There have been continued collaborations by the Federal Government of Nigeria (FG or “the Government”) and other stakeholders in the power sector, in a bid to improve the sector and optimize its capacity.
This newsletter highlights some of the recent developments and their impact on the industry.
The Nigerian Electricity Regulatory Commission (NERC) in a report issued in November 2020, stated that a total of 525,120 meters were deployed and installed in the premises of power users under the various franchise areas of the eleven (11) power distribution companies (Discos) between January 2019 and November 2020.
Liquidity has remained a critical issue in the distribution sector and Discos continue to struggle to pay for the power received from the power generation companies (Gencos). The Government rolled out several initiatives, including Meter Asset Provider (MAP) Regulation and the National Mass Metering Programme (NMMP), to increase the number of metered electricity users, cut down on estimated billings to customers and reduce non-technical losses. The MAP and NMMP were launched to replace the erstwhile Credited Advanced Payment for Metering Implementation (CAPMI) Scheme and provide a sustainable strategy to address mass metering of Nigerians, encourage the development of independent and competitive metering services and enhance revenue assurance in the Nigerian Electricity Supply Industry (NESI). Based on the NERC’s report, the Discos contracted 7,588,972 meters under the NNMP during the period. Of the available 1,000,000 meters rolled out in the first phase of the NMMP, only 16,308 meters have been installed in the premises of customers while 983,692 were warehoused in Discos’ offices.
Further, the NERC has directed that electricity customers who paid for meters under the MAP scheme should be refunded following the FG’s announcement that six million meters would be distributed at no cost to customers under the NMMP.
Notwithstanding the progress made in closing the country’s metering gap by the NNMP, customers have continued to experience challenges in getting meters due to manpower constraints and logistic challenges which manufacturers have to grapple with at the ports. We however expect to see an increased drive for mass metering of customers in the next quarter.
The Gencos were reported to have achieved a 93% increase in generation over the past seven years, despite the challenges in the sector since privatisation. The Gencos however, bemoaned the lack of infrastructure to evacuate all the available capacity. The Association of Power Generation Companies (APGC) reports that the available generation capacity
of 4,214.32MW has increased by 93.27% to 8,145MW, however, due to system constraints, generated power is rejected or forced to be reduced. The idle capacity represents non-performing capital investments which may impact the Gencos’ ability to service loans used in developing power plants and undermines their performance.
Although, the Gencos have forecasted a bleak performance in 2021, there appears to be a positive outlook for the renewable segment of the generation sector during the year, especially with the amounts earmarked by the FG for the development of renewables and off-grid solutions in the 2021 budget. However, the FG may need to intervene to address the critical liquidity challenges which may address Genco concerns regarding the future of the sector.
Click here to read more on this newsletter.