, but admitted that a lot of work needed to be done to close the metering gap of over six million households.
Metering takes lots of efforts and logistics, and it is not like buying a phone and slotting a sim card on it, he stressed.
Nigeria seeks to close the metering gap of over six million to help build a credible electricity market and attract investors to the fledgling power sector. However, analysts say the federal government should come up with multi-thronged approach, rather than rely on indigenous meter manufacturers who lack capacity to close the gap.
The federal government has, through the National Mass Metering Programme, which is a key component of the Economic Sustainability Plan, targeted bridging the metering gap by building capacity of indigenous local meter manufacturers in order to create wealth along the value chain, amid concerns of Covid-19 impact on the economy.
Meter manufacturers’ position
However, meter manufacturers say they can produce enough for Nigerians but call for convivial government policies and good operating enviromnent.
The Electricity Meter Manufacturers Association of Nigeria (EMMAN), in a recent press statement, said the directive to defer 35 percent import duty on pre-paid meters was an incentive for mass importation of the meters.
The association noted that local manufacturers were not being patronised by off-takers in the downstream power sector as they were not ready to cut corners. They said they were hampered by foreign exchange scarcity hurting the Nigerian economy – as meter parts were imported.
The association urged the government to encourage importers to set up factories so as to have a value chain that would create jobs for Nigerians.
The group had also noted that a recent presidential approval of tax deferment on importation of three million finished electricity meters was a disincentive and would have negative effects on local meter production.
Like manufacturers of other items, meter makers face challenges ranging from foreign exchange scarcity to high energy cost. The Manufacturers Association of Nigeria says the players are hard hit by the nation’s ports and lack of patronage.
Manufacturers struggle with poor infrastructure, high energy cost, regressive port system and multiple taxation, said MAN.
Capacity utilisation in the manufacturing sector slowed to 54.1 percent in the first half of 2019, from 54.50 percent recorded in same half of 2018, said MAN. Average number of power outage in the first half of 2019 increased to five times dally from four times daily recorded in the second half of 2018.
“Lingering foreign exchange (FX) crisis was perhaps the most significant challenge for the sector in 2020 as most industry players found it increasingly difficult to access FX meant for importation of critical factor inputs,” the Lagos Chamber of Commerce and Industry (LCCI) said in a 2020 economic review and 2021 outlook signed by Muda Yusuf, its director-general.
CBN N40bn disbursement
The Central Bank of Nigeria (CBN) has disbursed over N40 billion to indigenous meter manufacturers for the mass metering programme. However, findings have revealed the slow pace of the programme since October 2020 when it was launched.
One source said the CBN recently appointed consultants to track and monitor the disbursement of the mass metering from the indigenous meter manufacturers. The source raised concerns on why the apex bank would disburse funds for mass metering first before appointing consultants to monitor and track mass metering and capacity of indigenous companies.
” It means the apex bank did not do its due diligence before disbursing the funds,” the source, who did not want her name in print because she works for the government, said.
Available data from the NERC put the number of unmetered and unidentified customers at 4.09 million households. Obsolete meters for possible replacement are estimated at 1,7 million. Also, unidentified and disconnected customers have a recorded figure of 33.1 million customers.
The World Bank recently approved $750 million to support mass metering and network improvement, but has hinged the disbursement on credible electricity market reforms.
Analysts say the government, rather than pay billons of naira in electricity subsidy, needs to remove bottlenecks in metering programme ,while suggesting multi-thronged approach of allowing importation of meters while supporting indigenous local meter manufacturers to closie the metering gap.
“Metering is evolving and we would continue to come up with the right policies that ensure Nigerians are metered adequately, taking cognisance of emerging estates and housing expansion,” Frank Okafor, commissioner for engineering, NERC, told The ICIR.