CBN announces framework for financing electricity meter acquisitions

*As part CBN’s COVID-19 relief package, interest rate to be charged up to February 28, 2021, shall not exceed 5 percent per annum

Emmanuel Akosile | ConsumerConnect

The Federal Government’s recent moves to boost the commercial value of the nation’s electricity sector via increased tariffs may attract inflow of fresh capital to the vital but troubled sector soon, as the Central Bank of Nigeria (CBN) introduces a framework for financing electricity meters in the country.

ConsumerConnect gathered there are plans by private financial groups to raise about N480 billion credit facility for meter acquisitions across the electricity value chain in the country.

The CBN Monday, October 19 released a framework for financing the National Mass Metering Programme (NMMP) recently implemented by the Federal Government, a development expected to close the metering gap of over 10 million electricity consumers in the industry.

The framework outlines the operational modalities of the CBN financing support to the Distribution Companies (downstream) and Local Meter Manufacturers (upstream).

The document stated: “The introduction of the service-based tariff (SBT) in the Nigeria Electricity Supply Industry (NESI) effective from 1st September 2020 has put increased emphasis on the need to close the metering gap in the NESI.

“The closing of this gap will enhance efficiency of revenue collection by Distribution Companies (DisCos) and thereby facilitate meeting their obligations to other upstream market participants.”

According to the CBN, the objectives of the framework are to increase Nigeria’s metering rate; eliminate arbitrary estimated billing; strengthen the local meter value chain by increasing local meter manufacturing, assembly and deployment capacity; and support Nigeria’s economic recovery by creating jobs in the local meter value chain.

Others are reduction of collection losses and increasing financial flows to achieve 100 percent market remittance obligations of the DisCos; and improve network monitoring capability and availability of data for market administration and investment decision making.”

The facility shall be administered at an “all-in” interest rate of not more than 9.0 percent per annum or any other rate as may be specified by CBN.

The Bankers’ Bank stated that 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 percent per annum.

“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 are currently being produced in the country is also prohibited,” CBN said.