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Nigerian Government Proposes Model to End Estimated Electricity Billing in Three Years

The Federal Government has initiated a business model to end estimated

billing for every electricity customers in the next three years.

The proposed business model provides for the licensing of Meter

Services Providers (MSP) by the Commission who would, on a competitive

basis, provide for the financing, procurement, installation,

maintenance and replacement of electronic prepaid meters for end-users

of electricity.

This was contained in a consultative paper for a regulation to end

estimated billings of end-user electricity customers in the Nigerian

Electricity Supply Industry (NESI) obtained by newsmen. The policy

paper, which was released by the Nigerian Electricity Regulatory

Commission (NERC), has the backing of the Minister of Power, Works and

Housing, Babatunde Fashola.

According to NERC, the distribution licensee is expected to enter into

a Meter Service Agreement (MSA) with selected MSPs for the deployment

of a specified number of meters within the tenure of the agreement in

exchange for a monthly lease fee covering a period ranging from 10 to

15 years, thus enabling a full cost recovery over the technical useful

life of the asset plus a provision for a regulated return on the

investment. Under this model, the distribution licensee is the lessee

and the terms and conditions of the lease shall be mutually agreed

between the parties.

The commission stated that the Meter Services Agreement shall

incorporate service level obligation expected of the lessor during the

tenor of the agreement, particularly in the area of installation,

maintenance and replacement.

NERC stated: "The Commission has noted the critical role of metering

in minimizing customer apathy and in particular, ensuring the

long-term financial sustainability of the NESI. The Commission is

therefore committed to rapidly bringing to an end the widespread

practice of estimated billing for electricity consumption by ensuring

the full metering of all electricity customers in Nigeria. In this

context, the Commission has appraised the impact of the current

challenges affecting the rollout of meters in the industry as well as

other viable options in practice in other jurisdictions and hereby

propose the following initiatives as a means of fast tracking the

metering of all electricity customers in NESI by 2020. The Commission

has resolved to assiduously work towards bringing to an end the

widespread practice of estimated billing through the provision of

appropriate meters to all consumers."

It noted that upon the take-off of the proposed initiatives, all

distribution licensees shall be committed to an ambitious metering

target as one of the cardinal requirements for restoring the financial

viability of the NESI.

It added that as a driver for the ambitious targets, the Commission

proposes to review the current DisCo estimated billing methodology

with a view to curtailing abuse and providing protection for

consumers. "In the same vein, the Commission notes that a meter is an

essential part the electricity infrastructure required to service a

customer and no customer shall be allowed to remain connected to a

distribution licensee without a meter, where available," it

said.Speaking on the need to eliminate estimated billings, Fashola,

said that since the Electric Power Sector Reform Act (EPSRA) 2005 did

not give Discos the monopoly to supply meters to their customers even

though it was their duty, the government is going to license meter

providers to supply meters to customers on conditions approved by the


"Some Discos have come to say that their customers still want to pay

for meters and they can reach agreements with them on how to pay for

it. Government will not stand in the way of such an agreement. It is

consistent with the intent of privatization envisioned by EPSRA or at

least it does not violate the Act", he said.

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