HomeIndustry SectorsAsset MaintenanceGains and shortfalls: Nigeria’s metering sector shows promise

Gains and shortfalls: Nigeria’s metering sector shows promise

How has a recent development in Nigeria’s metering market and the COVID-19 pandemic affected the country’s commitment to conquering its metering challenge, and what has attracted Conlog to this West African market?

The article appeared in ESI Africa Issue 2-2021.
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Nigeria’s power sector was unbundled and partially privatised in 2013 to establish a competitive market to improve management and efficiency, increase generation capacity, and address technical and non-technical losses on the distribution grid.

With an estimated 10 million unmetered households at the time, this was one of the challenges that needed addressing to shift away from the practice of sending estimated bills or charging a flat fee for power – regardless of usage. Two initiatives that have supported the shift to increased metering are the meter asset provider (MAP) regulation and the newly introduced mass meter rollout programme. The meter asset provider regulation, effective from April 2018, introduced meter asset providers as a new set of service providers in Nigeria’s electricity supply industry.

The regulation provided for third-party financing of meters – on the proviso, of course, that contracting of meter asset providers be conducted through an open, transparent, and competitive bid process to ensure meters are provided on a least-cost basis to electricity customers.

Recently we spoke to Ogochukwu Onyelucheya, the Acting Chief Commercial Officer at Ikeja Electric; Olugbenga Ajagbe, the Chief Assets and Revenue Protection Officer at Ibadan Electricity Distribution Company; and Elungile Mzimba, the General Manager for Conlog Nigeria, about the current state of metering in that country.

Market review sees major shift in metered customers

Says Onyelucheya: “Metering has never before had this level of attention that it has had in the last 18 to 24 months. I think that is something very significant. At the end of 2018, we had maybe 150,000 prepaid customers; today, we have 400,000. As you can see, that is more than a 100% increase.”

Mzimba concurs, saying: “The Nigerian metering sector has taken quite a lot of significant strides forward, demonstrating a commitment to close out the metering gap identified in 2018. The regulator within Nigeria set up the MAP policy, designed purely to close the metering gap and eliminate estimated billing for the Nigerian population.”

When the MAP programme came about, Conlog was already looking at Nigeria as a market they would like to expand further. “We pride ourselves on being an African technology provider, and about 60% of our business comes from sub-Saharan Africa.”

Mzimba explains that one of the main drivers of the MAP programme was to attract private investors to come and fund the provision of these meters and enable customers to make arrangements to pay for these meters over time. Conlog was business-ready, having provided metering solutions to Nigeria over the past decades, and registered in the country since 2018.

In mid-2019, Conlog started producing meters in Nigeria, and “because things move very fast in Nigeria, a lot has been achieved”, Mzimba continues. “Since then, we’ve installed over 125,000 meters. And, let me mention, one of our greatest achievements was when the first Conlog meter was made in Nigeria. We localised and built a plant in Lagos. We’ve manufactured over 150,000 metres in Nigeria since 2020.”

The Conlog general manager adds that the MAP programme took off in mid- 2019, going into 2020, with many meters being brought into the country by various organisations and various MAP companies. “Unfortunately, in 2020, like the rest of the world, COVID-19 became quite a huge deterrent in the processes of rolling out meters. It affected all import and export activities, on which this programme heavily relies, as local manufacturers and meter assemblies bring in components and parts from abroad,” she reveals.

Metering to build trust and reduce discos’ commercial losses

Much was achieved despite the challenges brought about by COVID-19. However, during a 2020 year-end review, a proposal was put forward whereby the federal government suggested a programme to provide free meters for customers.

Under the MAP programme, customers pay for a meter upfront or make a credit arrangement to pay for the meter. The new programme, which became the National Mass Metering programme, called for the federal government to establish a funding structure in collaboration with the Central Bank of Nigeria. This change means customers effectively receive meters for free.

“This is the programme that is now driving the same efforts of closing the metering gap,” Mzimbe says. She adds the benefit is “to put control back into the hands of the customer in Nigeria, to take control of what they’re consuming, as to give some power to the discos so that they have an auditable, traceable record of their revenues and revenue protection efforts.”

Yet, progress has not only been in terms of metering for consumers. The focus of the Ikeja Distribution Company has been on the critical points of the distribution grid, namely 33kV and 11kV feeders and transformers. While a programme to install prepaid meters for consumers has accompanied this focus.

“This has been important because consumers don’t trust estimated bills, and with no trust, you see recovery of revenue becomes very difficult,” Onyelucheya shares. “In 2016, we had 50% commercial losses, but by the end of 2019, we had reduced these to 25%, which is a huge improvement. Unfortunately, because of the financial challenges of COVID-19 lockdowns, commercial losses are back up to 30–35%. Our target is to get losses down to 15% ultimately.”

Dealing with commercial losses is a focus for the Ibadan Electricity Distribution Company as well. Says Olugbenga Ajagbe, Chief Assets & Revenue Protection Officer: “We set up what we call a meter monitoring team, which is solely to identify major bypasses and energy theft, and people who are not paying for energy consumed. We’ve tried to drive it with the use of technology because of our vast geographical spread. We’ve looked at it, transformer by transformer.”

Ajabge continues: “We check our meters to identify if anyone has tampered with the seals. We also check the integrity of the meters periodically; we’ll visit customers, especially high consumption customers, to make sure that their meters are functioning. And we can take really accurate readings to ensure that customers pay for energy consumed. We intend to, as much as possible, drive down our losses. By making sure that meters are not compromised in any form or shape.”

Financing the programme and customer concerns

The provision of free meters will significantly drive the uptake of meters through the mass metering rollout programme. However, there are some obstacles. One major roadblock to this uptake has been confusion around whether a consumer who has paid for their meter can take it when they move to another location. What if there isn’t a meter installed in the new place? Do they have to pay for that installation too?

Considering the issues of disbursement of funds by the Federal Government, Ajagbe says: “The funds will be released in tranches. With this first tranche, we’re able to meter over 100,000 customers. With the second, third, and fourth tranches, we will be able to provide more and more meters to our consumers.”

Onyelucheya, however, has a final word of caution: “Metering, in itself, is not the solution to commercial losses. Metering without monitoring and collection increases commercial losses. Let me explain. If you aren’t collecting the revenue due to you, what is the point of metering? What we need to do is enforce disconnections.”

A system that can independently and remotely determine when a customer has bypassed the meter is needed, states Onyelucheya: “We need methods and automation in place that will detect this theft, even before someone informs us it might be happening.” Incorporating tools for smart metering is the next step. With the level of information that automation delivers, Nigeria’s electricity supply industry will be better placed to overcome losses, ultimately driving profitability. ESI

Contact Conlog to explore a comprehensive and holistic approach to reaping the full benefit of your metering investment.

Conlog specialize in providing prepayment solutions for the delivery of electricity services. Our broad product offer encompasses prepayment meters, vending, revenue management, maintenance, support and consultation, as well as a dedicated and accredited training facility for all aspects of prepayment. This comprehensive and holistic approach enables customers to reap the full benefit of their investment and ensures sustained success, into the future.