The Federal Government launched the National Mass Metering Programme (NMMP) in respect of which the CBN, in October 2020, issued the Framework for Financing of National Mass Metering Programme ("CBN Framework"). The Framework seeks to, amongst others, increase the country's metering rate and eliminate arbitrary estimated billing.
By the said Framework, the CBN will provide financing support to the Distribution Companies (DisCos) (for the procurement of meters for customers) and the local meter manufacturers. In light of this Framework's introduction, we have in the following paragraphs compiled probable questions meter manufacturers, customers and MAPs may have and provided answers to them.
A. METER MANUFACTURERS ASK
i. What does NMMP mean?
It means National Mass Metering Programme. It is a metering initiative introduced by the Federal Government of Nigeria geared towards mass metering of Nigerians by providing loan facility to (i) the DisCos (for the procurement of meters for its customers); and (ii) the local meter Manufacturers (for the manufacturing and assembling of meters).
ii. What activities qualify for the CBN facilities?
The DisCo can only use the facility granted to it to procure meters locally manufactured in Nigeria. However, the DisCos are also permitted to procure meters verified by the NERC imported by a Meter Asset Provider (MAP) as of September 30, 2020. The DisCo can neither use the facility to procure fully assembled meters imported by a MAP nor can it use the facility to import metering infrastructure that are currently produced in Nigeria.
With respect to the facility granted to local meter manufacturer, such local manufacturer cannot use the CBN facility to finance the importation of fully assembled meters. The implication of this is that the local manufacturer can use the facility to import Completely/ SemiKnocked Down (CKDs/SKDs) Components for assembling in Nigeria.
iii. What are the specifics of the facility granted to local Meter Manufacturers?
The facility granted is at most 70% of the total cost of the applicable fees related to meter manufacturing
The facility has a maximum tenor of 10years but does not exceed December 31, 2030. However, the tenor for the working capital facility is 1 year with the opportunity to roll-over, not more than twice (that is, a maximum of 3 years altogether).
The interest rate is not more than 9% per annum or specified by the CBN.
The Framework provides for moratorium of 2 years.
iv. How can the local meter manufacturers use the facility granted to them?
A local meter manufacturer interested in the facility can only use the facility to procure manufacturing or assembly equipment for meters, set up or expand assembly/manufacturing facilities; procure production data management and software systems, and work capital. However, the local meter manufacturer cannot use the facility to finance the importation of fully assembled meters.
v. Our organization is interested in the facility granted to local meter manufacturer. Are we considered local meter manufacturer?
To be considered a local meter manufacturer, your company must either be engaged in manufacturing electricity meters and their components; or in the assembly of the CKDs/SKDs.
To qualify for the grant, interested applicants must demonstrate both technical and financial capacities. The purpose of the financial capacity is to determine whether the applicant company can repay the loan. The applicant company must also show evidence that it is locally owned or a consortium involving a minimum of 70% local ownership. Finally, the applicant must demonstrate its commitment to employ local talents through a detailed training plan.
vi. What are the documents required for the application?
- Written request from the project promoter;
- Certified True Copy of Certificate of Incorporation;
- Certified True Copy of MEMART;
- Certified True Copy of Form CAC 1.1;
- Business plan containing the organizational chart, health and safety guidelines, 3-year financial projections, and detailed vocational and technical training plan; and
- Latest three (3) years audited financial statements for existing companies or a 6-months Management Account for new companies.
vii. How do we apply for the facility?
An eligible company is required to send its request to Participating Financial Institutions (PFI) under the Real Sector Support Facility/ Differentiated Cash Reserve Requirement (RSSF/DCRR). The PFI is required to conduct due diligence and obtain internal approval for the facility. After that, the PFI submits the request to the CBN for approval and release of funds.
B. CUSTOMER ASKS
i. Am I required to pay for meters received under the NMMP?
Although the DisCo is expected to repay the CBN's facility, nothing in the Frameworks shows that you, as a customer, are to pay for the meters. It is, therefore, presumed that the customers are not required to pay for the meters. However, depending on the contract between the meter supplier and your DisCo, you may be required to make some payments if, for example, you willfully damage your meter.
ii. Who do I meet to get my meter: my DisCo or the MAP?
It is advisable that you meet with your DisCo for installation of meter in your premises. This is because the DisCo has been mandated to provide meters.
iii. I am owing electricity bills. Am I entitled to Meter?
Yes, you are entitled to meter. However, you will have to enter into some payment plan with your DisCo to settle your outstanding bill.
iv. Who owns the Meters installed?
The DisCo owns the meter.
v. I am yet to receive my meter. How am I billed?
Until the DisCo provides you with a meter, you are billed according to the 2020 Amended Order on Estimate Bills' Capping (Order). This Order protects you from being arbitrarily billed by ensuring that you are not billed for electricity that you consume beyond the cap stipulated for your band in the Order.
To ensure transparency, your Disco is expected to indicate on your bill and receipt the business unit, transformer name, tariff class and rates. To know the cap associated to your band area, you may refer to the NERC order issued for your disco at https://nerc.gov.ng/index.php/library/do cuments/NERC-Orders/AmendedOrders-on-the-Capping-of-EstimatedBills/
vi. I don't want a meter. Can I reject being metered?
You may reject meter installation in your premises. However, you will be disconnected from your DisCo. Kindly also note that energy theft is a crime.
C. METER ASSET PROVIDERS (MAPS) ASK.
i. What happens to the meters ordered under the MAP?
The CBN Framework envisages two phases: Phase 0 and Phase 1. Phase 0 covers meters ordered under the MAP programme: the Commission is expected to send to the CBN the verified stock allocated to the DisCo, invoice for the meters to be bought, agreement with the MAPs, and local procurement evidence.
Phase 1: deals with the bulk procurement from local meter manufacturers/assemblers.
ii. Are all MAPs eligible to take part in the supply of meters to DisCos under the NMMP?
Yes, all MAPs included in the NERC's Approved Meter List can take part in phase 0. However, it is doubtful that all MAPs can take part in Phase 1. This is because Phase 1 envisages bulk procurement from local manufacturer/assemblers; and not all MAPs are manufacturers or assemblers.
iii. Am I bound by the Metering Services Agreement (MSA)?
Your obligations under the MSA continues to apply in so far as the MSA exists. However, it is advisable to terminate the MSA and enter another agreement with the DisCo to replace the MSA. The reason is that the CBN NMMP Framework deviates from some of the terms provided under the MSA. For instance, rather than the customers paying, the Framework provides payment by the DisCo as financed by the CBN. To therefore protect you from having two parallel contracts in respect of the same transaction, it is tidier and less risky to have another agreement replace the MSA. However, entering into another agreement does not obliterate rights and obligations existing as at the date of terminating the MSA.
iv. Does the MAP Regulation still apply in light of the CBN NMMP Program?
The CBN Framework fails to show the relationship between it and the MAP Regulation: whether it complements it or replaces it. However, unless it is repealed, the MAP Regulations 2018 is still in force.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.