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New metering strategy may push electricity revenue beyond N144bn annually

By BusinessNews Staff on August 2, 2014

In a move aimed at increasing the revenue generated from the electricity market in Nigeria, the Ministry of Power has transferred the control of metering facilities stationed at the electricity trading points across the country to Nigeria’s Electricity Supply Industry (NESI).

The move, which is also aimed at drastically reducing the associated spiralling costs in the generation, transmission and distribution of electricity, will ultimately push up the earning in the sector.

Currently, the monthly revenue collection in Nigeria’s electricity market is put at N12 billion, which is about N144 billion annually, about a half of the industry’s approved and expected threshold of N24 billion monthly or N288billion annually.

The calculation is that once the financial leakages being experienced under the current arrangement are blocked, the revenue profile of the market would shoot up.

Minister of Power, Prof. Chinedu Nebo, who supervised the handover of the facility by the Market Operator (MO) in Abuja yesterday, explained that obvious gaps presently being experienced in revenue collection within the electricity market could soon be eliminated with the new development.

Part of the reasons for the market’s low monthly revenue profile have always ranged from poor revenue collection by distribution companies, to electricity transmission losses and instances of unfair trade practices across board.

But Nebo said generating companies, transmission service providers and distribution companies would now have to commit to good governance practices in their dealings as the MO no longer has the mandate to run their metering points.

“We hereby implore the market participants not to do anything that will compromise the integrity of the metering data as this will affect the accuracy of market settlement,” Nebo said.

As part of the conditions precedent for the official commencement of the Transitional Electricity Market (TEM), the handover grants operators the chance to manage their energy supplies. The MO had overtime been asked by the Nigerian Electricity Regulatory Commission (NERC) to hand over meters at the various trading points to operators in the market.

This development also grants affected market participants, generation companies, transmission service providers and distribution companies the responsibility to transparently and efficiently manage their metering interfaces with a view to cutting down on the industry’s loss statistics.

The acting Managing Director of MO, Mrs. Ngozi Osuhor, equally stated that the MO would now restrict itself to preparing the monthly invoice for the sector, with the expectation that operators in the sector would transparently manage the meter reading process.

She said: “From 2004 when commercialisation started, the Market Operator was given the responsibility to bring in meters, install, manage and also read them.

“Now, with privatisation, the Market Operator remains on the government side but the participants in the market need to take charge of the meters.”

“They will read the meters, maintain and even install them and what the Market Operator will now do is to give instructions on how the meters must be installed as well as their qualities; it is now a matter of supervision.”

She further said of the MO’s expectation that: “They will read the meters and show us, with which we will prepare their invoice but the thing is that in each case, the people using the meters will read the meter and so there is an interface and they will read and send information to us.

“We are at the stage in the MO where we need to face what we have to do, one of which is to provide a system where we can see what is happening at these interfaces from our offices. And from there we can monitor the performance of the meters for transparency in the market.

“Actually, the regulator has been pressurising us to do this because they felt that we must hand back these meters to the people who are supposed to own them and the reason why the MO owned them was that we didn’t have a commercial arrangement in place.”

With this new arrangement, the operator of the Nigerian Electricity Market (ONEM) also referred to as the Market Operator (MO), which hitherto managed the various metering facilities that measure the amount of electricity supplied across board, now hands over its daily running to assume a new supervisory responsibility.

[This Day]

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