CEM REPORT, POWER| Addressing a longstanding challenge, the Nigerian government has allocated ₦20 billion for the procurement of meters for Band A electricity customers. This initiative, expected to be completed by September 2024, aims to ensure accurate billing and reduce revenue losses in the power sector.

The announcement came from Adebayo Adelabu, the Minister of Power, during the BusinessDay conference titled “Powering Nigeria’s Energy Future: Addressing Infrastructural Challenges for Sustainable Energy Development” held in Lagos.

“We are releasing ₦20 billion for the electricity distribution companies (DisCos) to procure meters for the unmetered Band A customers before the end of September,” stated Adelabu.

Who are Band A Customers?

Band A customers represent a specific category of electricity consumers in Nigeria who receive a relatively high level of service – typically, 20-24 hours of electricity supply daily. This differentiation in service tiers reflects the ongoing challenges with consistent national power generation.

Curbing Revenue Losses and Improving Transparency

The metering initiative is a crucial step towards addressing a significant issue plaguing the Nigerian power sector: revenue loss. With a large portion of customers unmetered, DisCos often struggle to accurately bill for electricity consumed. This lack of transparency can lead to disputes, hinder investment, and ultimately, impede the growth of the sector.

The government’s push for metering coincides with a recent significant increase in electricity tariffs. In April 2024, NERC announced a jump from ₦66/₦77 per kilowatt-hour to ₦225 kWh, aiming to reduce electricity subsidies by an estimated ₦1.14 trillion in 2024. The government had previously projected spending ₦1.6 trillion on subsidies for the same year.

The Scope of the Metering Challenge

The scale of the metering challenge is substantial. According to data from the Nigerian Electricity Regulatory Commission (NERC) and the National Bureau of Statistics, over seven million electricity customers in Nigeria currently lack meters. This translates to a significant portion of the consumer base being left without clear and verifiable electricity bills.

A Multi-pronged Approach to Metering

The ₦20 billion allocation represents just one aspect of the government’s multifaceted strategy to address the metering gap. Minister Adelabu elaborated on additional initiatives:

World Bank Distribution Support Recovery Program: This program facilitates the injection of 1.5 million meters into the power sector.

Presidential Metering Initiative: This ambitious initiative aims to procure an additional 2 million meters annually over a five-year period.

Expected Benefits of Full Metering

The full-scale metering of Band A customers, coupled with the broader metering initiatives outlined, is expected to yield several benefits:

Accurate Billing: Meters will ensure that customers are billed based on their actual electricity consumption, promoting fairness and transparency.

Reduced Revenue Loss: Accurate billing will help DisCos recover costs more effectively, leading to improved financial health within the sector.

Improved Cash Flow: Reduced revenue losses will translate to better cash flow for DisCos, enabling them to invest in infrastructure upgrades and service improvements.

Challenges and Considerations

While the government’s commitment to metering is a positive step, challenges remain. The efficiency and transparency of the procurement process for meters will be critical to ensure the initiative’s success. Additionally, ensuring the installation and maintenance of meters across the country will require robust logistical planning and coordination.

If You Ask Me

The full metering of Band A customers, alongside the broader metering initiatives, represents a significant step towards a more sustainable power sector in Nigeria. By promoting accurate billing, reducing revenue losses, and improving cash flow, these initiatives can lay the groundwork for a more efficient and customer-centric electricity market. The success of these efforts will be crucial in attracting investment and ultimately, ensuring a reliable and affordable power supply for Nigerians across the country.

CEM REPORT, ENERGY | The Nigerian Electricity Regulatory Commission (NERC) has sparked controversy with a recent decision to increase electricity rates for Band A customers. This category encompasses households fortunate enough to receive an average of 20 hours of daily electricity supply.

The announcement, made by NERC Vice Chairman Musliu Oseni, revealed a staggering increase – a jump from ₦66 per kilowatt-hour (kWh) to a whopping ₦225/kWh. This translates to a 230% increase in electricity costs for these consumers.

The Band System and the Hike Impact

Nigeria’s electricity distribution system categorizes consumers into different bands based on the average daily power supply they receive. Band A, with the highest tier, enjoys the most consistent supply, while Band D experiences frequent outages.

According to Oseni, roughly 15% of Nigeria’s 12 million electricity consumers fall under Band A. However, the recent review by NERC indicates a discrepancy within this category. Their evaluation suggests that only 17% of feeders (distribution lines) previously classified as Band A truly meet the 20-hour supply criteria. Consequently, these feeders now service a smaller portion of customers – under 15% of the total Band A population.

“We currently have 800 feeders that are categorised as Band A, but upon reviewing those feeders’ performance, the Commission has now reduced it to under 500. This means that 17% now qualify as Band A feeders. These feeders only service 15% of total electricity customers connected to the feeders.

NERC Justification for the Hike

The NERC explains this price increase as a necessary measure due to the financial strain on the electricity sector. The government’s failure to consistently meet subsidy obligations has created a significant debt burden for power generation companies and gas suppliers.

However, the decision has been met with widespread criticism from consumers. Many question the fairness of such a steep hike, particularly considering the ongoing challenges with power supply reliability. Nigerians already grapple with frequent blackouts, raising concerns about paying a premium for a service that may not be consistently delivered.

Metering Assurances and Impact on Other Bands

The NERC has attempted to address consumer anxieties by emphasizing a focus on meter rollout. They aim to ensure that affected customers are not subjected to overbilling, especially under the new tariff structure.

Oseni reassured citizens that the price increase is exclusive to Band A customers who genuinely receive the promised level of power supply. Consumers in Bands B, C, and D will not be impacted by this specific tariff review. The metering rate for Band A customers is reportedly at 80%, suggesting a significant portion already have meters installed.

The Road Ahead

The NERC’s decision to hike electricity rates for Band A customers highlights the complex challenges within Nigeria’s power sector. While the move might address financial sustainability concerns, it raises questions about affordability and fairness for consumers.

The success of this strategy hinges on two key factors: consistent power supply for Band A customers and a swift rollout of meters to prevent overbilling. Ultimately, Nigerians yearn for a more reliable and equitable electricity system that balances the needs of the industry with consumer affordability.

December 11, 2024

Band A Customers