- INTRODUCTION
Desirous to bridge the metering gap for all distribution
licensees which was reported at 4,740,275 meters as at the end of
2017, the Nigerian Electricity Regulatory Commission (“the
Commission”) pursuant to its power to make regulations by Section
96(2) of the Electric Power Sector Reform Act, (ESPRA) 2005 and all
enabling laws released the Meter Assets Provider (MAP)
Regulations.[1] The Regulations which was signed by Sani Garba,
the Vice Chairman of the Commission shall be enforceable from the
3rd day of April 2018.
The Regulations is expected to enhance operations of the
electricity market and attract viable private investors who will
partner with the electricity distribution Companies (DISCOs) to
procure meters in cooperation with the concerned DISCOs to recoup
fees through charges built into the end user’s electricity bill.
The Regulations comprise of 9 chapters, 34 sections and 2 schedules
and we review the key provisions as below.
- KEY HIGHLIGHTS OF THE REGULATIONS
2.1 Objectives of the Regulations: As provided
in chapter I, the Regulations which are intended to provided
standard rules for meeting the metering gap of the Nigerian
Electricity Service Industry (NESI) clearly spelt out the
objectives which it intends to fulfill as follows:
- Encourage the development of independent and competitive meter
services in NESI; - Eliminate estimated billing practices in NESI;
- Attract private investment to the provision of metering
services in NESI; - Close the metering gap through accelerated meter roll out in
NESI; and - Enhance revenue assurance in NESI.
In achieving the aforementioned objectives, the Commission will
require the cooperation of all relevant parties affected by the
regulations which include the Distribution licensees (DISCOs) who
up till now have not shown keen interest meeting their metering
obligations or in opening the market space for metering, the MAPs
and the consumers of electricity who have always clamoured for an
efficient metering system.
2.2 Metering Obligation: Keen to reduce the
metering gap for all Distribution Licensees which was reported at
4,740,275 meters as at December 31, 2017, the Regulations places
metering obligation on the Distribution Licensees (the DISCOs) as
they remain responsible for meeting their metering targets as
specified by the Commission from time to time as restated in
chapter IV of the Regulations. Furthermore, they are obliged to
engage the services of MAPs in accordance with the provisions of
these Regulations towards meeting their metering targets specified
by the Commission. Apart from the DISCOs, Eligible Customers being
served under the Eligible Customer Regulations[2] may also engage MAPs to ensure proper energy
accounting.
The metering gap in the market is projected to significantly
increase upon the conclusion of the ongoing customer enumeration
exercise embarked upon by the Commission. Clearly, we believe that
a successful implementation of the lofty goals of these Regulations
will open up the vast market space, create value chain for end
users of electricity and lead to significant changes in accounting
for the supply of electricity which is vital for the sustenance of
not only the NESI but the entire economy.
[1] (No. NERC-R
-112) – released on 8th March, 2018
[2] Eligible Customer Regulations
2017, Regulation No. NERC-R-111 permits electricity customers to
buy power directly from the generation companies in line with the
provisions of Section 27 of the Electric Power Sector Reform Act
2005 whereby such eligible customers are permitted to buy power
from a licensee other than electricity distribution companies.
2.3 Obtaining MAP License: Every person/entity
interested in a MAP license must submit the following documents to
the Commission as set out in the Regulations:
a. Completed application form;
b. Certificate of incorporation and memorandum and articles of
association;
c. Tax clearance certificates;
d. Certified audited financial statements for 3 consecutive years
prior to the year in which the application is made;
e. Detailed resumes of Applicant’s board of directors, management
and technical staff;
f. Ten-year Business Plan; and
g. Applicant’s relevant experience in asset finance, metering and
other relating business.
We believe the intendment of the Regulations to keep the
application procedure for MAPs simple, as outlined in chapter III
of the Regulations, is to encourage willing participants to join in
the process of liberating the procurement and supply of meters to
the end users as this will, no doubt, boost investments in the
sector as parties will be willing to participant and to seek
licenses that are not cumbersome and difficult to obtain.
2.4 Procurement Process and Grant of Permit: In
a bid to hasten the procedure for the procurement process and grant
of permit, the chapter III of the Regulations further mandates the
Distribution Licensees to conclude the procurement process for the
engagement of the first set of MAPs within 120 days from the
3rd day of April 2018. The engagement process for
subsequent MAPs shall be completed within 120 days from the
commencement of the procurement. The regulation further mandates
the commission to approve all Meter Service Agreement entered into
between the Distribution Licensee and a successful applicant.
The tenure of entities that obtain a Meter Asset Provider Permit
shall be for a period of 15 years in the first instance effective
from the date of issuance by the Commission.
The Regulations further prohibits the Distribution Licensee, its
core investors, subsidiaries, affiliates, directors and their
relatives from setting up, owning shares or holding directorships
and senior management positions in the MAP. This is done
essentially to open the market space and allow for a level playing
ground for new entrants whose activities will act as a check on any
perceived excesses of the DISCOs regarding billing of
consumers.
2.5 Local Content policy: In order to guarantee
and strengthen government’s resolve to encourage participation of
local entities in the sector, section 9 of the Regulations
stipulates that MAPs shall source a minimum of 30% of their
contracted metering volumes from local meter manufacturing
companies in Nigeria. Further changes to the minimum local content
thresholds shall be as specified in the NERC Local Content
Regulations.[1]
This position taken by the regulation is highly commendable as
the participation of the local business entities in critical
sectors of the economy is vital in increasing the capacity,
sustenance and localization of technical knowledge of the sector
and minimizing the appropriation of crucial resources that would
have been spent to import such services.
2.6 Technical and Technological Requirement:
With a view to ensure maximum standard and quality service delivery
by the MAPs and the DISCOs, the Regulations provides for basic
technical and technological requirements which MAPs must fulfill to
include: compliance with the Metering Code, the Guidelines for
Certification of Metering Service Provider and Related Matters and
other relevant Regulations, deployment of minimum technology and
back-office systems that are capable of maintaining and retrieving
records of financial, inventory, customer data and monitoring usage
of deployed infrastructure in real time. The provision of section
33 of the regulation mandating all parties to comply with all
health and safety regulations is also commendable.
2.7 Rights and obligations of the Parties: The
Regulations has also clearly spelt out in chapter IV the rights,
obligations and duties of the major stakeholders in the critical
aspects of metering and evaluation of electricity consumption. The
roles of the DISCOs, MAPs and even the consumers are provided in
the Regulations to enable parties know the extent of the rights and
corresponding obligations placed on them as relevant stakeholders
in the NESI.
2.8 Applicability: Chapter VII containing
section 24 of the Regulations clearly states the extent of its
applicability to be extended to all Distribution Licensees, MAPs,
Customers and all types of end-user customer meters in the NESI.
However, the Regulations shall not override metering contracts
entered into by Distribution Licensees prior to its coming into
effect. Hence, earlier arrangements or contracts already signed by
the DISCOs for the provision of meters to its consumers are still
subsisting and enforceable by parties.
It is expected that this provision of the regulations will calm
the already frayed nerves of DISCOs and parties already in a
business arrangement over fears that the regulation would
invalidate these pre-existing contracts. The provisions of all
other Regulations, Rules and Codes of the Commission shall also be
applicable to the extent of their relevance. However, the
provisions of the MAPs Regulations shall prevail in the event of
conflict with any other Regulation or Code with respect to the
subject matter of these Regulations.
2.9 Dispute Resolution: In anticipation of any
dispute that is likely to emanate from the agreement between
parties pursuant to the Metering Service Agreement and in line with
best practice, section 27[2] in chapter IX of the Regulations stipulates that
all agreements entered into by parties shall contain appropriate
dispute resolution clauses for settlement of disputes by
arbitration.
It is clear that the Regulation chose arbitration as a mode of
resolving disputes among parties due to the inherent advantages of
speedy resolution of commercial disputes through the arbitration
process to ensure that investments are not hindered with its
attendant effects on a sector yearning for huge financial injection
by investors.
3. COMMENT / CONCLUSION
On the whole, the enactment of the Regulation is timely and
commendable. If well implemented with the cooperation of all
relevant stakeholders, it will be beneficial to all stakeholders
and hopefully achieve the intended objectives.
However, one major displeasure or opposition which the
Regulations will likely face from consumers is the introduction of
a monthly meter service charge which is to be borne by the
electricity consumers with the likely increase in the bills to be
paid by consumers who still grapple with the problems of epileptic
power supply and the harsh economic situation in the country. It is
our hope that NERC will be alert to review and ensure the fee that
will be set as the ‘recovery of cost of meter asset plus a
reasonable return over a period of 10 years’ in the Meter Service
Agreement between the DISCOs and the MAPs will be reasonable as the
consumer ultimately pays this fee.
Also, in order to ensure smooth operation of the lofty
objectives of the Regulations, the Commission must devise a means
to facilitate a viable working relationship between the
Distribution Licensees and the MAPs to create a synergy in ensuring
timeous supply and provision of smart meters to consumers which
will boost their confidence in the industry and improve the value
chain of electricity supply. The regulator must sensitize and if
need be incentivize the DISCOs to ensure that this policy does not
endure the same fate the Credited Advance Programme for Metering
Implementation (CAPMI) suffered from the DISCOs, who either
reluctantly half-heartedly implemented it or wholly ignored it.
It is our hope that the implementation of these regulations in
the NESI will create jobs for some of the teeming unemployed
Nigerian youths, build indigenous technical expertise, inspire
other segments of the Nigerian economy with its effects, and reduce
the problematic issue of estimated billing system which has eroded
the confidence of consumers in the service providers as they feel
exploited having been made to pay for the inefficiencies of the
DISCOs and the entire NESI. It is also our hope that this will
deepen the participation of smaller entities in the sector.
For further information on this review and area of law please
contact Olaoye Olalere or Uche Matthew at: S. P.
A. Ajibade & Co., Lagos by telephone (+234 1 472 9890), fax
(+234 1 4605092) mobile (+234 815-979-4216), email
(oolalere@spaajibade.com) or mobile (+234-815-979-4265), email
(umatthew@spaajibade.com).
[1] Nigerian
Electricity Regulatory Commission Regulations on National Content
Development for the Nigerian Electricity Supply Industry 2013.
[2] Though
wrongly numbered as 28 on the table of arrangement of sections as a
result of wrong numbering of ‘Transitional Arrangements’
as both numbers 25 and 26 instead of as number 25 alone.
- INTRODUCTION
Desirous to bridge the metering gap for all distribution
licensees which was reported at 4,740,275 meters as at the end of
2017, the Nigerian Electricity Regulatory Commission (“the
Commission”) pursuant to its power to make regulations by Section
96(2) of the Electric Power Sector Reform Act, (ESPRA) 2005 and all
enabling laws released the Meter Assets Provider (MAP)
Regulations.[1] The Regulations which was signed by Sani Garba,
the Vice Chairman of the Commission shall be enforceable from the
3rd day of April 2018.
The Regulations is expected to enhance operations of the
electricity market and attract viable private investors who will
partner with the electricity distribution Companies (DISCOs) to
procure meters in cooperation with the concerned DISCOs to recoup
fees through charges built into the end user’s electricity bill.
The Regulations comprise of 9 chapters, 34 sections and 2 schedules
and we review the key provisions as below.
- KEY HIGHLIGHTS OF THE REGULATIONS
2.1 Objectives of the Regulations: As provided
in chapter I, the Regulations which are intended to provided
standard rules for meeting the metering gap of the Nigerian
Electricity Service Industry (NESI) clearly spelt out the
objectives which it intends to fulfill as follows:
- Encourage the development of independent and competitive meter
services in NESI; - Eliminate estimated billing practices in NESI;
- Attract private investment to the provision of metering
services in NESI; - Close the metering gap through accelerated meter roll out in
NESI; and - Enhance revenue assurance in NESI.
In achieving the aforementioned objectives, the Commission will
require the cooperation of all relevant parties affected by the
regulations which include the Distribution licensees (DISCOs) who
up till now have not shown keen interest meeting their metering
obligations or in opening the market space for metering, the MAPs
and the consumers of electricity who have always clamoured for an
efficient metering system.
2.2 Metering Obligation: Keen to reduce the
metering gap for all Distribution Licensees which was reported at
4,740,275 meters as at December 31, 2017, the Regulations places
metering obligation on the Distribution Licensees (the DISCOs) as
they remain responsible for meeting their metering targets as
specified by the Commission from time to time as restated in
chapter IV of the Regulations. Furthermore, they are obliged to
engage the services of MAPs in accordance with the provisions of
these Regulations towards meeting their metering targets specified
by the Commission. Apart from the DISCOs, Eligible Customers being
served under the Eligible Customer Regulations[2] may also engage MAPs to ensure proper energy
accounting.
The metering gap in the market is projected to significantly
increase upon the conclusion of the ongoing customer enumeration
exercise embarked upon by the Commission. Clearly, we believe that
a successful implementation of the lofty goals of these Regulations
will open up the vast market space, create value chain for end
users of electricity and lead to significant changes in accounting
for the supply of electricity which is vital for the sustenance of
not only the NESI but the entire economy.
[1] (No. NERC-R
-112) – released on 8th March, 2018
[2] Eligible Customer Regulations
2017, Regulation No. NERC-R-111 permits electricity customers to
buy power directly from the generation companies in line with the
provisions of Section 27 of the Electric Power Sector Reform Act
2005 whereby such eligible customers are permitted to buy power
from a licensee other than electricity distribution companies.
2.3 Obtaining MAP License: Every person/entity
interested in a MAP license must submit the following documents to
the Commission as set out in the Regulations:
a. Completed application form;
b. Certificate of incorporation and memorandum and articles of
association;
c. Tax clearance certificates;
d. Certified audited financial statements for 3 consecutive years
prior to the year in which the application is made;
e. Detailed resumes of Applicant’s board of directors, management
and technical staff;
f. Ten-year Business Plan; and
g. Applicant’s relevant experience in asset finance, metering and
other relating business.
We believe the intendment of the Regulations to keep the
application procedure for MAPs simple, as outlined in chapter III
of the Regulations, is to encourage willing participants to join in
the process of liberating the procurement and supply of meters to
the end users as this will, no doubt, boost investments in the
sector as parties will be willing to participant and to seek
licenses that are not cumbersome and difficult to obtain.
2.4 Procurement Process and Grant of Permit: In
a bid to hasten the procedure for the procurement process and grant
of permit, the chapter III of the Regulations further mandates the
Distribution Licensees to conclude the procurement process for the
engagement of the first set of MAPs within 120 days from the
3rd day of April 2018. The engagement process for
subsequent MAPs shall be completed within 120 days from the
commencement of the procurement. The regulation further mandates
the commission to approve all Meter Service Agreement entered into
between the Distribution Licensee and a successful applicant.
The tenure of entities that obtain a Meter Asset Provider Permit
shall be for a period of 15 years in the first instance effective
from the date of issuance by the Commission.
The Regulations further prohibits the Distribution Licensee, its
core investors, subsidiaries, affiliates, directors and their
relatives from setting up, owning shares or holding directorships
and senior management positions in the MAP. This is done
essentially to open the market space and allow for a level playing
ground for new entrants whose activities will act as a check on any
perceived excesses of the DISCOs regarding billing of
consumers.
2.5 Local Content policy: In order to guarantee
and strengthen government’s resolve to encourage participation of
local entities in the sector, section 9 of the Regulations
stipulates that MAPs shall source a minimum of 30% of their
contracted metering volumes from local meter manufacturing
companies in Nigeria. Further changes to the minimum local content
thresholds shall be as specified in the NERC Local Content
Regulations.[1]
This position taken by the regulation is highly commendable as
the participation of the local business entities in critical
sectors of the economy is vital in increasing the capacity,
sustenance and localization of technical knowledge of the sector
and minimizing the appropriation of crucial resources that would
have been spent to import such services.
2.6 Technical and Technological Requirement:
With a view to ensure maximum standard and quality service delivery
by the MAPs and the DISCOs, the Regulations provides for basic
technical and technological requirements which MAPs must fulfill to
include: compliance with the Metering Code, the Guidelines for
Certification of Metering Service Provider and Related Matters and
other relevant Regulations, deployment of minimum technology and
back-office systems that are capable of maintaining and retrieving
records of financial, inventory, customer data and monitoring usage
of deployed infrastructure in real time. The provision of section
33 of the regulation mandating all parties to comply with all
health and safety regulations is also commendable.
2.7 Rights and obligations of the Parties: The
Regulations has also clearly spelt out in chapter IV the rights,
obligations and duties of the major stakeholders in the critical
aspects of metering and evaluation of electricity consumption. The
roles of the DISCOs, MAPs and even the consumers are provided in
the Regulations to enable parties know the extent of the rights and
corresponding obligations placed on them as relevant stakeholders
in the NESI.
2.8 Applicability: Chapter VII containing
section 24 of the Regulations clearly states the extent of its
applicability to be extended to all Distribution Licensees, MAPs,
Customers and all types of end-user customer meters in the NESI.
However, the Regulations shall not override metering contracts
entered into by Distribution Licensees prior to its coming into
effect. Hence, earlier arrangements or contracts already signed by
the DISCOs for the provision of meters to its consumers are still
subsisting and enforceable by parties.
It is expected that this provision of the regulations will calm
the already frayed nerves of DISCOs and parties already in a
business arrangement over fears that the regulation would
invalidate these pre-existing contracts. The provisions of all
other Regulations, Rules and Codes of the Commission shall also be
applicable to the extent of their relevance. However, the
provisions of the MAPs Regulations shall prevail in the event of
conflict with any other Regulation or Code with respect to the
subject matter of these Regulations.
2.9 Dispute Resolution: In anticipation of any
dispute that is likely to emanate from the agreement between
parties pursuant to the Metering Service Agreement and in line with
best practice, section 27[2] in chapter IX of the Regulations stipulates that
all agreements entered into by parties shall contain appropriate
dispute resolution clauses for settlement of disputes by
arbitration.
It is clear that the Regulation chose arbitration as a mode of
resolving disputes among parties due to the inherent advantages of
speedy resolution of commercial disputes through the arbitration
process to ensure that investments are not hindered with its
attendant effects on a sector yearning for huge financial injection
by investors.
3. COMMENT / CONCLUSION
On the whole, the enactment of the Regulation is timely and
commendable. If well implemented with the cooperation of all
relevant stakeholders, it will be beneficial to all stakeholders
and hopefully achieve the intended objectives.
However, one major displeasure or opposition which the
Regulations will likely face from consumers is the introduction of
a monthly meter service charge which is to be borne by the
electricity consumers with the likely increase in the bills to be
paid by consumers who still grapple with the problems of epileptic
power supply and the harsh economic situation in the country. It is
our hope that NERC will be alert to review and ensure the fee that
will be set as the ‘recovery of cost of meter asset plus a
reasonable return over a period of 10 years’ in the Meter Service
Agreement between the DISCOs and the MAPs will be reasonable as the
consumer ultimately pays this fee.
Also, in order to ensure smooth operation of the lofty
objectives of the Regulations, the Commission must devise a means
to facilitate a viable working relationship between the
Distribution Licensees and the MAPs to create a synergy in ensuring
timeous supply and provision of smart meters to consumers which
will boost their confidence in the industry and improve the value
chain of electricity supply. The regulator must sensitize and if
need be incentivize the DISCOs to ensure that this policy does not
endure the same fate the Credited Advance Programme for Metering
Implementation (CAPMI) suffered from the DISCOs, who either
reluctantly half-heartedly implemented it or wholly ignored it.
It is our hope that the implementation of these regulations in
the NESI will create jobs for some of the teeming unemployed
Nigerian youths, build indigenous technical expertise, inspire
other segments of the Nigerian economy with its effects, and reduce
the problematic issue of estimated billing system which has eroded
the confidence of consumers in the service providers as they feel
exploited having been made to pay for the inefficiencies of the
DISCOs and the entire NESI. It is also our hope that this will
deepen the participation of smaller entities in the sector.
For further information on this review and area of law please
contact Olaoye Olalere or Uche Matthew at: S. P.
A. Ajibade & Co., Lagos by telephone (+234 1 472 9890), fax
(+234 1 4605092) mobile (+234 815-979-4216), email
(oolalere@spaajibade.com) or mobile (+234-815-979-4265), email
(umatthew@spaajibade.com).
[1] Nigerian
Electricity Regulatory Commission Regulations on National Content
Development for the Nigerian Electricity Supply Industry 2013.
[2] Though
wrongly numbered as 28 on the table of arrangement of sections as a
result of wrong numbering of ‘Transitional Arrangements’
as both numbers 25 and 26 instead of as number 25 alone.
Read more https://nairalaw.com/overview-of-the-metering-assets-provider-regulations-2018/