It’s impossible to close electricity metering gap by 2022 — Balogun
The Chairman/Chief Executive Officer, Momas Electricity Meters Manufacturing Company Limited, Mr Kola Balogun, in this interview with ’FEMI ASU, speaks on customer metering in the power sector and the challenges facing local meter producers, among other issues
The Meter Asset Providers Regulation was introduced in 2018 and the regulator directed that meter rollout should commence on May 1, 2019; as one of the meter asset providers, how has your company fared?
The metering scheme started late, but it is better late than never. It was a welcome development and keyed into the entire regulation. The experience has not been as expected because there was so much financial difficulty on the part of the consumers; they did not respond the way we had anticipated. We thought it would look like the Credited Advanced Payment for Metering Implementation scheme, where a lot of people paid for meters.
We have licences to work with two distribution companies – Ibadan Electricity Distribution Company and Kano Electricity Distribution Company. We are doing very well in Ibadan. In Kano, we are doing very well but the response rate has not been encouraging. We have meters there but the number of consumers who are responding is very minimal. In Ibadan, we have deployed more than 5,000 meters since we started, but in Kano, we have deployed less than 200 meters.
Originally, the mandate given to the electricity distribution companies was to provide meters for consumers. MAP is an intervention; so if the consumers are not willing to pay for meters, then the Discos are supposed to provide meters for them, so that we can quickly close the metering gap.
What are the major challenges facing local meter manufacturers with respect to the MAP scheme?
Non-compliance with the 30 per cent local content requirement is a major setback for us, and it is actually hampering our growth as manufacturers and as a nation. MEMMCOL is an original equipment manufacturer. We are the designer of our meters; we don’t depend on anybody to be able to do anything on our meters. If I am importing raw materials, I am doing so because of the economy of scale. My meter is almost 100 per cent local content.
Our meter in Momas is designed by Nigerians. Polyvinyl chloride is part of the materials we use to build the body of the meter. The PVC we use for meter is fire-resistant. It must not catch fire immediately. So, the fire resistivity property must be improved upon, and that is what they don’t have in Eleme in Port Harcourt. For them to be able to improvise the heat exchanger that will make it to go up to that level, the volume that we are buying must be large enough. In other words, all other raw materials can equally be purchased locally provided the volume we are consuming is very large.
There is a component we used to buy in China, and it is produced in Saudi Arabia. When Saudi Arabia saw that we were buying their raw material from China, they asked us if we could come to Saudi Arabia to buy it. We went to Riyadh, and when they asked us what our consumption in a year is, I said 10 containers. They said it was too small because the Chinese would buy 10 shiploads. So, it is better they sell to the Chinese at a lower price so that the Chinese will sell to us. The price at which the Chinese will sell the meter is what I will sell to any Nigerian because I am a designer of the meter; it is not that I am buying somebody’s patent. There are some meters we have manufactured to address specific needs in the country because it is our design. And until we keep improving on our technological capability, we will not grow as a nation.
What do you think is the reason why some of the Meter Asset Providers are not complying with the 30 per cent local content requirement?
I think it is because they don’t believe in Nigerian products, and this is a mindset that we need to change. Oftentimes, they will say, ‘We need this technical specification.’ Why do you need a foreign technical specification that is not in compliance with your metering code? This is the disconnection we have between the regulator and the Discos. The Discos will be saying, ‘This is what we want.’ The regulator will say, ‘This is what we are supposed to do.’
If a Meter Asset Provider is not performing for one reason or the other, the Disco or regulator is supposed to replace it. The Discos and the regulator must be on top of the entire scheme in terms of supervision and making necessary changes when necessary.
Some of the Meter Asset Providers are said to lack adequate financial capacity to deploy the required number of meters; is your company also facing this challenge?
No; we even have surplus funding. The Bank of Industry has made some money available for us. But when you don’t have an offtaker – someone who has already signed an agreement to take the meters immediately when you produce them, it is a problem.
But a situation whereby you are at the mercy of the consumers, it is what the consumers pay that will determine what you produce. So, you must be cautious about how you expose yourself to the bank because when the time for repayment comes, you can’t give excuses to the bank.
But if a Disco or any of the MAP licensees has signed a contract for the production of 100,000 or one million meters and made a minimum deposit, finance is available. There are so many banks willing to give loans. But the system must be right; who is going to be the offtaker? Who is going to be the obligor of the loan? It is the manufacturer. Will the Discos be ready to pay in case the consumers refuse to pay? They said they would not pay back. So, who is going to bear the burden of the loan? This is something we need to address.
Do you think the government should put in place a funding scheme for the Meter Asset Providers?
Fantastic! That would be the right thing to do. If the government can make money available for us to access, especially the manufacturers, that will be fine.
The coronavirus pandemic has disrupted supply chain globally; how has this affected your operations?
Right now, we have closed the factory to comply with the two-week stay-at-home order. But even before then, we had already started creating some level of spacing in the factory. So, it has slowed down the entire operations in the factory, and we still have to pay salaries and some other overheads. We still have to keep some servers on because we are operating our online services for people who want to buy credit; that system has to be on 24/7 and we have to keep some staff there so that they can attend to consumers.
We buy some of our materials from Russia, the United States, Taiwan and China. But all over the world, supply chain has been disrupted. We are hoping that this pandemic will be resolved in a short while. If this pandemic continues for a month or two, we will be totally out of operation because we won’t be able to import anything, and we won’t be able to look for substitution for the raw materials locally.
Last year, the Nigerian Electricity Regulatory Commission set a target of three years(2022) for the provision of meters to all electricity customers; do you think this is achievable?
It is just a mirage; it is not possible. Funding capability is not there. In terms of manpower, we are not yet there. We need a lot of skill development to be able to install the volume of meters we are looking at. If we are saying over five million meters would be deployed, do you know the manpower requirement to install them across the country? People who have track records in the power sector should be brought together for a roundtable discussion about how to move the sector forward.
How long do you think it will take to supply meters to all customers in the country?
We need a minimum of six to seven years to bridge the metering gap, all things being equal. We can achieve this if we have in place proper statistics, proper monitoring and financial intervention as required by the sector.