How DisCos Will Access N21bn Electricity Metering Fund

NERC: How DisCos Will Access N21bn Electricity Metering Fund

3 weeks ago
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The Nigerian Electricity Regulatory Commission (NERC) has approved N21 billion for electricity Distribution Companies (DisCos) in the country to provide meters for customers.

This was disclosed in the NERC’s “Order on the Operationalization of ‘Tranche A’ of the Meter Acquisition Fund” dated 19 June and signed by NERC Chairman, Sanusi Garba and Commissioner Legal, Dafe Akpeneye.

NERC said the order which took effect from 13 June 2024 may be amended or revoked by subsequent orders issued by the Commission.

Providing background to the order, NERC said it introduced the Meter Asset Provider (MAP) Regulations 2018 and subsequently, the Meter Asset Provider and National Mass Metering Regulations (MAP&NMMR) in 2021 to address metering challenges in the Nigerian Electricity Supply Industry (NESI).

The electricity regulator explained that the regulations provided several options for metering end-use customers but the interventions, though significant, had not resulted in the closure of the national metering gap which currently stood in excess of seven million customers.

It, however, stated that one of the challenges identified as the major constraint in the acquisition and deployment of end-use meters and other capital investments, was inability of DisCos to raise financing in the form of debt or additional equity.

READ ALSO: Electricity: NERC Tasks DisCos On Bridging Metering Gap, Warns Against Estimate Billing

To tackle the meter financing challenge it said: “The Meter Acquisition Fund (MAF) scheme was therefore developed and approved by the Commission, primarily to address the challenge of DisCo creditworthiness inhibiting the deployment of end-use meter in NESI by creating a credible revenue stream from the market funds on the back of which long term financing may be secured by the utilities.”

Addressing Metering Gap

The Commission said the Federal Government approved the Presidential Metering Initiative (PMI) with the overarching goal of closing the metering gap in the Nigeria Electricity Supply Industry (NESI) within three years leveraging smart metering technologies for data analytics. “The MAF shall form one of the revenue streams for the repayment of the long tenor financing for metering,” it added.

NERC said the funds shall be managed by Fund Manager (FM) based on terms and conditions negotiated by the DisCos and approved by the commission.

It also disclosed that the Commission approved the deregulation of meter prices under the MAP scheme vide Order NERC/2024/040 to ensure an efficient pricing of meters while responding more quickly to changes in macroeconomic parameters.

“The Order provides that all prices of meters under the MAP scheme shall be determined through a transparent and competitive bidding process by eligible MAPs.”

It also indicated that a competitive bidding process was held on 21 May 2024 based on the provisions of Order NERC/2024/040 where a total of 24 Meter Asset Providers participated across the 12 DisCos and 44 bids were submitted for 10 meters specifications.

The Commission noted that the deployment of funds under the MAF scheme would accelerate the deployment of meters and a closure of the current metering gap, “thereby reducing commercial & collection losses to DisCos, enhancing quality of service and improvement of customer satisfaction.”

NERC further emphasized in the Order that while NESI is expected to leverage the revenue stream under the MAF framework to raise substantial capital funding for metering, there is an imperative to accelerate a closure of the metering gap for all customers currently under Band A tariff “for the purpose of revenue protection and facilitating demand side management for the affected customers,” it added.

The Commission urged the DisCos to utilise the first tranche (Tranche A) of disbursement from the MAF scheme based on contributions made by DisCos as at the April 2024 markets settlement.

According to the order the approved N21 billion will be apportioned pro rata to contribution by the DisCos as Tranche A of the MAF scheme.

READ ALSO: Metering All Consumers Only Way To Increase Revenue Collection By DisCos, Not Tariff Hike – Expert

The order has attached marked Schedule 1, containing a breakdown of funds available for each DisCo for the purchase of end-use customer meters.

“All the meters to be procured and installed under the MAF framework shall be at no cost to the customers of the DisCos,” it stated.

Meter Pricing, Procurement Process

Other mandates to the DisCos are that within 14 days from the effective date of the Order, they should conduct a transparent and competitive procurement process, for meter price determination, selection and engagement of MAPs/LMMAs for the metering of end-use customer meters under the MAF scheme.

“A report containing details of the process undertaken for the selection of MAPs/LMMAs, including meter price, meter specifications, and the list of customers to be metered shall be sent to the Commission for approval, within 20 days from the effective date of this Order.

“Upon approval of the Commission, the DisCo shall enter into contracts with selected MAPs/LMMAs on one of the following terms:

“(i) Where an Advance Payment Guarantee (APG) issued by a commercial bank in Nigeria is provided by a qualifying MAP/LMMA, 30% of the contract sum shall be paid by the FM on behalf of the DisCo to the MAP/LMMA upon execution of the contract. A further two milestone payments shall be made upon the completion of 60% of contracted quantities and 100% of the contract respectively, with the funds advanced against bank guarantee amortised over the payments.

“(i) Where the MAP/LMMA do not request an advance payment, the milestone payments shall be made upon the verified installation of 20%, 60% and 100% respectively of the contracted volume of meters. A vendor may, at his option, defer payment until the completion of the installation of the contracted volumes.

“DisCos shall ensure that all the necessary resources and network clearance required by the MAP/LMMA to install meters based on installation plans are provided and/or completed.”

The Commission also stated that all contracts for the supply and installation of meters shall be filed with the Commission adding that installation must be completed within 60 days from the date of approval of the process by the Commission.

It also emphasised that all parties under the MAF scheme must exhibit the highest degree of public trust and ethical standard “and shall not engage in any conduct that may constitute unfair practice or conflict of interest.”


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