Calls for auditing and legal action taken against defaulting electricity metre manufacturing firms in the country resonated yesterday as stakeholders queried the bid for a $155 million World Bank loan to import metres as the Federal Government continues in its efforts to bridge the over 8.1million metering gap.
The stakeholders also advised the World Bank to lower its expectations from the country’s energy sector under the National Mass Metering Programme (NMMP) of the Federal Government. While over 8.1 million households are without metres as electricity consumers in the country grapple with arbitrary billing, local metre manufacturers under the umbrella of Metre Manufacturers and Assemblage Association of Nigeria (MMAAN) are insisting that the conditions set by the World Bank for the implementation of the second phase of NMMP would kill local industry in Nigeria.
Coming barely a year after the Central Bank of Nigeria (CBN) was reportedly forced to withdraw legal action against some metre companies, mainly indigenous firms, over their roles in short-changing Nigerians under the first phase of the programme, some stakeholders yesterday insisted that while the protection of local industry must be respected, auditing of the first phase of NMMP was also crucial. They also maintained that necessary legal action must be taken against defaulting firms and individuals to clean up the electricity market in Nigeria.
To pacify Nigerians after the increase in electricity tariff, which was described as Service Based Tariff (SBT), the former administration of former president Muhammadu Buhari disrupted existing arrangement of the Nigerian Electricity Regulatory Commission (NERC) through a Metre Asset Providers (MAPs) and introduced the NMMP, which aimed at providing free metres to consumers.
While the local metre companies had reportedly invested to meet the demand posed by the MAPs, the immediate past administration enforced the NMMP with about 800,000 metres provided instead of over five million that would have been provided by now if the programme had lived up to expectations.
However, MMAAN, which was initially asking NERC to increase the price of prepaid metres from the current price per unit of a single-phase metre from N58, 661.69 to N117, 323.38 and three-phase metre from the present price of N109, 684.36 to N219, 368.72 (excluding VAT), reacted angrily after the World Bank published its bid for the second phase of NMMP.
In a recent letter to the Bureau of Public Procurement (BPP), the association demanded that the World Bank-funded bid process be suspended immediately, alleging that the move might cripple over $500 million investments in the sector.
MMAAN Acting President, Ademola Agoro urged the Bureau and the government to save the local metering sector from total collapse, and the investments and jobs of Nigerians. “The tender, which closes on July 11, 2023, if left to continue, would amount to a constructive breach of the award of contract(s) for the supply of four million metres under the Phase One of the programme already awarded to some of our members since November 2022 by Transmission Company of Nigeria (TCN), a bid process that BPP approved.
“You (BPP) may note that the TCN recently advertised a World Bank funded bid process for the supply of 1.2 million smart metres to DisCos in Nigeria. That your office be aware that this particular bid process is being opened to foreign companies (manufacturers, suppliers and exporters) of fully built electricity metres with a planned Custom duty waiver granted to them to import meters into Nigeria,” Agoro said.
The Guardian gathered that the metre manufacturers obtained a court injunction from a Kano High Court on July 10 halting the bidding process. The development, it was learnt, forced the bank to shift the bidding process, which was meant to be an international process to July 21 with the intention that the case would have been resolved before then.
The Guardian also gathered that the development had led the NERC to call for an emergency meeting, as it fumed over its involvement in the court injuction as well as the fact that the manufacturers did not consult the commission before filing the case.
Sources at the meeting disclosed that although the session was rowdy, the players made progress and would convene another meeting in the coming week as the World Bank may bow to pressure of aligning its plan to local realities, especially the Federal Government’s backward integration, which prioritises local manufacturing against importation.
While the World Bank was looking for an international bid, some of the manufacturers told The Guardian that none of the local manufacturers would be able to meet the conditions being set by the bank, adding that although the bank would have gotten the metres way less than what most local companies were offering, it would kill the local firms that had been frustrated through the policy inconsistency of the government.
While the shoddy deal of some of the metre manufacturer’s perpetrated in conjunction with players in the industry had deterred the CBN, The Guardian gathered that most of the genuine manufacturers had been stocked over 18 months with volumes of metres stacked in their warehouses.
Former President of the Nigerian Association for Energy Economics and Ghana National Petroleum Corporation (GNPC) Professorial Chair in Oil and Gas Economics and Management at the Institute for Oil and Gas Studies, University of Cape Coast, Prof. Wunmi Iledare, said local businesses must come to understand the business world is a global village.
He said: “Local cost of services can no longer be higher than import parity price going forward. I have always argued that the local Content Act is not a licence or a call for low quality and high cost for local delivery of goods and services. The global competitors are now within reach with improved global supply chain management.”
However, former President of the Chartered Institute of Bankers of Nigeria (CIBN) and Professor of Economics at Babcock University, Segun Ajibola, who described the slow pace of metering since the unbundling of electricity sector into generating, transmitting and distributing segments, noted that the local metering companies have not lived up to expectations.
He told The Guardian that if there was any complaint louder than the average in the industry today, it was that of lack of prepaid metres. “And it seems all the operators are enjoying the situation because it opens up the option of estimated billing, which the consumers see as a rip off. The outcry of Central Bank the other time exposed the inefficient template the local metering companies are running with,” Ajibola said.
Noting that the monopolistic state of the power sector has been breeding inefficiency, Ajibola said while electricity consumers were battling to have prepaid metres in their homes, offices and business premises, “local suppliers are failing them.”
He threw a shade at the NERC for its regulatory failure, saying the objection of the local manufacturers was not totally misplaced as Nigeria needs to develop local capacity for producing items like metres. “One way out is to set realistic deadlines for the local manufacturers failing which the monopoly of the local manufacturers could be broken,” he said.
Energy expert, Ameh Madaki, said it was wrong for the country to import electricity metres when there is capacity to produce them locally. “The local manufacturers were encouraged to set up expensive plants to produce the metres, and without patronage, those investments will be stranded.
“Producing electricity metres is not rocket science, and the key to our economic recovery and shoring up of the value of the naira against the dollar and other international currencies lies in our looking inwards to patronise local businesses and improve their capacity to compete. We must strive to keep the jobs here and improve on the quality of things produced locally,” he stated.
While calling for necessary legal action if the metre companies have been found wanting in the previous metering scheme, an energy scholar at the University of Ibadan, Prof. Adeola Adenikinju, insisted that the country must encourage local producers.
“That is the way to ensure jobs and build local capacity. Alternatively, foreign producers should be encouraged to establish in Nigeria. The World Bank and other international donors should work with Nigeria to build such local capacity. This money is eventually going to be paid back by Nigeria,” he noted. Founder of Spark Nigeria, Chinedu Amah, said there must be an audit of the first phase of the mass metering programme.
According to him, the issues surrounding the flopped first phase could not be buried. He noted that the government could not move to phase two of the programme without querying why the first phase failed. “We must define what demand for metering truly exists and ascertain that local manufacturing can meet this demand. If local manufacturing can meet the metering demand then it would be an aberration to turn to international firms for our local metering,” he said.
Amah insisted that the Federal Government must understand that its role should be policy making to build local capacity and create jobs, not to seek easy solutions to problems that could be managed locally.
Meanwhile, electricity consumers may pay more in the coming days as 11 DisCos yesterday applied to the Federal Government through the NERC for a review of their respective tariffs. This was contained in a joint application dated July 14, 2023, titled, ‘Notice of Application for Rate Review by the Electricity Distribution Companies, which was made public by the NERC yesterday.
The energy distributors predicated their calls for rate review on the need to incorporate changes in macroeconomic parametres and other factors affecting the quality of service, operations and sustainability of the companies.
The letter reads in part: “Pursuant to Section 116 (1) and 2(a&b) of the Electricity Act 2023 and other extant rules, the 11 successor electricity distribution companies (“DisCos”) have filed an application for rate review with the Nigerian Electricity Regulatory Commission (“NERC” or the “Commission”). The request for rate review is premised on the need to incorporate changes in macroeconomic parametres and other factors affecting the quality of service, operations and sustainability of the companies.
“Accordingly, the Commission hereby invites the general public for comments on the rate review applications by the distribution licensees. Interested stakeholders are advised to review and take into consideration the excerpts of the Rate Review Applications filed with the Commission by the respective licensees. “The applications can be accessed on the Commission’s website at www.nerc.gov.ng.
“As part of the rule-making process and in the exercise of the powers conferred by the Electricity Act, the Commission shall conduct a Rate Case Hearing on the applications prior to making a ruling. Any person wishing to participate in the proceedings as an intervenor should forward his/her application to email@example.com before close of business on July 20, 2023. The Request to Participate shall include the following: i. An explanation of the person’s interest in the proceeding and how the party would be affected by the outcome of the Application; and ii. A description of the party’s concerns, observations comments and/or objections to the application.
“All members of the public and stakeholders are encouraged to send their comments or representations before the close of business on July 20, 2023 to the Chairman/CEO, The Nigerian Electricity Regulatory Commission.”