The much-anticipated growth spurt in the Nigerian metering market has yet to come on stream as the new investors in the electricity distribution companies (Discos) continue a slower-than-expected deployment of prepaid meters even as consumers are poised to buy.
With a deficit of over 4 million meters in the country and high demand for prepaid meters, local manufacturers who have ramped up their production capacity in a bid to meet the growing demand are at the mercy of the Discos as only the Discos are empowered by the current policy to purchase directly from the manufacturers. The only exception is when a Disco gives work orders to a vendor, who can then purchase directly from the manufacturers.
With the costs of a single-phase and a three-phase prepaid meter ranging between N25,000 and N50,000, the metering market is worth over N150 billion, based on the average cost of N35,000 per meter and market deficit of 4 million meters.
BusinessDay gathered that the financial challenge facing most of the Discos is impeding their drive to make prepaid meters available to consumers as some of the manufacturers are not willing to sell on credit.
An industry source, however, said that some of the Discos are reluctant to deploy prepaid meters to the consumers because estimated billing, to which many electricity consumers are subjected due to lack of prepaid meters, is helping their revenue base. There have been growing complaints from consumers about over-estimated or ‘crazy’ billing in recent times.
According to a committee on metering set up by the Nigerian Electricity Regulatory Commission (NERC), the metering gap in the market is very huge, with about 50 percent of consumers being without meters.
In May 2013, NERC introduced a new metering scheme, the Credited Advance Payment for Metering Implementation (CAPMI), to address the slow pace of customer metering by the Discos as well as the high level of complaints received from customers and dissatisfaction with the current estimated billing practices.
CAPMI provides a platform for willing customers to pay the cost of the meter into a dedicated account jointly managed by the Disco and meter vendor/installer. Under the scheme, once payment has been effected, the customers would have their meters installed within 45 days by a NERC-accredited vendor/installer.
But following the conclusion of the privatisation of the defunct Power Holding Company of Nigeria (PHCN) late last year, the new investors who took over the Discos jettisoned the scheme. Now, a number of them including Eko, Kaduna and Abuja Discos are implementing the scheme.
Kola Balogun, managing director, Momas Electricity Meters Manufacturing Company Limited, said the metering market has not seen a significant change as the response of the power firms was not yet encouraging.
“The CAPMI is improving in terms of implementation, but it is nothing to write home about in terms of expectation,” he said.
Noting that the market was so huge, Balogun stressed that the metering gap in the country could not be bridged in two to three years, adding, “It is policy that is making the market inactive. If we can sell meters to estate owners directly, it will open up a little market.”
On whether there is sufficient local manufacturing capacity in the country, Balogun said, “In Momas, we can produce at the lowest level 50,000 meters in a month. Since November, the new investors have not consumed up to 30,000 meters. And we need over 4 million meters in the country.”
Other local manufacturers include Mojec International Limited, Electricity Meter Company of Nigeria (EMCON) and Unistar, but “the manufacturers are not encouraged. They have borrowed money from banks and they have to pay back. Some of them have had to retrench staff,” Muyideen Adebayo Ibrahim, secretary general of the Electricity Meters Manufacturers Association of Nigeria (EMMAN), told BusinessDay, stressing the need for government to rethink its policy on metering.
“Activity has been dull not only for the manufacturers, but also the vendors, installers and technicians. There is a policy that all meters are owned by the Discos, and so individuals cannot go to the market to buy meters. The government through NERC should change this policy.”
If vendors are approved or licensed to buy directly from the manufacturers and individuals buy from the vendors, the market will see growth and it will create employment, Ibrahim said.
Based on the proposals submitted by the core investors in the Discos, 6.52 million new meters would be installed over the course of the next five years, meaning more than one million would be installed yearly, according to Atedo Peterside, chairman, Technical Committee of the National Council on Privatisation (NCP).
“Now, with the coming of private electricity market, the possibility of quickly bridging this huge gap is more realistic. It will take time and huge financial investment to reduce drastically the number of unmetered consumers. But because metering is a crucial strategy for reducing financial losses, the new private distribution companies will have the incentive to make appropriate investment to meter consumers,” Sam Amadi, chairman of NERC, said at an event in Lagos in March 2014.
Ben Gardner, president of Northeast Group, in a new study ‘Sub-Saharan Africa Electricity Metering: Market Forecast (2014-2024)’, said that after mobile phones, electricity metering was the next big prepaid market in Africa, adding, “Utilities use prepaid metering to improve their revenue collection, so they can invest in their infrastructure to improve its reliability. Consumers also benefit through greater awareness of their electricity usage, more accurate bills and the ability to budget more effectively.”
According to the report, sub-Saharan Africa’s electricity metering market will see the fastest growth of any region in the world over the next decade, as the market is expected to reach 63.3 million electricity meters and its value grow 234 percent to $9.9 billion cumulatively by 2024.
Amadi had recently said that NERC expected a robust metering of customers by the Discos, warning that reckless estimated billing must stop, and urged them to fast-track metering of customers.
Eko Disco had last week said it had concluded plans to invest N1.3 billion to roll out 360,000 meters to customers under the distribution network.
FEMI ASU