A Review of the Nigerian Energy Industry

Power sector and locally-manufactured meters

23 October 2015, Lagos –  On Wednesday, August 13, 2015, a significant milestone was achieved in the Nigerian power sector with the presentation of samples of locally manufactured meters to President Muhammadu Buhari by the Permanent Secretary, Federal Ministry of Power, Ambassador Godknows Ighali.

*Ambassador Godknows Igali.
Ambassador Godknows Igali.

Technocrats in the power sector reckon that with this development of locallymade meters, there would be a significant growth in the Nigerian economy and also a reduction in the level of unemployment in the country.

The questions that currently linger in the minds of industry players are:now that the made in Nigeria meters have been presented to Mr. President what next? How would this presentation translate to patronage of the locally made meters?

The different players in the entire value chain of the power sector have a role to play to make this very critical sector of the economy work for the good of all.For instance, the Central Bank of Nigeria (CBN) has a big role to play in the interest of the economy by helping to ensure that all electricity distribution companies patronise local meter manufacturers.

The CBN could contribute by limiting forex allocation to electricity distribution companies to import these prepaid electricity meters which our indigenous manufacturers are able to produce with a far better hybrid quality when compared to some of the imported ones that are usually dumped in our market.

The Nigerian Electricity Regulatory Commission (NERC) also owes the nation the crucial duty to ensure that made in Nigeria meters meet international standard by ensuring periodic random testing of meters produced by these indigenous manufacturers through its agency, Electricity Management Service (EMS). This role of EMS is so important and must be diligently carried out to put the indigenous manufacturers on their toes not to compromise on quality.

Going forward is the issue of ensuring that this bold step is encouraged in the sector to fully enjoy the holistic value chain and also tackle one of the administration’s core economic agenda,unemployment.

To this end, there is still a strong need for all stakeholders concerned especially the supervising ministry (Ministry of Power) to take a second look at the functions of the DISCOs because it appears that the DISCOs have been saddled with the responsibility of purchasing meters and also distribution of bills (including estimated bills) to power consumers whereas their primary function is to ensure that power gets to the transformer.

Perhaps, this is why they have not taken time to provide solutions to the issue of general bad shape of transformers in the country which is indeed a major factor affecting energy delivery to the end consumers. This is because the power transmission companies have enough electricity to supply to the consumers through the DISCOs but most transformers currently in place cannot withstand the amount of power or energy required by the consumers.

It would also be necessary to take a second look at the entire privatisation process in the power sector and limit the role of the DISCOs to the distribution and now allow for the emergence of electricity marketing companies.

By so doing, the DISCOs that are presently overwhelmed with combining the two responsibilities of distribution and marketing would now be more focused.

As a matter of fact, the proposed electricity marketing companies would be expected to be autonomous and a separate business entity not owned either in part or full by the DISCOs.

It must be noted that combining the role of marketing and distribution for DISCOs as we currently have it is an anomaly that is limiting the benefits or the expected benefits of the privatisation process.

If the proposition of the creation of electricity marketing companies is implemented, it would result in efficient distribution of power by the DISCOs. The marketing company would then ensure consumers are properly metered, appropriately billed and the power sector the greater beneficiary.

However, one can only hope that these indigenous meter manufacturers would make this patronage count, especially in the area of job creation and employment opportunities for Nigerian youths. The manufacturers must be ready to show in tangible and clear terms how this move would increased the employment rate in the country.

It is also important to note that these local manufacturers would increase capacity through expansion drive. This is very crucial because it would be counterproductive to stop importation of meters if local manufacturers cannot meet the local needs.

Again, more investors should be encouraged to venture into electricity meter manufacturing to promote healthy competition which will be in the general interest of the country in terms of quality and product pricing.

Finally, it is necessary to open a window for the local manufacture of transformers. This way we can proudly say the reforms in the power sector is complete.
Bolaji Abimbola, a public affairs commentator, wrote from Lagos.

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