We Need N299bn, CAPEX Expansion to End Estimated Billing – DisCos

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Electricity Distribution Companies need to install 4.1 million new prepaid meters across the country to reduce estimated billings on electricity consumers

The electricity Distribution Companies (DisCos) said about N299 billion is required to close the 4.1 million metering gap just as they seek more capital expenditure (CAPEX) window and legislative actions for mobile courts to swiftly tackle energy theft and meter bypassing.

The Association of Nigerian Electricity Distributors (ANED) during a public hearing on the Bill to Criminalise Estimated Billing at the National Assembly on Tuesday said the DisCos are making huge investments in providing meters for their customers and cutting down those on estimation.

The DisCos’ body noted that estimated billing methodology was standard practice in over 150 countries globally. These countries include USA, Turkey, Germany, Brazil, Chile, China, India, Indonesia among others. Over 26 African countries including Egypt, Ethiopia, Ghana, and Cameroon also maintain this global standard.

According to the Director of Advocacy and Research, Barrister Sunday Oduntan in Abuja said while the CAPEX allowed for all the 11 DisCos is N305billion for five years to provide meters, maintain their networks and perform other obligations, the 4.1m metering gap stands at N299bn amounting to 98 per cent of the allowed CAPEX.

ANED also noted that any new legislation would need to consider the historical challenges of the DisCos which include non-cost reflective nature of the electricity tariff which has created a significant market shortfall of over N800bn; a nascent private-led power sector worsened by macro-economic factors that is affecting the DisCos’ operations and performance.

The DisCos said the market shortfalls further impede their ability to access the financing necessary for OPEX, CAPEX and loss reduction initiatives.

While advocating for legislative action against energy theft and meter bypass, ANED said metering alone contributes to an estimated 30 per cent reduction of their Collection Losses adding that the DisCos lose about 40 per cent monthly to energy theft.

It said: “Adequate CAPEX & OPEX provisions should be made under the electricity tariff, to ensure comprehensive metering, and legislative effort should be applied to criminalising energy theft and meter bypass, and creating electricity special/mobile courts. This would assist in catalysing the desired large scale metering within the sector.”

To ensure reduction in estimated billing, ANED said its members have ensured the 100 per cent metering of all Maximum Demand customers (large users) in their networks; adopted check-meters to measure consumption to ensure fair bill estimation; and adjust bills of customers where there are errors.

The DisCos also noted that the proposed amendment to the Electric Power Sector Reform Act (EPSRA) 2005 by criminalising estimated billing will conflict with the Share Sale Agreement (SSA), Performance Agreement and the EPSRA.

“It holds the possibility of a “Change of Law” determination that could, potentially, result in the federal government paying out an amount in excess of 5 billion dollars, in accordance with the related provision in the Performance Agreement.

“New customers may not be connected to the grid until the availability of meters, therefore denying them of service. Indeed, there would be wholesale disconnection of all the customers currently on estimated billing,” they noted.

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