The Nigerian Electricity Regulatory Commission (NERC) said the country’s metering gap remains significant despite the installation of 3.03 million meters since the privatization of the sector in 2013.
According to the commission, the metering rate currently hovers around 50 per cent, leaving half of the electricity customers on estimated billing.
The Commissioner in charge of planning research and strategy, Dr Yusuf Ali, at the 2024 edition of PwC’s Annual Power and Utilities Roundtable disclosed that the reliance on estimated billing and the metering gap poses a major challenge to the sector’s liquidity and overall efficiency.
Ali, during his presentation titled: ‘Recent Policy Reforms and NERC Orders: Exploring Their Potential to Renew Optimism in the Electric Power Sector’, mentioned that the metering challenge is worsened by the poor level of customer enumeration across DisCos.
He highlighted that metering is the lifeblood of revenue recovery, noting that the effectiveness of tariff reforms will be imperilled by poor metering.
In a breakdown of the metering rate since 2020 according to the Commissioner, in 2020, there were 11.84 million registered customers with 4.66 million metered and a metering rate of 39.36 per cent, while in 2021, the nation had 12.86 million registered customers with 4.69 million metered and a metering rate of 36.47 per cent.
In 2022, the country had 12.15 million registered customers with 5.13 million metered and a metering rate of 42.22 per cent, in 2023 the metered customers stood at 5.84 million out of 13.16 million registered customers with a metering rate of 44.38 per cent while in 2024 the metered customers stand at 6.15 million meters out of 13.33 million registered customers with a metering rate of 46.14 per cent.
“Some of the ongoing interventions geared towards the accelerated deployment of end-user meters include Presidential Metering Initiative (PMI), World Bank DISREP and Meter Acquisition Fund (MAF),” he said.
Also, he revealed that monthly revenue collection increased from N31 billion in July 2017 to N160 billion in July 2024, noting that the upstream segment has also seen significant remittance growth.
Ali disclosed that collections in July 2024 represent a 414 per cent increase compared to collections in July 2017. He mentioned that increased collections coupled with the payment discipline initiatives that commenced in 2020 have translated to increased remittance to the upstream players which are the Generating Companies (GenCos) and Transmission Company of Nigeria (TCN) through the Payment waterfall structure and Distribution Company (DisCo) admin OpEx limitation.
“Under the MRO/DRO regime, allowing Discos to charge near-cost reflective tariffs is essential for holding them accountable – DRO increased from nine per cent in Jan 2024 to 47 per cent in Apr 2024. Organic market collections have proven to be the most reliable form of funding in the NESI so are critical for growth,” he said.
The Commission highlighted that the order on transition to bilateral trading is expected to herald a more competitive market according to the provisions of the Electricity Act (EA) 2023.
Ali emphasised that the current contracting framework for bulk energy procurement in the NESI is not working as the available generation capacity hovers at 5GW with ~8GW stranded.
Ali stated that only five of 30 plants have effective contracts; while others are on best endeavour contracts, noting that GenCos on average have received above 40 per cent of their 2024 invoice.
“Lack of effective contracts has eroded market discipline as well as revenue assurance for GenCos compromising capacity recovery/sustenance. In terms of Gas supply, 80 percent of installed capacity cannot be secured unless there are firm contracts,” he said.
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