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Nigerian Electricity Regulatory Commission releases first quarter report
In its first-quarter report, the Nigerian Electricity Regulatory Commission says only about 42 per cent of registered electricity customers have been metered, while financial illiquidity remains the most significant challenge affecting the industry's sustainability. Sam Amadi, Former Chairman of the National Electricity Regulation Commission joins CNBC Africa from Imo state, Nigeria to discuss the regulator's first-quarter report.
Mon, 10 Sep 2018 07:56:44 GMT
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AI Generated Summary
- The slow progress in metering customers is evident, with only 42 per cent of registered electricity customers being metered.
- The Meter Asset Provider (MAP) initiative faces skepticism in its ability to address the metering problem due to financing and logistical constraints.
- The absence of cost-reflective tariffs contributes to the financial liquidity challenge in the sector, requiring a comprehensive approach to regulatory and financial issues.
The Nigerian Electricity Regulatory Commission (NERC) has released its first-quarter report, shedding light on the challenges facing the electricity industry in the country. The report highlights that only about 42 per cent of registered electricity customers have been metered, indicating a slow progress in addressing the metering problem. Additionally, financial illiquidity remains a significant challenge affecting the industry's sustainability. Sam Amadi, Former Chairman of the National Electricity Regulation Commission, joined CNBC Africa from Imo state, Nigeria to discuss the regulator's first-quarter report.
Amadi emphasized that it is too early to measure the impact of the Meter Asset Provider (MAP) initiative, as the program recently took off and is still going through licensing and protocol processes. The data from the report revealed that as of 2012, only 40% of customers were metered, showing a minimal improvement to 42% in the present day. This slow progress indicates that the industry is still facing challenges in metering customers effectively.
When asked about the potential of MAP to address the metering problem, Amadi expressed skepticism, stating that MAP is not a magical solution. He pointed out that financing and logistics are key issues in metering, as many distribution companies are financially strained or close to bankruptcy. While MAP aims to involve meter providers to address the metering gap, Amadi doubts its capacity to significantly change the outcome due to existing challenges.
Another highlight from the report is the liquidity challenge in the sector, with the absence of cost-reflective tariffs exacerbating the issue. Analysts have emphasized the need to address the tariff structure to ensure sustainable financial operations. Amadi argued that the focus should not solely be on cost-reflective tariffs, as regulatory mechanisms can allow for under-recovery in the short term to ensure full recovery in the long run. The mismatch between production costs and available equity for investment poses a significant hurdle that must be addressed to improve the industry's financial health.
In conclusion, the NERC's first-quarter report underscores the ongoing struggles in metering customers and addressing financial liquidity in the Nigerian electricity sector. While initiatives like MAP aim to tackle these challenges, regulatory and financial constraints continue to hinder progress. Stakeholders must work towards a holistic approach that combines regulatory support, financial investment, and operational efficiency to ensure a sustainable and reliable electricity supply for the Nigerian population.
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