By Idowu Oyebanjo
*Threats
The biggest threat to the implementation of the Meter
Asset Provider (MAP) regulation is the regulatory inconsistency and policy
summersaults for which the Nigerian Electricity Supply Industry (NESI) has come
to be known in the eyes of the international community. What if, for
socio-political reasons, the MAP regulation is withdrawn and the metering
service charge removed some few months down the line post-investment? A related
issue is around the ownership of meters to be installed. Will the consumer own
the meter and carry it when they leave the property as was possible previously
if they relocate within the same DisCo franchise area?
Will the consumer pay
for meters owned by others as well as pay for the electricity consumed (a
service) and metering service rendered (another service) in the procurement of
same service? Consumers may see this as a case of double-dipping! As the
regulation makes provisions for consumers who wish to make an upfront full
payment for meters, will such a consumer continue to pay for similar charges if
they relocate elsewhere within the NESI? The best way around these and allied
issues will be to decouple the consumer from the asset by means of a metering
point administration number (MPAN) unique to every property to which electricity
is supplied and metered. Theretofore, every consumer will pay a service charge
for metering and this component can be included in the MYTO tariff structure.
Also, the issues around customers who have paid for meters and are yet to
receive them under the CAPMI scheme have to be resolved. There is the risk
around sustainability of policies made in this regard and generally, within the
regulated electricity supply industry in Nigeria.
The major stakeholders in the implementation of MAP are
the consumers, the DisCos, the MASPs and the financial organizations who will
provide funding for the investment required. To succeed, the process has to
have a line of sight and be seen to be transparent. The monies due to each
party has to be handled by an independent and dedicated system or body which
escrows the payments made by consumers and distributes to relevant parties
based on a previously agreed sharing formula. The implementation has to be such
that investors and financiers can have consistent cash flow and recoup their
investment in reasonable time. To this end, there is a need for a clear
financial or capital structure in the implementation (debt and or equity) for
MAP and financiers who will provide long-term loans at single-digit interest
rates. Sadly, the Central Bank of Nigeria (CBN) that has been in the fore-front
of the Nigerian Electricity Market Stabilization Aid, currently has a limited
budget available to provide finance for Meter Asset Service Providers (MASPs).
That said, the CBN is only prepared to provide funding in the form of
re-financing for MASPs that can demonstrate viability and sustainability of
their business model.
The time deadline provided for DisCos to procure the
services of MAPS is one hundred and twenty (120) days following the 3rd of
April, 2018 date of declaring the regulation. In comparison to the level of
activities to be carried out for a competitively tendered procurement process
and the number of certified MASPs for the entire country (22), this time is
insufficient and need increasing. MASPs should also not be limited by the
number of permits they have to obtain to accelerate the delivery of meters to
cover the sure-to-increase metering gap. Also, economy of scale should be
encouraged to ensure the warranty on installed meters are up to the shelf life,
ten (10) years say, of installed meters.
For the general implementation of the MAP regulation to be
a success, there is need for the proper monitoring and development of a
competitive MAP procurement process. Nigerian Electricity Regulatory Commission
(NERC) tenders’ auditors will ensure transparency and review the procurement
process. Both pre and post-installation audits are imperative. MASPs must have
the technical competence and financial capacity to carry out the intended services
and the procurement process must ensure this is the case. We need to have
genuine investors who will be willing to put money into investing in
infrastructure, which in this case are the durable and fit-for-the purpose
electricity meters for the NESI. This will also mean the power system will have
a much desired enforcement system devoid of the corruption-ridden judicial
system we have to day. The special court for the NESI will rely on the efforts
of specially trained enforcement officers who will render swift services up to
adjudication based on laid down procedures.
According to the regulation, consumers will have to pay a
metering service charge (a lease charge) for the services provided by a MAP. In
view of the level of consumer apathy today, and more so, as many consumers have
paid for meters previously under the CAPMI scheme and are yet to receive the
meters, there is an urgent need for an extensive enlightenment and
sensitization campaign to be championed by NERC to seek the understanding of consumers
nationwide. It is best to involve consumer advocacy and civil society groups,
consumer protection council, and other affiliate organizations during the
communication efforts to make this campaign a success. Yet, there is still the
issue of consumers who reject the offer to have meters installed in their
property. Thus, a robust enlightenment campaign for market participants and
customer re-orientation to be championed by the DisCos and NERC is apt.
The absence of robust data and communication systems on
which the stakeholders including the MASPs can leverage is another area of
need. For the NESI to function optimally, and by extension for the
implementation of the MAP regulation to be a success, there is a dire need for
customer enumeration, consolidated with asset information systems.
This
provides an opportunity for DisCos to sponsor an energy networks association
(ENA) to be saddled with delving into core technical problems within the NESI
for and on behalf of the stakeholders. Issues to be looked at include but not
limited to cost-reflectivity of tariffs, customer charging methodology,
consolidated and centralized high-fidelity data capture of consumers and
assets, technical policies for the successful operation of power assets and
systems, specifications for plants, components and devices, research and
development (R&D), investigation into failures and recommendations etc.
As metering services have hitherto been in the
jurisdiction of DisCos, there will be cases of existing contracts with certain
metering services providers that need to ultimately operate based on the MAP
regulatory framework. While a process to ensure the sacrosanctity of such
contracts has to be put in place, a cut-off date for migrating all such legacy
metering services contracts to operate in line with the MAP regulation has to
be determined. Such existing contracts between DisCos and their current
metering service providers have to be declared to NERC now to preserve the
integrity of the new regulatory regime. Also, it is possible for a DisCo to
frustrate the process of implementing the MAP regulation if for example
additional mundane and impeding requirements are placed on MASPs in the
procurement of their services as the regulator has only provided minimum
requirements for MASPs with Discos at liberty to demand further requirements in
conformance with their asset management policies.
This has the potential to
slow down the implementation of the MAP regulation. The antidote to this is the
separation of the “wire” business of DisCos from the energy supply business to
be provided by separate legal entities, owned by existing DisCos, MASPs or
others. In addition, as MASPs have to procure 30% of meters from certified
local manufacturers, a system has to be worked out to ensure that MASPs
patronise local manufacturers of meters and if possible tracked by the
regulator. Also, the percentage of local content involvement can be increased
(or flipped) to make original equipment manufacturers (OEMs) to open shop in Nigeria which
brings with it attendant employment opportunities and allied economic benefits
that impact positively on the country’s GDP.
The absence of technical specification and standards of
electricity meters to which MASPs must adhere leaves room for sub-standard
meters to be installed within the NESI. This threatens the sustainability of
the business for MASPs and may ultimately lead the consumers back to status
quo. The required specifications will include requirements for technology, data
management and communication systems. There is also the issue of collaboration
between NERC and Nigerian Electricity Management Services Agency (NEMSA).
The MAP regulation is a step in the right direction
towards entrenching full retail competition in the NESI as envisioned by the
Electric Power Supply Reform Act (EPSRA) 2005 which has to be updated to
reflect the changes brought about by the declaration of the eligible customer
and meter asset provider regulations. Its implementation is only a part of the
solutions to the myriads of problems bedevilling the power sector. Closing the
metering gap does not in itself remove the problems associated with ATC&C
losses, cases of electricity theft and meter bypass, low morale and deficiency
in human capital resources within the NESI.
The next step in the direction of full-scale competition
in the distribution system within the NESI will involve the separation of the
“wire” services from the energy supply services to allow DisCos to carry lower
risks and focus on the required investment in the operation and maintenance of
the weak network infrastructure while reducing the aggregate technical and
non-technical losses in the distribution network.
…Concluded
