The Federal Government of Nigeria, through the Nigerian Electricity Regulatory Commission (NERC), has implemented significant price increases for pre-paid meters between 2021 and 2023. This increase has affected both single-phase and three-phase meters, resulting in an 83% increase in the price of single-phase meters and a 145% increase in the price of three-phase meters.
It was gathered that the NERC has implemented two price increases for single-phase and three-phase pre-paid meters during the period under review.
Here are some key details:
- Price Hike Details: The price of single-phase meters has risen from N44,896.17 in 2021 to N81,975.16 in 2023. Three-phase meters have increased from N82,855.19 in 2021 to N143,836.10 in 2023.
- NERC’s Rationale: NERC stated that the price hike was necessary to enable Meter Asset Providers (MAPs) to recover reasonable costs associated with meter procurement and maintenance while ensuring a viable return on investment. The aim was to evaluate the affordability of meter services for consumers and prevent excessive pricing.
- Influence from Meter Manufacturers: The Meter Manufacturers and Assemblers Association of Nigeria (MMAAN) requested the price increase, citing factors such as an increase in the cost of production, export duties, foreign exchange rate fluctuations, and others. MMAAN argued that the cost of producing single-phase and three-phase meters is N101,061.10 and N185,047.20, respectively.
- Impact on Consumers: The price hike may pose challenges for electricity consumers, as they are responsible for purchasing the meters. Unmetered customers would need to pay N491.8 billion to gain access to meters based on the new prices. Additionally, electricity distribution companies have stopped collecting orders to offset payments made before the price increase.
- Concerns and Criticisms: Experts and consumer protection groups have raised concerns about the impact of the price increase on consumers. They highlight factors such as customs import duties, devaluation of the naira, and multiple charges by government agencies as contributing to the hike. They argue that providing pre-paid meters should be the responsibility of electricity distribution companies, as agreed upon during the sector’s privatization.
However, electricity distribution companies have ceased collecting orders to offset those who made payments before the price increase. In an interview with Daily Trust, the acting president of the Meter Manufacturers and Assemblers Association of Nigeria (MMAAN), Engr Ademola Isaac Agoro, stated that the instability of the naira in the forex market indicates that it is time for the government to stop controlling the meter price. He argued that this is necessary as manufacturers rely on imported products to produce the meters.
Similarly, the President of Nigeria Consumer Protection Network, Kunle Kola Olubiyo, attributed the recent hike in customs import duties/customs charges, devaluation of the naira, and other multiple charges by different government agencies at ports. Olubiyo questioned why it is the responsibility of electricity consumers/end-user customers in the electricity market to provide pre-paid meters or fund the deployment of meters intended to enhance cost recovery, energy accountability, and returns of investment for electricity distribution companies.
He added that the agreement signed by the companies before the sector was privatised under the Service Level Agreement (SLA) was that they would provide the meters as a means to guarantee revenue efficiencies and collection efficiencies.
The increase in the price of pre-paid meters has financial implications for electricity consumers and may affect the government’s efforts to ensure accurate billing and energy accountability in the electricity sector.
