A Review of the Nigerian Energy Industry

Inability to recoup investment frustrates local production of meters

23 September 2014, Lagos – The uncertainty of distribution companies, DISCOs, to recoup their investments may be hampering their desire to patronise local meter manufacturers, as it takes a long time to recoup investment from locally manufactured meters.

Relating the experience of the Ibadan Electricity Distribution Company, IBEDC, since taking over from PHCN in November 2013, the Deputy Managing Director, Mr. John Darlington, noted that although patronising local manufacturers is laudable, the cost is prohibitive.

Electric-metersAccording to him, “Metering is good investment; an average household in Lagos pays electricity bill of about N6,000, N8,000 or probably N10,000. But in Ibadan, an average household pays electricity bill of about N2,000.

“Whereas, the average cost of a meter is N22,000 or N23,000, of which you must recover the investment in the life of the meter. If a person is paying about N1,500 monthly electricity bill, how many years will it take him to pay back a N22,000 cost of meter?

“Secondly, our local knowledge shows how creative we are in this part of the world. Most of us own properties abroad, and you dare not tamper with the meter in your apartment. But in Nigeria, even in houses of the rich, we tamper with our meters, bypass our meters, and deal with the meters with impunity. So before we make an investment in this regard, we must study the technology that will help us manage this menace.”

Darlington added that Ibadan DISCO has taken into cognisance the fact that many customers within its network do not pay proportionate bill that can enable the company recoup an investment in meters.

“I cannot buy a new meter at N22,000, multiply it by the customer base of 1 million and after the investment, I cannot recover my cost of power, let alone the cost of the whole investment because I have deployed a technology which an average person can tamper with. That is the burden we carry.”

Darlington also noted that foreigners did not invest in the DISCOs due to the complicity that trailed government/labour relationship. “We bought the distribution company without doing due diligence because the union did not allow anybody to come into this company. But Nigerians took the risk. That is why there is no foreign investor in any of the DISCOs today.

“Foreign investors are managing it, but their money is not on the table. Nigerians who invested in the DISCOs have shown patriotism. These are the bottlenecks and the pain we are going through,” he added.

Also speaking, the Managing Director, Mr. Fortunato Leynes, said that the company is trying to close the gap between those that have meters and customers without meters, which informed the company’s bid for more meters.

“We are trying to close the metering gap between those customers who do not have meters and those that have. We are taking delivery of about 24,000 meters for now to serve those without meters. Those who complain of estimated bills should seize the opportunity to come to our business office and apply for their meters,” he said.

He also said that IBEDC is set to raise about $160 million through a consortium of banks led by Skye Bank, to help fund the company’s operations appropriately.

Leynes explained that the company has entered into a partnership with the University of Ibadan, in order to build skilled and effective human capital.

According to him, “IBEDC in its quest to make true its vision of becoming the best electricity distribution company in Nigeria went into a strategic partnership with the University of Ibadan. This is based on two critical initiatives; first, talent sourcing and development, and the second is making the institution the first island in our franchise area that would be guaranteed 24 hours power supply,” he added.

 – Vanguard


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