A SWOT ANALYSIS OF THE METER ASSET PROVIDER REGULATION (PART 2)

Threats

The biggest threat to the implementation of the Meter Asset Provider (MAP) regulation is the regulatory inconsistency and policy summersaults for which the Nigerian Electricity Supply Industry (NESI) has come to be known in the eyes of the international community. What if, for socio-political reasons, the MAP regulation is withdrawn and the metering service charge removed some few months down the line post-investment? A related issue is around the ownership of meters to be installed. Will the consumer own the meter and carry it when they leave the property as was possible previously if they relocate within the same DisCo franchise area? Will the consumer pay for meters owned by others as well as pay for the electricity consumed (a service) and metering service rendered (another service) in the procurement of same service? Consumers may see this as a case of double-dipping! As the regulation makes provisions for consumers who wish to make an upfront full payment for meters, will such a consumer continue to pay for similar charges if they relocate elsewhere within the NESI? The best way around these and allied issues will be to decouple the consumer from the asset by means of a metering point administration number (MPAN) unique to every property to which electricity is supplied and metered. Theretofore, every consumer will pay a service charge for metering and this component can be included in the MYTO tariff structure. Also, the issues around customers who have paid for meters and are yet to receive them under the CAPMI scheme have to be resolved. There is the risk around sustainability of policies made in this regard and generally, within the regulated electricity supply industry in Nigeria.

The major stakeholders in the implementation of MAP are the consumers, the DisCos, the MASPs and the financial organizations who will provide funding for the investment required. To succeed, the process has to have a line of sight and be seen to be transparent. The monies due to each party has to be handled by an independent and dedicated system or body which escrows the payments made by consumers and distributes to relevant parties based on a previously agreed sharing formula. The implementation has to be such that investors and financiers can have consistent cash flow and recoup their investment in reasonable time. To this end, there is a need for a clear financial or capital structure in the implementation (debt and or equity) for MAP and financiers who will provide long-term loans at single-digit interest rates. Sadly, the Central Bank of Nigeria (CBN) that has been in the fore-front of the Nigerian Electricity Market Stabilization Aid, currently has a limited budget available to provide finance for Meter Asset Service Providers (MASPs). That said, the CBN is only prepared to provide funding in the form of re-financing for MASPs that can demonstrate viability and sustainability of their business model.

The time deadline provided for DisCos to procure the services of MAPS is one hundred and twenty (120) days following the 3rd of April, 2018 date of declaring the regulation. In comparison to the level of activities to be carried out for a competitively tendered procurement process and the number of certified MASPs for the entire country (22), this time is insufficient and need increasing. MASPs should also not be limited by the number of permits they have to obtain to accelerate the delivery of meters to cover the sure-to-increase metering gap. Also, economy of scale should be encouraged to ensure the warranty on installed meters are up to the shelf life, ten (10) years say, of installed meters.

For the general implementation of the MAP regulation to be a success, there is need for the proper monitoring and development of a competitive MAP procurement process. Nigerian Electricity Regulatory Commission (NERC) tenders’ auditors will ensure transparency and review the procurement process. Both pre and post-installation audits are imperative. MASPs must have the technical competence and financial capacity to carry out the intended services and the procurement process must ensure this is the case. We need to have genuine investors who will be willing to put money into investing in infrastructure, which in this case are the durable and fit-for-the purpose electricity meters for the NESI. This will also mean the power system will have a much desired enforcement system devoid of the corruption-ridden judicial system we have to day. The special court for the NESI will rely on the efforts of specially trained enforcement officers who will render swift services up to adjudication based on laid down procedures.

According to the regulation, consumers will have to pay a metering service charge (a lease charge) for the services provided by a MAP. In view of the level of consumer apathy today, and more so, as many consumers have paid for meters previously under the CAPMI scheme and are yet to receive the meters, there is an urgent need for an extensive enlightenment and sensitization campaign to be championed by NERC to seek the understanding of consumers nationwide. It is best to involve consumer advocacy and civil society groups, consumer protection council, and other affiliate organizations during the communication efforts to make this campaign a success. Yet, there is still the issue of consumers who reject the offer to have meters installed in their property. Thus, a robust enlightenment campaign for market participants and customer re-orientation to be championed by the DisCos and NERC is apt.

The absence of robust data and communication systems on which the stakeholders including the MASPs can leverage is another area of need. For the NESI to function optimally, and by extension for the implementation of the MAP regulation to be a success, there is a dire need for customer enumeration, consolidated with asset information systems. This provides an opportunity for DisCos to sponsor an energy networks association (ENA) to be saddled with delving into core technical problems within the NESI for and on behalf of the stakeholders. Issues to be looked at include but not limited to cost-reflectivity of tariffs, customer charging methodology, consolidated and centralized high-fidelity data capture of consumers and assets, technical policies for the successful operation of power assets and systems, specifications for plants, components and devices, research and development (R&D), investigation into failures and recommendations etc.

As metering services have hitherto been in the jurisdiction of DisCos, there will be cases of existing contracts with certain metering services providers that need to ultimately operate based on the MAP regulatory framework. While a process to ensure the sacrosanctity of such contracts has to be put in place, a cut-off date for migrating all such legacy metering services contracts to operate in line with the MAP regulation has to be determined. Such existing contracts between DisCos and their current metering service providers have to be declared to NERC now to preserve the integrity of the new regulatory regime. Also, it is possible for a DisCo to frustrate the process of implementing the MAP regulation if for example additional mundane and impeding requirements are placed on MASPs in the procurement of their services as the regulator has only provided minimum requirements for MASPs with Discos at liberty to demand further requirements in conformance with their asset management policies. This has the potential to slow down the implementation of the MAP regulation. The antidote to this is the separation of the “wire” business of DisCos from the energy supply business to be provided by separate legal entities, owned by existing DisCos, MASPs or others. In addition, as MASPs have to procure 30% of meters from certified local manufacturers, a system has to be worked out to ensure that MASPs patronise local manufacturers of meters and if possible tracked by the regulator. Also, the percentage of local content involvement can be increased (or flipped) to make original equipment manufacturers (OEMs) to open shop in Nigeria which brings with it attendant employment opportunities and allied economic benefits that impact positively on the country’s GDP.

The absence of technical specification and standards of electricity meters to which MASPs must adhere leaves room for sub-standard meters to be installed within the NESI. This threatens the sustainability of the business for MASPs and may ultimately lead the consumers back to status quo. The required specifications will include requirements for technology, data management and communication systems. There is also the issue of collaboration between NERC and Nigerian Electricity Management Services Agency (NEMSA).

The MAP regulation is a step in the right direction towards entrenching full retail competition in the NESI as envisioned by the Electric Power Supply Reform Act (EPSRA) 2005 which has to be updated to reflect the changes brought about by the declaration of the eligible customer and meter asset provider regulations. Its implementation is only a part of the solutions to the myriads of problems bedevilling the power sector. Closing the metering gap does not in itself remove the problems associated with ATC&C losses, cases of electricity theft and meter bypass, low morale and deficiency in human capital resources within the NESI.

The next step in the direction of full-scale competition in the distribution system within the NESI will involve the separation of the “wire” services from the energy supply services to allow DisCos to carry lower risks and focus on the required investment in the operation and maintenance of the weak network infrastructure while reducing the aggregate technical and non-technical losses in the distribution network.

By: Idowu Oyebanjo

Concluded

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One thought on “A SWOT ANALYSIS OF THE METER ASSET PROVIDER REGULATION (PART 2)

  1. I hope that the relevant authority are reading this to make better policies. Long live the Federal Republic of Nigeria

    Like

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