October 14, 2024/CSL Research
Data from the Nigerian Electricity Regulatory Commission (NERC) revealed a 48.9% y/y increase in revenue collected by the electricity distribution companies (DisCos) to N391.7bn in Q2 2024 from N263.1bn in Q2 2023. Also, there was an increase of 34.3% q/q from N291.6bn in Q1 2024. Total customer numbers grew 13.2% in Q2 2024 to 12.99m from 11.47m in Q2 2023. Of the 12.99m customers, only 5.92m (45.6%) were metered, while 7.07m (54.4%) remained under estimated billing. Ineffective metering remains a major drawback to the success of power sector reforms in Nigeria. While some consumers avoid paying for power consumed through meter bypass, some other consumers are made to pay for what they have not consumed through estimated billing by DisCos.
Despite a y/y decline in total electricity supply in Q2 2024 by 5.1% to 5613 GWh, there was rise in revenue collected. This rise in revenue is largely attributed to higher billing for band A ustomers, who receive a minimum of 20 hours of electricity daily. Distribution companies (DisCos) have long struggled with adequately metering their customers. This has worked to their advantage, as many rely on estimated billing practices due to inadequate metering. To address this, the Meter Asset Provider (MAP) Regulation was introduced on 03 April 2018.
It established meter asset providers as a new class of service providers within the Nigerian Electricity Supply Industry. However, the requirement for upfront payment before meter installation deterred widespread adoption of prepaid meters, despite their well-known benefits. This led to the introduction of the Central Bank of Nigeria’s (CBN) sponsored mass metering plan, designed to encourage the use of prepaid meters and reduce the reliance on estimated billing.
The Federal Government launched the National Mass Metering Programme (NMMP) in 2020 and the CBN, in October of the same year, issued the Framework for its financing. The initiative is geared towards mass metering of Nigerians by providing loan facilities to (i) the DisCos (for the procurement of meters for its customers), and (ii) the local meter Manufacturers (for the manufacturing and assembling of meters). The purchase price of the meter is to be programmed into the prepaid meter allowing consumers to collect the meter for free whilst the cost is spread and billed into the tariffs payable by such consumers. At the start of the program, the metering gap was estimated at about 9.8million meters and according to current data, 7.07 million customers remain unmetered.
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