The Nigerian Regulatory Distribution Commission (NERC) has asked the 11 Distribution Companies (DisCos) to pay back customers who bought electricity meters under the Meter Assets Providers scheme (Map).
The scheme has customers who bought the meters under the platform of prepaid and postpaid basis, this means that customers were allowed to pay before they got the meters or after the meters were installed in their homes, respectively.
The order initiates the process of the reimbursement of customers which it said would start from April 1.
Why do customers pay for meters?
In Nigeria, the power sector was privatized in 2013 under the Electric Power Sector Reform Act, 2005, which saw the balkanization of the power sector into three – generation, transmission and distribution.
While the generation and distribution were left in the hands of the private sector, the transmission still remains under the government.
The distribution companies that took over were supposed to provide meters for customers to end estimated billings which created room for exploitation of customers as they were often over-charged for what they did not consume.
This created mistrust between customers and the DisCos, leading to the former not paying the bills or under pay what they are asked to pay.
It also created liquidity issues as the DisCos, who collect money on behalf of the entire value chain of the Nigeria Electricity Supply Industry (NESI), could not recover the cost of electricity given to it, as such the sector is not profitable.
With the sector not profitable, the DisCos were not able to provide the funds necessary to procure meters for customers.
Consequently, NERC introduced the ‘Meter Asset Provider (MAP) Regulation (Regulation No. NERC/R/112), which became effective on April 3, 2018.
The regulation provided for a third-party financing of meters, under a permit issued by the commission, and a grace of over a period of 10 years for the DisCos to pay back.
The regulation read that “under the new MAP regulation, customer classes shall be amended to ensure that customers only pay for meters when a meter is physically installed in their premises. The electricity bill of customers provided with a meter under the new regulatory framework shall comprise two parts – energy charge and metering service charge.”
“The payment of metering service charge will be removed from the customer electricity bill upon the full amortisation of the meter asset over its useful life. All faulty meters are expected to be repaired or replaced free of charge within two working days, except in instances where it is established that the customer is responsible for the damaged meter.”
What the new order says
The new order is implementing a regulation by NERC called ‘Meter Asset Provider and National Mass Metering Regulations, 2021’ which states how reimbursement of the cost of meters procured by customers under the MAP would be effected.
Section 24 (1) (b) of the regulation had said that “where a customer elects to make upfront payments for meters under these Regulations, the cost of the meter shall be refunded through energy credits by the Distribution Licensee. The reimbursement schedule shall be as approved by the commission, having regard to an evaluation of the financial standing of the Distribution Licensee. This provision also applies to upfront payments made by customers upon commencement of the MAP framework in 2018.”
With commencement of payment to start from 1 April 2023, the order said the cost of a prepaid meter paid by a customer under MAP shall be over 120 equal instalments and reimbursed through energy credits computed based on the prevailing tariff at the time of vending.
It provided that in a situation where a customer did not buy an electricity token in a given month or months, the DisCo would, at the point of the next vending, refund the accumulated energy credits due to the customer for the period not vended.
For a post-paid customer, it allowed for reimbursement by the DisCos “in the form of a rebate on customers’ monthly invoice to reflect the fixed monthly reimbursement computed on the cost of the meter spread over a period of 120 months.”
It added that all DisCos shall ensure that the refund of the cost of a MAP meter appears as a distinct line item on the vending receipt of prepaid customers and monthly bill of the post-paid customers.
“The line item should clearly indicate the energy cost, corresponding energy value being refunded and the outstanding balance of the cost of the meter.”
It disclosed that all the DisCos would file monthly reports with the Commission containing a breakdown of the total monetary value of refund to customers through energy credit in accordance with the commission’s prescribed template.
The order did not specify how many customers would be paid back in a month or if the pay back would be in the form of customers making an application for the refund or by paying back those who first bought meters under the scheme.
This Fact Check is produced in Partnership with the Centre for Democracy and Development (CDD)