CEM REPORT, ENERGY| The federal government has unveiled a two-pronged attack on the nation’s power woes, aiming to significantly close the metering gap and boost electricity distribution capacity.
Minister of Power, Adebayo Adelabu, announced plans to secure funding ranging from ₦250 billion to ₦300 billion annually over the next four to five years. This ambitious initiative targets the critical issue of metering, a major source of billing disputes and inefficiency in the sector.
“We have a Presidential Metering Initiative that has the target of installing a minimum of two million to 2.5 million meters every year for the next five years,” said Adelabu. “Even if we cannot close it [the metering gap] 100 percent…we have to reduce it significantly.”
The government intends to raise the ₦300 billion through a combination of seed capital and debt financing. A ₦75 billion initial investment will come from the federal government, with additional support expected from the Nigeria Sovereign Investment Authority (NSIA).
Focus on Local Manufacturing and Sustainability
The focus extends beyond just funding. Minister Adelabu emphasized the government’s dedication to promoting local content within the power sector. He revealed plans for a bill that would replicate existing local content laws in the oil and gas sector, specifically targeting the manufacturing of power equipment. This move aims to create jobs, stimulate the domestic economy, and potentially reduce reliance on imported meters.
“In the power sector, it is our choice to have significant local content in our projects and our contracts. We are trying to work on a bill now that will legislate local content for the power sector just like we have in our oil and gas. That is the only way we can sustain local producers. So, that is the reason I am here,” declared Minister Adelabu during his visit to Momas Electricity Meters Manufacturing Company Limited (MEMMCOL) in Ogun State.
“This will help the government in the promotion of import substitution policy of locally-made products in the power sector and encourage backward integration in the areas of technical training,” he added.
Distribution Boost
The government’s strategy isn’t limited to metering. Adelabu also announced a push to increase electricity distribution capacity to 6,100 megawatts (MW) within the next six months. This ambitious goal stems from the Transmission Company of Nigeria’s (TCN) successful system stress tests, demonstrating their ability to handle over 8,100MW.
Furthermore, the government is exploring a “partial Sovereign Risk Guarantee” (SRG) to bolster the capacity of generation companies (Gencos). This financial instrument aims to mitigate investment risks and encourage increased power generation.
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Adelabu identified Eko and Ikeja Discos as models for efficient service delivery. These Discos have reportedly exceeded set thresholds in collection efficiency and service quality. The government plans to leverage their success by implementing similar strategies across the sector in the coming months.
A Collaborative Approach for Metering Gap and Distribution
Minister Adelabu acknowledged the collective responsibility for the power sector’s current state. “We all contributed to the decay in the sector and we must also contribute to reversing the decay,” he stated. This collaborative approach, involving the government, private sector, and consumers, is crucial for ensuring the long-term success of these initiatives.
The Nigerian government’s plan represents a bold step towards addressing the nation’s power challenges. By tackling the metering gap, boosting distribution capacity, and prioritizing local content, the country has the potential to experience a significant improvement in its electricity sector. The coming years will be critical in determining whether these ambitious goals translate into a more reliable and efficient power supply for Nigerians.
A Brighter Future for Nigeria’s Power Sector?
The government’s plans to address the metering gap and promote local content in meter manufacturing represent a significant step towards a more efficient and sustainable power sector in Nigeria.
While challenges remain, including ensuring efficient meter distribution and achieving full cost recovery, these initiatives offer a glimmer of hope for improved electricity access and billing practices for millions of Nigerians. The success of these plans will hinge on effective implementation, collaboration between stakeholders, and continued government support for the domestic power sector.
