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Uneconomic tariff, MYTO CAPEX responsible for poor meter rollout – DisCos

*Seek CBN help to bridge 6m gap

By Obas Esiedesa

Electricity Distribution Companies (DisCos) have blamed slow pace in electricity meter rollout on uneconomical tariff and low provision for Capital Expenditure (CAPEX) in the Multi-Year Tariff Order (MYTO).

The utilities have therefore advocated for a Central Bank of Nigeria funded massive meter rollout project to bridge the six million metering gap and ensure that electricity customers are adequately metered in advance of the full take-off of the proposed Service Reflective Tariff (SRT).

The Managing Director of Abuja Electricity Distribution Company (AEDC), Ernest Mupwaya, who spoke Thursday on behalf of the DisCos at the House of Representatives public hearing on the power sector in Abuja, disclosed that historically, the CAPEX provision in Nigeria’s electricity tariff had been inadequate to cover the cost of metering customers.

He explained: “Over the years, there has been insufficient investment in customer metering due, largely, to inadequate MYTO CAPEX and uneconomic tariff. The approved CAPEX for DisCos has never been adequate for comprehensive metering.

“In Q1/2020, the number of registered customers in NESI passed the 10 million point. The Nigeria Electricity Supply Industry (NESI) is growing at an average rate of 75,000 new customers every month, however, many are still connected without a meter. Consequently, the metering penetration has decreased from 45.5% in January 2017 down to 40.3% in March 2020.

“Plugging the metering gap that is in excess of six million meters has been slow because even the recently introduced MAP regulations incorporate inappropriate meter pricing and so it is not working as NERC/DisCos expected. The twin effects of the sudden increase in import duties of 35% on meter and NERC’s wrong pricing frustrated the good intentions of MAP.

“The recent capping of estimated billing has also reduced the incentives for consumers to obtain meters under the MAP regulation.

“Paradoxically, in their PIPs, all DisCos committed to meter 100% of the end-users before 2024 through the MAP regulation, reflecting the regulator’s determination that DisCos should hands-off actual metering. As such, DisCos did not include any CAPEX allowance for metering, in case MAP regulation fails”, he added.

DisCos recommended that since they no longer have a provision in their CAPEX for metering, the Central Bank of Nigeria (CBN) should help the electricity supply industry by providing funds for emergency mass metering projects, to take place over a period of 18 months.

They also recommended that the government should grant full waivers on the 35% increased duty surcharged on meters until mass metering is achieved and that an appropriate and commercial price on meters should be put in place by NERC, to achieve mass metering.

“Given NERC’s previous approval period of three years under the MAP regulation, DisCos propose capping to be introduced after massive metering roll out over next 18 months and NERC should work with DisCos to improve the methodology on estimated billing. This DisCos proposed methodology on estimated billing should be adopted during the emergency meter roll out period”, Mupwaya posited.

Written by ExpressDay

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