Exchange Rate: NERC to increase price of prepaid meters

Exchange Rate: NERC to increase price of prepaid meters

The Nigerian Electricity Regulatory Commission (NERC) is considering increasing the price of prepaid meters once again.

This consideration comes in response to the escalating production costs faced by meter manufacturers, according to sources familiar with the matter who spoke to Nairametrics.

These sources, who requested anonymity, revealed that manufacturers have ceased issuing invoices to Distribution Companies (Discos), in anticipation of an upward price revision by the NERC.

According to the sources, the increase in prices is directly related to the foreign exchange crisis affecting the economy, leading to increased production costs and inflationary pressures on manufacturers.

Earlier last week, NERC accused the 11 Distribution Companies (DisCos) nationwide of overcharging unmetered customers, resulting in a fine of N10.5 billion.

Meanwhile, an official from a Distribution Company informed Nairametrics that new applications for meters are no longer being processed, as there are indications that NERC will soon announce a new pricing rate.

The source also mentioned that the applications can only be processed once the new prices are announced, leaving many applicants without a prepaid meter.

He said,

• “The cost of prepaid meters is going to go up soon. Meter Asset Providers have stop selling new meters as they await NERC to approve new prices.
• “New meter applications are not being processed until the price changes are reflected.
• So due to FX issues, the meter manufacturers have stopped sending invoices until the meter price is reviewed.”

Some customers who spoke to Nairametrics complained of not being able to get meters despite applying weeks earlier and in some cases months. Others who had paid for their meters also complained of delays in getting the meters.

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Another DisCo source opined that the new applications for meters are not being processed until the cost of meters is reflective of the situation in the country. However, they stated that customers who have paid will get their meters and may not be required to pay any other cost regardless of whether a new meter cost is approved.

NERC, the sector regulator, approves the cost of prepaid meters, most of which are imported into the country as semi-knocked down units and assembled locally for use. Prepaid meters have also evolved over the years with DisCos including features that mitigate against energy theft and offering more consumption data.

Nigeria’s meter deficit is thought to be over 7 million as most customers continue to be billed on estimates.

The Manufacturers Association of Nigeria (MAN) has earlier reported in its ‘Manufacturing Sector Outlook for 2024’, the that average capacity utilization is expected to linger around the 50% mark due to forex-related challenges and the prevailing high inflation rate.

The report noted that forex crisis and high inflation in the country will limit its performance in Nigeria till mid-2024.

It said:

• “Average capacity utilization will still hover around the 50% threshold as the forex-related challenges and high inflation rate limiting manufacturing performance may linger until mid-year.
• “The sector may experience a meagre improvement in manufacturing output as forex and interest rates-related challenges are expected to subside from the third quarter.”

What you should know

With a 27 years high inflation rate of 29.90% and an incessant fall of the Naira against the Dollar in the FX market, Nigeria manufacturing industry continue to grapple with rising cost of production.

Last Increase

• In September 2023, NERC upwardly reviewed the price of prepaid meter in a circular marked NERC/2023/020, and jointly signed by Sanusi Garba, the commission’s chairman ’and Dafe Akpeneye, its commissioner, legal, licencing, and compliance.
• According to the circular, the commission said a single-phase meter will now cost N81,975.16 instead of the previous price of N58,661.69.
• Similarly, the price of a three-phase meter was increased to N143,836.10 from N109,684.36.
• At that time, inflation rate was 26.72% and $1 was around N800 in the official market.
• Meanwhile, inflation continues to worsen as the Naira loses over 40% of its value since the last evaluation of the price of prepaid meter.
• With a new price review prepaid meter price sight, consumers are more likely to pay over N100,000 for a single-phase meter and perhaps a N150,000 for a three-phase prepaid meter.

Exchange Rate: NERC to increase price of prepaid meters