Buhari approves one year deferment of 35% on FBU electricity meters

Nigeria's power sector is set to receive a much-needed boost as President Buhari recently approved a one-year deferment of the 35% import adjustment tax on fully built unit electricity meters. The move comes as part of efforts to bridge the metering gap and ensure fair power supply pricing for users in the country. The government initially imposed the levy to encourage local production and protect investments in the local assembly of electricity meters. However, with the metering gap still a pressing issue, the focus has shifted towards ensuring more meters are brought into the country to meet the burgeoning demand. This development is seen as a significant step towards improving the efficiency and sustainability of Nigeria's power sector, which has long grappled with challenges such as collection inefficiencies, transmission losses, and pricing disparities. With only 40% of the country's 10 million electricity customers currently metered, there is a sizable gap of 6 million meters that needs to be addressed. The Meter Asset Provider scheme, which was introduced over a three-year period to close this gap and promote local meter production, has faced slow implementation, leading to the need for a more immediate solution. The one-year deferment of the import tax is expected to pave the way for the importation of 3 million meters by 2021, thereby significantly boosting the metering process in the country. This move aligns with the government's broader efforts to enhance the power sector, including the Presidential Power Initiative aimed at improving transmission capacity to seven gigawatts by next year. The introduction of service reflective tariffs, set to take effect in September, is another key initiative that is expected to enhance the viability of the power sector. Under the new tariff structure, customers using less than 12 hours of electricity per day or consuming less than 50 kilowatt hours per month will not see any tariff increase. This targeted approach is designed to shield the most vulnerable segments of society from the impact of tariff adjustments while ensuring that higher tariff classes contribute their fair share. The combined implementation of the new tariffs, the Meter Asset Provider scheme, and transmission improvements under the CMS initiative is poised to create a more sustainable power sector in Nigeria. To further bolster the sector, efforts are underway to attract investments in reliable generation infrastructure. Plans are in motion to secure agreements for new power generation projects that could inject over $3 billion into the country's power sector. These long-term investments are crucial for meeting the growing energy needs of Nigeria and ensuring a stable and efficient power supply for its citizens. As the country moves forward with these strategic initiatives, stakeholders are optimistic about the positive impact they will have on Nigeria's power sector and its ability to drive economic growth and development.