Power distribution companies have raised concerns about the directive issued by the Minister of Power, Adebayo Adelabu, which mandates that prepaid meters be provided free of charge to all categories of electricity consumers.
Operators who spoke anonymously, citing the sensitivity of the issue, said the minister’s declaration appeared to be a political statement made without adequate consultation with key stakeholders, particularly meter installers and service providers.
On Thursday, the Federal Government prohibited electricity distribution companies and meter installers from collecting any fees for meter installation, warning that any official or installer found extorting customers would face prosecution. Adelabu issued this warning during an on site inspection of newly imported smart meters at APM Terminals in Apapa, Lagos.
The minister explained that the meters were procured under the World Bank funded Distribution Sector Recovery Programme and must be installed for consumers at no cost. He stressed that any demand for payment would be treated as a criminal offence.
He stated that the meters would be distributed to all electricity consumers, irrespective of their service band.
“I want to mention that it is unprecedented that these meters are to be installed and distributed to consumers free of charge—free of charge! Nobody should collect money from any consumer. It is an illegality. It is an offence for the officials of distribution companies across Nigeria to request a dime before installation; even the indirect installers cannot ask consumers for a dime. It has to be installed free of charge so that billings and collections will improve for the sector,” Adelabu said.
However, DisCo operators said the meters described as free by the Federal Government would still be paid for by the distribution companies over a ten year period. They questioned why the government expects DisCos to absorb the cost of installation.
According to the operators, meter installers are not employees of the DisCos, and the cost of installation must be borne by someone.
“Those meters you see, someone has to pay for them, and the government expects the DisCos to bear the cost of the so called free meters. They said the DisCos can pay it over 10 years.
When you ask the DisCos to pay for any capital expenditure, we call it allowable capex. You have to allow it when computing their tariffs; otherwise, it makes their balance sheets toxic,” an official with a distribution company stated.
Another operator said, “We need to know that meter installers are not staff of the DisCos. They are already asking who will pay them if the consumers do not pay. Did the minister consider all those? You said the people should not pay the installers; who should pay them? We, the DisCos, are not the ones installing meters. That role was taken away from the DisCos when Babatunde Fashola was the power minister.
“They said the DisCos have no business with metering. This is the result we are seeing today. Assuming the DisCos are the ones installing meters, you can force them to pay. We will all see the outcome of that pronouncement in the coming days. If the government can pay installers, no problem, but I’m not sure any DisCo will volunteer to pay the installers.”
The officials described Adelabu’s remarks as populist in nature.
“The statement was just a populist statement from a politician. We are not sure if the President sent him that message. He said everything should be free; where is the position of cost recovery? Anything you do in the power sector, you have to first consider who bears the cost. Somebody has to bear the cost to avoid debt piling up.
“The government ought to sit with the DisCos and the meter manufacturers to seek advice if the plan is to make sure the people don’t bear any cost, and we will come up with our various contributions. But instead of doing that, the government would go and make unrealistic promises to the public. For instance, the meters are coming in batches, but you have made the masses believe that there are enough meters for everyone. That’s not the reality,” one source said.
The operators warned that the free meter declaration could undermine the Meter Asset Providers scheme, which allows consumers to purchase meters directly.
“People are now rejecting the Meter Asset Providers scheme because they have heard that meters are free. The minister came up with a very wrong narrative. Has he sat down with stakeholders before going out to say meters are free? How can you say you have enough meters for over five million people? We still have the MAP scheme ongoing, whereby the meter provider sells directly to the customer. MAP is still there because the free meters they are bringing cannot fill the metering gap.
“So, MAP has been going on simultaneously over the years. But this latest statement is now affecting MAP because people don’t know the difference. The government should clarify and let the people know that the free meters can’t go round everyone; they should state the areas that can get the free meters and the category of customers, so that others not captured will know they will have to go for MAP by getting the meters with their money and get a refund through energy credits over time.
“But with the minister’s statement that the free meters are for all customers, nobody will go for MAP again, and I don’t know how badly this will affect local meter suppliers in the MAP scheme,” one operator said.
The stakeholders urged the government and the electricity regulator to prioritise cost recovery in all sector policies.
“If he says meter installers should not be paid, who’s going to pay them? The DisCos or the Ministry of Power? Those are the questions the government should answer. The regulator should always talk about cost recovery. From the look of things, the minister does not seem to care much about cost recovery, and he’s happy making political statements.
“He has to tell us who’s going to pay. We agree, people should not pay, no problem, but who will pay? Is it going to be subsidised again? Is the government going to pay for it? If the government says the operators should pay, where will they recover the money from? Every penny has to be accounted for and recovered. The purpose of doing business is cost recovery; if you cannot recover your cost, you will be cutting corners,” another operator said.
The DisCos also called on the government to be transparent with consumers, noting that the minister’s comments have already heightened tensions.
“We must always tell the people the truth. I don’t know how the minister intends to do it, but his comments are not helping matters; he’s not even protecting the MAP scheme. He is putting the MAP scheme in jeopardy. Already, customers are fighting their DisCos because the minister made a statement that meters are free for all. How’s that possible? It is a challenge, but we see how it goes,” an official with one of the DisCos said.
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