Recently, the Group Chief Operating Officer of Armese Power Solutions, Dallas Peavey, joined CNBC Africa’s Beyond Markets host, Esther Awoniyi, to discuss the opportunities Nigeria’s Meter Asset Provider (MAP) regulation could avail Nigerians.
Some Background Information
Recall that in April last year, Nigerian regulators launched the MAP regulation with the intention of closing the electricity metering gap that existed in the country. Some 108 companies were licensed by the Nigerian Electricity Regulatory Commission (NERC) to procure and distribute meters to Nigerians.
The MAP regulation became essential because prior to its launch, about five million Nigerians were estimated to be either getting estimated billings for electricity consumption or not paying at all. The situation then did not quite augur well for either the Discos or the consumers due to the lack of transparency. Therefore, something needed to be done about it
The latest developments
Interestingly, barely five months after the companies were licensed to close the metering gap, there has been a 35% increase in the tariff they pay to import meter. Peavey noted that this has made it extremely difficult to do business. This is because the 35% increase came at a time after a fixed price had already been implemented.
Note that the initial tariff placed on meter importation was 10%. Peavey said there was never a stakeholder deliberation prior to increasing the excise duties. As such, the meter distributors were taken by surprise. And they cannot even increase price now because not only are the prices fixed/regulator, a lot of customers simply cannot afford to pay beyond the current price.
What is the way forward?
Should the fixed price be done away with in order to allow market forces to prevail at this point? It is important to consider this because as Peavey stressed, the current situation is very problematic because the meter importers are struggling to make ends meet because market forces are working against them.
But there are opportunities
It should be noted at this juncture, that there are Nigerian companies who locally manufacture (assemble) electricity meters. Peavey admitted that the current situation provides opportunities for them. When asked whether they can meet demand, he said “absolutely yes”. His company (I.e., Armese Power Solutions) can produce as much as three million meters per annum, he discussed. But then even at that, the company would still have to incur higher costs importing the components for ‘manufacturing’ the meters. More so, Armese Power Solution is the only company that has the capability to locally produce that much meter per annum, he claimed.