Economic analysts did not applaud the Federal Government’s recent actions to increase its electricity sector commercial value via increased tariff.
The economic analysts suspect that an increase in tariff will lead to new bank credits to the electricity sector.
These actions have compelled the Central Bank of Nigeria to develop a financially savvy plan to finance new meters in Nigeria.
Yesterday, the Central Bank of Nigeria unveiled its framework to finance the National Mass Metering Programme (NMMP), which was recently implemented by the federal government. The program will drastically reduce the metering gap of more than 10 million consumers in the sector.
The recently disclosed framework outlines the CBN financing support’s operational modalities to the Distribution Companies (downstream) and Local Meter Manufacturers (upstream).
An excerpt from the released document stated: “The introduction of the service-based tariff (SBT) in the Nigeria Electricity Supply Industry (NESI) effective from September 1, 2020, has put increased emphasis on the need to close the metering gap in the NESI.
“The closing of this gap will enhance the efficiency of revenue collection by Distribution Companies (DISCOs) and thereby facilitate meeting their obligations to other upstream market participants.”
According to the document, the aim of the framework is: “to increase Nigeria’s metering rate; Elimination of arbitrary estimated billing; Strengthen the local meter value chain by increasing local meter manufacturing, assembly, and deployment capacity.
“Support Nigeria’s economic recovery by creating jobs in the local meter value chain. Reduction of collection losses and increasing financial flows to achieve 100 per cent market remittance obligations of the DISCOs. And Improve network monitoring capability and availability of data for market administration and investment decision making.”
The central bank noted that: “Procurement of fully assembled meters from overseas is prohibited except meters imported by Meter Asset Providers (MAP) already in the country as at September 30, 2020, and verified by NERC. And importation of related metering infrastructure that is currently being produced in the country is also prohibited.”
Also, the Apex bank noted that: “the facility shall be administered at an “all-in” interest rate of not more than 9.0 per cent per annum or any other rate as may be specified by Central Bank. As part of the bank’s Covid-19 relief package, the interest rate to be charged up to February 28, 2021, shall not exceed five per cent per annum.”