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FIX THIS PROBLEM AND YOU FIX ELECTRICITY IN NIGERIA
SUMMARY

In summary, to fix power, all electricity consumers should have smart prepared meters (or more appropriately smart GPRS electricity meters should we be worried about energy theft). This is where the money is, this is where the money comes in. Now, let me explain further. Nigerian Electricity Regulatory Commission (NERC) has a critical role to play in this very important aspect of the power sector.

Direct Link to the PDF Document:
https://drive.google.com/file/d/1bQ7akhiy--yCTpIP4P8gh3FKqfG7_qfD/view?usp=sharing

[b]STATEMENT OF THE PROBLEM
[/b]We do not have access to stable and cheap electricity because the DISCOS do not have the funds to strengthen and expand its distribution network. Why do DISCOS not have the funds to strengthen and expand its distribution network? Electricity consumers are not billed appropriately, they do not pay their bills (the estimated bills given), overbilling and underbilling of most consumers, especially consumers in the local government, villages and then estimated billing because electricity consumers are not metered.
With passing months and years, the bills accumulated by these estimated billed consumers (and these bills are not really their consumption as the estimated bills are heaped on a minor fraction of the electricity consumers), the DISCOS in turn owes the electricity suppliers (GENCOS, transmission companies and other stake holders) and banks they collected loans from.
In trying to fix shortfall in revenue, the regulatory agencies increase electricity tariff, the DISCOS send out higher estimated bills, consumers are not happy to pay these estimated bills (as it can be x3 or x4 their actual consumptions) and while some a significantly smaller amount compared to the actual amount billed. Electricity tariff is increased to fix financial shortfall leading to higher estimated billing, more people not paying etc.

The circle continues and the power section cannot expand and improve. This has been the circle we have been experiencing for years. The result is, the DISCOs are unable to expand or grow and service delivery remains poor.

SOLUTION TO THIS PROBLEM
To solve the problem, DISCOs need money and lots of it to expand and strengthen their network. To get this money, all electricity consumers are to pay for their consumption just as telecom subscribers pay for their consumption. This is the only way to get the money in the hands of consumers for expansion and growth of their network.

But majority of electricity consumers are not metered, so how do they pay for what they do not consume? Consumers wants energy meters (prepared or postpaid), DISCOs do not provide these energy meters to consumers and even individuals that can afford to get these meters pay for it and yet, unable to get it, why?

For whatever reasons, getting energy meters in Nigeria is very difficult. Can this problem be solved? How?

THE PROBLEM WITH ENERGY METERS
The regulation from Nigerian Electricity Regulatory Commission (NERC) states that electricity meters, are provided by the DISCOs. There are cases where individuals pay for these meters and gets them, but by regulation, DISCOs must provide meters for its electricity consumers.

Take a walk into any DISCO office and request for it and you will be told there do not have free meters but if you want to get one, you are to pay for it. But they are very expensive and not available.

But how could single-phase prepared meters cost more than N60,000? And 3-Phase meters cost way more? Why should it cost that much? Which consumer is going to pay that amount to get a meter? And yet, these meters are rightly the properties of DISCOS?

Port Harcourt Electricity Distribution Company (PHED) covers the areas of Rivers State, Akwa Ibom, Bayelsa and Cross River. A single-phase meter cost N63,000 and 3- Phase cost N117,910.

The Image below (See File 1 Image 1) below was taken from their customer care unit. See the single-phase prepared meters as they are installed in customers’ home (See File 1 Image 2).

The meter is manufactured by Shijiazhuang Kelin Electric Co., Ltd. It is made up of the Customer Interface Unit (with keypad) and the other unit placed in plastic enclosures on electric poles (or in some cases customer premises) (See File 2)

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HOW MUCH DOES THESE METERS COST?

It would be surprising, but the meter sold by DISCOs in Nigeria actually cost far less.

$29 translating to about N12,136 (N418/$). Even if an exchange rate of 500/$, it will still not cost more than N15,000. It could also be seen that minimum number of orders is 100 pieces. Factoring shipping among other expenses, the unit cost should not be more than N20,000.

See File 3 and 4 below.

So, DISCOs (or one the companies license by NERC) will import these meters at a unit cost of not more than N20,000 and be selling them at N63,000.

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IMPORTING ENERGY METERS VS LOCAL MANUFACTURING/ASSEMBLY
Protesting the one year 35% import adjustment tax (levy) deferment by the Federal Government, Mr Kola Balogun, Chairman of Momas Electricity Meters Manufacturing Limited (MEMMCOL) said in 2020.

"The implication of this is that over 600million US dollars would be exported to China to import the approved 3million meters. This means we would further be developing another country's economy and continue to increase unemployment, poverty and underdevelopment in our country.” (https://www.vanguardngr.com/2020/09/review-levies-on-imported-electricity-meters-emman-urges-fg-2/)

The above would mean that the 3million meters to be imported would cost $200 Per Unit. That is outrageous considering a unit cost ranges between $27 to $29 depending on the minimum quantity ordered. As has been noted, PHED single phase meter cost N63,000, that is $150 (at official rate of N418/$) or $130 (at parallel market rate of N483/$).

Mr Kola Balogun further stated:
"We are bold to emphatically say that we at MEMMCOL, have the local capability to bridge the metering gap if the right policy is put in place.”

Question is, at what cost will bridging the metering gap by local manufacturers be to electricity customers ? If the meters assembled (or produced) in the country is costing 3times of the imported, then who loses and how long will it take to bridge the gap?

WHERE MONEY IS MADE AND LOST BY THE DISCOS
The Nigerian power industry is a business and money are made from sells of electricity to consumers. The political class, the rich in the society can afford to settle their bills (estimated or metered) and they can afford to purchase these overpriced meters thereby avoiding the payment of estimated bills.
Here is the fact, these are just a minor fraction of the population of electricity consumers. The majority are those who cannot afford to pay for these overpriced meters and who cannot (would not) pay these bills as estimated. So, who loses at the end?

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BRIDGING THE METERING GAP: THE FLAWS
I have not done the census of electricity consumers in Nigeria but by my estimate, the metering gap is way higher than what is said to be. According to the Vanguard article of December, 16, 2021, it is said that.

“The records of the Commission [NERC] indicate that, of the 10,733,509 registered energy customers as at 31 December 2020, only 4,053,043 (37.76%) have been metered. Therefore, 62.24% of the registered electricity customers are still on estimated billing which has contributed to customer apathy towards payment for electricity bills.”

The estimate is that we have registered 10,733,509 electricity consumers. I would assume that these excludes those in the outskirt of the town, villages etc. These do consume electricity but are not registered with the DISCOs. The commission also stated that 4,053,043 (37.76%) of these registered customers are metered.

The record is flawed in many respects for it fails to account for the social landscape of the Nigerian housing market. In a typical Nigerian compound (except for compounds that is basically a family home), there may be as high as 20 electricity consumers (20 rented self-content/single rooms/flat etc.). If this compound is billed on estimate, it is going to be registered as a single electricity user as this was how it was registered by the landlord.

What this mean is, the landlord has 20 accommodations for rent. It could be 10 self-content, 8 single rooms and 2 flats. Under estimated billing, the landlord will be registered as a single electricity consumer but in reality, there are 20. If prepared meters are allocated and installed, it will then be evident that they are 20 consumers of electricity in the compound.

At present, my compound is counted as a single electricity when in reality, there are 4 rented accommodations (3 self-content and 1 flat).

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STIFFLING GROWTH IN THE POWER INDUSTRY
The power industry being a business cannot expand because they are not getting the money needed to expand from the vast majority of consumers who are weighed down by the burden of estimated bills. If all consumers were metered, they would get their money and use it to expand their business.

The business model used by the power industry is stifling its growth and progress, especially as it concerns the DISCOs, but it trickles up the value chain, because money made by the DISCOs is passed up the ladder.

The problem is that when just a handful of companies are allowed to import meters, it gives these few the power to control the price of meters leading to scarcity and increase in price of the product. At the end, Nigeria and Nigerians loses. When only a minor fraction of the electricity consumers is able to purchase the overpriced meters from DISCOs, the mass of consumers continues with estimated bills which they cannot pay, money is lost by DISCOs, which affect it growth and expansion. So, we remain stuck in low distribution network even while we have a higher transmission and generation capacity. These have been the problem for years and it is why we cannot grow.

But consider if we allow anyone (even individuals) to import their meters, even buy these meters off the shelf at the real market price, the country wins because of the dominos effect it will have. The DISCOs will get their money from every consumer, the money get up the ladder to the transmission and generation companies and other stake holders, the DISCOs will also see the money they need to maintain and expand their distribution networks, the consumer is happy to pay their bills because it is what they use, everyone wins etc

All these would require or take is for the regulatory agencies NERC to allow meters to be imported not by a selected few but almost anyone. These would flood the market with meters where anyone can get it off the shelf, crashing the price of meters.

HOW ABOUT LOCAL METER MANUFACTURING?
Earlier, I quoted Mr Kola Balogun, Chairman of Momas Electricity Meters Manufacturing Limited who said.

“This means we would further be developing another country's economy and continue to increase unemployment, poverty and underdevelopment in our country… "We are bold to emphatically say that we at MEMMCOL have the local capability to bridge the metering gap if the right policy is put in place.”

This argument is flawed in many respects. Let me explain why.
How many mobile phones are manufactured or even assembled in Nigeria and how has these led to increase in unemployment, poverty and underdevelopment? If Nigeria had made the policy to allow few selected companies import phones into Nigeria, how long will it have taken for almost everyone to have mobile phones and how much of underdevelopment, unemployment and poverty would Nigeria experience?

While true that importing mobile phones have helped to develop other countries, but it has helped Nigeria more by creating more jobs, reducing unemployment and dependence on government and underdevelopment. It would rather have the opposite effect if Nigerian regulatory agency Nigerian Communication Commission (NCC) were to make policies to not allow mobile phone importation in the country or by a selected few.

In reality, we have seen that while importation of mobiles phones (and other electronics) has led to the development of another country’ economy, it has assisted us more as many are employed in many ways through these gadgets. In reality, it has benefited us more.

If the local manufacturers are afraid of the competition they face from importation of meters, then it is their problem to make their price competitive. Nigeria has a population of 214m people, growing at the rate of 2.5%, in the year 2030, it is expected to be 262m people and by 2040, 329m. There is still a very large market for the local meter manufacturers to key into.

If we are to wait for local manufacturers, Nigeria will never solve her power issues by 2040 because the DISCOs are not making the money needed to maintain and expand their business with an increasing electricity consumer base.

It’s time to think smartly and differently. To solve the problem of today, we need to flood the market with meters, smart prepared meters (or even better, smart prepared GPRS meters).

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A LESSON FROM THE TELECOMMUNICATION INDUSTRY
We can agree that the telecommunication industry is much more complex, require a higher level of expertise, technology and innovation than the power industry. But why is the telecom industry so successful but the power industry is not?

Let us think about this, we remember how costly it was to purchase phones, sim cards and airtime back in the early years and when data network became available, it was quite expensive. However, as time went by, even while scaling up their services, providing 3g, 4g, fiber optics, mobile applications etc, the cost kept going down. Today, sim cards are cheap, airtime and data can be gotten at even 50 naira.

Now imagine that NCC had made a policy for telecom companies like MTN, Airtel, Globacom and Etisalat to be the sole providers of mobile phones to all Nigerians that would need it, how messed up would the telecommunication industry be? It would not grow or expand. Let us also imagine that after seeing the failures by the telecom service providers, that NCC had reviewed their policies to allow for say 99 companies as suppliers of mobile phones? We would not have seen any appreciable improvement from the days of NITEL. We would be in a similar situation we see ourselves in the power industry.

MY CONCLUSION AND OPTIONS
The money needed for growth and expansion of the power industry in Nigeria is in the hands of millions of electricity customers. The DISCOs are not seeing the money because they do not have an efficient way of getting the money and they cannot force the money into their bank accounts through estimated billings. Customers are never going to pay, even if they have the money to.

Meters needs to be provided but customers are not going to be happy paying for the exorbitant overpriced meters. The market needs to be overflooded with prepared meters, customers need to be able to buy prepared smart meters off the shelf at a cheap rate.

And these are never going happen (leading to fixing the power industry) if only 99 companies are allowed to supply meters to a population of about 214m people. People should be able to purchase their meters off the shelf (as with the case of mobile phones and other gadget in the telecom sector), individuals should be able to import meters and use them, after all, they will still need to purchase the electricity from the DISCOs.

Discos should be unburdened with the responsibility of providing smart prepared meters. This is the best that can happen to them. Let consumers get these meters, off the shelf at its real cost. After importation or buying them off the shelf (which should not cost more than N20,000), to allow the smart meter accept their recharge token, it is taken to the DISCOs offices or their field office for calibration, firmware/software upgrade/registering into their system. This would be similar to getting a sim card for mobile phone after purchase.

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OPTIONS OF A GPRS SMART PREPARED METERS
The regulations by NERC should allow for importations of Smart Prepared Meters into the country by just anyone as is allowed in the telecommunication sector. This would have the benefit of flooding the country with energy meters thereby driving down the unit cost. Smart Prepared Meters are the end products that enable the players in the power sectors to recover their expenses. The cost has to be extremely low so that the masses that really need them can purchase them.

I believe the economically, technologically beneficial thing for Nigeria is that the regulations from NERC should be in the form that energy meters imported into the country supports SIM Cards (GPRS services) which would offer the DISCOs the ability to monitor in real time the activities and behavior of power consumption in areas covered by them and also to detect meter tampering by electricity consumers.

The advantage of GPRS supported smart meters are numerous. DISCOs or third parties would be able to set up servers where data transmitted from the energy meters are stored. Below are options of GPRS enabled smart prepared energy meters the Nigerian government can look into.

SINGLE PHASE GPRS ENERGY METERS

OPTION 1 (See File 6, 7)
Direct Link to marketer: https://www.alibaba.com/product-detail/STE18-G-STS-Single-phase-smart_1600205660261.html?spm=a2700.galleryofferlist.normal_offer.d_title.40af185aEgjXW1

OPTION 2 (See File 8, 9)
Direct Link to marketer: https://www.alibaba.com/product-detail/STE18-G-STS-Single-phase-smart_1600205660261.html?spm=a2700.galleryofferlist.normal_offer.d_title.40af185aEgjXW1

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THREE PHASE GPRS ENERGY METERS

OPTION 1 (See File 10, 11)
Direct Link to marketer: https://www.alibaba.com/product-detail/Three-phase-prepaid-electricity-meter-energy_60194888436.html?spm=a2700.details.0.0.463e7b03yZbYjp

OPTION 2 (See File 12, 13)
Direct Link to marketer: https://www.alibaba.com/product-detail/DTZ1737-Three-phase-tariff-controlled-intelligent_62510357285.html?spm=a2700.galleryofferlist.normal_offer.d_title.29987004rWTVMP
All the above energy meters have the following functions:
a) Remote Power on/off Switch Control: Relay built in answers the Switch on/off command from the server platform to remotely control the power on/off.
b) Communications: Built in GPRS modem with plug-and-play design for transmitting data directly to the server platform.
c) Data Storage: Energy data stored in the modem traceable and retrievable in case of GPRS or other network disruption. Storage up to one year to avoid data loss.

As the federal government is moving into a digital economy, I believe this to be the direction government policies should focus on.

Direct Link to the PDF Document:
https://drive.google.com/file/d/1bQ7akhiy--yCTpIP4P8gh3FKqfG7_qfD/view?usp=sharing