On the 12th of March, the National Electricity Regulatory Commission (NERC) announced a new policy under the Electric Power Sector Reform Act (EPSRA) of 2005. Known as the 2018 Meter Asset Providers (MAPs) policy, it was designed to deregulate the provision pre-paid meter.
In essence, electricity distribution companies (Discos) have to outsource the acquisitions and installation of prepaid meters to qualified third-party entities.
The policy is to ensure that the difficulty of metering electricity consumers is significantly reduced. As Nigeria News noted, one of the biggest complaints of consumers of electricity is the lack of prepaid meters giving rise to corruption and exploitation through what Discos call estimated billing.
All this being equal the MAPs policy would be one of the most significant development since the power sector was privatized. Below are all the things you need to about the policy.
MAPs Licensing Process
There are several steps involved in the licensing process. This can be broken down into:
1. Interested companies wishing to become MAPs apply to the NERC
2. NERC conducts due diligence on all intending entities. Only firms issued with a ‘No-objection’ notice by NERC can go ahead with the procurement process.
3. The Discos would conduct the procurement process from bids of firms who pass steps 1 and 2 above. Successful bidders are given an offer letter.
Successful bidders would have to enter a Meter Servicing Agreement with the Discos
A Tender Auditor appointed by NERC would monitor the bid process to make sure it is transparent.
4. The successful bidders (stage 3) would then apply for a MAPs permit or license from NERC. The license would be issued if the regulator is satisfied the bidder met all the necessary requirements.
These include technical, technological, statutory and local content requirements.
5. Successful bidders must be able to show that at least 30% of the meters to be installed are sought from local manufactures
The Contract Agreement between Discos and MAPS
Two contracts would be signed between the MAPS and the respective Discos. They are: Meter Service Agreement (MSA) and Service Level Agreement (SLA).
MSA covers the agreement on the number of meters to be supplied and installed for consumers and how payment for the installed meters would be implemented.
Under the SLA, the MAPS and Discos spell out clearly what is expected from each party including how targets and time frames are to be met.
Funding and Financial Obligations
In the MSA between both parties, there is an obligation for a Metering Service Charge (MSC).
This implies that Discos would pay the MAPs the MSc from the bills collected from electricity consumers. In essence, consumers would pay for the meters through the MSA over a period of 10 years.
The MSC is to enable MAPS to take care of operational costs as well as servicing faulty meters while the agreement is in force.
To ensure transparency in how the MSC is shared between Discos and MAPs, all the money collected under the MSC would be warehoused in a dedicated account.
Electricity consumers who chose to pay for their meters upfront would be exempted from the MSC. Consumers who already have prepaid meters are also exempted from paying the MSC.
Duration of the MAP Licence
The license granted to MAPs by the NERC to finance, procure, install and operate meter services is valid for 15 years from the date of issuance of the license.
It is expected that the MAPs would break even in about 10 years.
Each license given to the MAPs is restricted to only one Disco. In other words, a MAP cannot enter into another agreement with other Discos using just one license. They would have to apply for another license to work with a different Disco.
It should be noted that the MAP framework does not cover the assets of the various Discos before the new MAP policy. In other words, prepaid meters and analog meters before the policy came into effect belong to the various Discos.
The regulation also states that Discos can still install and service meters for their consumers up to the 31st of December 2018.
But as from 1st January 2019, only MAPS are allowed to procure, install and service prepaid meters.
It is just two months since the new policy on the procurement and deployment of prepaid meters was announced. So it is early at this point to pass judgment on its effectiveness so far.
But it is noteworthy that the government, through NERC, gave the 11 Discos 120 days to engage the services of MAPs. This order came two weeks after the regulation was announced.
There is still time to make a full assessment of the compliance level of Discos to the MAPs regulations.