The Association of Nigerian Electricity Distributors (ANED), the umbrella body of electricity distributors (DisCos), has raised questions over the new third-party-meter intervention draft introduced by the Nigerian Electricity Regulatory Commission (NERC).
NERC introduced the Meter Asset Provider (MAP) Scheme for metering of customers as a strategy to deal with the issue of estimated billing, reports the Independent Energy Watch Initiative.
According to the regulators, the DisCos and MAPs will enter into a metering service agreement, which will provide for the number of meters to be installed by MAPs in the DISCOs’ franchise areas.
ANED’s executive director for research and advocacy, Sunday Oduntan, commended NERC for its effort towards eliminating estimated billing.
However, he revealed that unless irregularities within the scheme are addressed the intervention may not live up to expectation.
“I have previously commended the federal government for the introduction of the MAP scheme through NERC; I believe it is for the general benefit of the country. Nonetheless, few irregularities have become obvious to us, and except they are looked into immediately, the programme will struggle in achieving its goal,” said Oduntan.
“First, the regulations state that electricity consumers can pay in advance for meters, and others can pay by installment. Now from experience, if consumer X pays completely for his prepaid meter he has no problems, he can decide at any time to buy electricity or not, but if consumer Y that has opted for installment plan fails to vend regularly and vends in small amounts, a situation arises whereby whenever he or she vends, the entire amount of the payment made will automatically be used to service his or her prepaid meter debt thereby leaving him or her in darkness,” he noted.
According to Oduntan, this situation will leave the consumers frustrated and may lead to claims of fraudulent practices on the part of the electricity distributors.
“It is not fraud; it is bad payment programming,” he highlighted.
In this regard, what is required is customer education and the development of practical installment schemes that take into account a customer’s payment pattern or history for customers that choose the installment plan.
Issues with electricity franchise network
Oduntan further stated that the disparity in the price of meters provided by the MAP is another cause for concern, “Issue number two, let’s use Lagos state as our case study, now Yaba is divided into two areas in the electricity franchise network, Eko DisCos manages one half of this area, while Ikeja DisCo manages the other half.
“Let us say consumer X, who is serviced by EKO DISCO, buys his or her prepaid meter for N53000 (Fifty-Three Thousand Naira) from the MAP provider and customer Y who lives on the other end of Yaba buys his prepaid meter for N 63000 (Sixty-Three thousand Naira) from Ikeja DisCo. Do you know what will happen? Customer Y will be seriously aggrieved and may feel cheated, not knowing that the companies that provided the prepaid meters to each of the DisCos are different” he asserted.
In dealing with these issues arising from the MAP Scheme, the spokesman for the DISCOs called for a roundtable discussion of all the involved parties, this, he stated, should have been done before the scheme was rolled out.
“What we expected NERC to have done was to invite the meter providers to agree on a benchmark flat price. The Specs of meter had been standardized; therefore, the price must be standardised as well. The DISCOs have all the details that MAPs need to operate effectively. Therefore, we should have been called as well to scrutinise the pros and cons of the scheme before implementation.”
Differential pricing for meters
In response to the issues raised by ANED, NERC stated that it had never failed as the regulator, to engage stakeholders in the sector before issuing out new regulations.
According to the regulator, this was the case with the MAP scheme; NERC revealed that they held many engagements with the stakeholders, the DISCOs being the key stakeholder.
The regulator stated that they held ten forum hearings in the six geopolitical zones.
The regulatory body went on to state that it would be impossible not to engage the DISCOs because the implementation of the MAP scheme is the responsibility of the DISCOs.
Regarding the difference in meter prices for different franchise areas, the regulatory body stated that they had envisaged that problem and are proffering solutions to make sure that all the meters come out at the same price.
NERC insisted that they will address the issue of differential pricing for meters. The regulator noted that a competitive process for determining the cost of meters was extended by the Commission to engender more competition and has hence fixed a uniform price for all MAPs based on the outcome of the procurement of all DisCos.
The regulator indicated that phase 1 of the implementation of the MAP scheme would focus on upfront payment. Phase 1b would be “off vending” financing by DisCos and phase 2 will be financed through a fixed charge on vending until fully amortized.
The electricity regulator also addressed the issue of instalment payment for prepaid meters under the MAP Scheme.
They agreed that the instalment payment scheme could pose some challenges, especially for the indigent customers, as the rate of payment for electricity (the average vending amount by the customer) and the amount of instalment payment may be so disparate that customers may only end up paying for meters without enough money to buy electricity.
The regulator indicated that they are looking at creating different payment schemes so that the payment for meters does not unduly impact payment for electricity.
In seeking to eliminate this challenge, the regulator could be experimenting with the option of third-party financing to support such class of electricity customers. The success of this option (third-Party Financing) will be dependent on the ability of the microfinance institutions to offer the customers long-term debt; without the long-term debt, the instalment payment scheme may work a hardship on customers, especially, the indigent ones.
On its part, the regulator insisted that it had anticipated these problems and is working assiduously to ensure hitch-free implementation of the MAP program. In this regard, NERC declared that they are hopeful that they will come out with a solution that will be a win-win for all parties involved.