Private group raises N480bn meter loans
There are indications that the recent moves by the Federal Government to boost commercial value of the nation’s electricity industry through increased tariff may spark off inflow of fresh bank credits to the sector as the Central Bank of Nigeria, CBN, introduces framework for financing electricity meters.
This is also coming at the backdrop of another plan by a private financial groups to raise about N480 billion credit facility for meter acquisitions across the electricity value chain.
The CBN, yesterday, rolled out a framework for financing the National Mass Metering Programme (NMMP) recently implemented by the federal government, a development expected to close the metering gap of over 10 million customers in the industry.
The framework outlines the operational modalities of the CBN financing support to the Distribution Companies (downstream) and Local Meter Manufacturers (upstream).
It stated: “The introduction of the service-based tariff (SBT) in the Nigeria Electricity Supply Industry (NESI) effective from 1st September 2020 has put increased emphasis on the need to close the metering gap in the NESI.
“The closing of this gap will enhance efficiency of revenue collection by Distribution Companies (DISCOs) and thereby facilitate meeting their obligations to other upstream market participants.”
The objectives of the framework, according to the CBN, are “to increase Nigeria’s metering rate; Elimination of arbitrary estimated billing; Strengthen the local meter value chain by increasing local meter manufacturing, assembly and deployment capacity; Support Nigeria’s economic recovery by creating jobs in the local meter value chain; Reduction of collection losses and increasing financial flows to achieve 100 percent market remittance obligations of the DISCOs; and Improve network monitoring capability and availability of data for market administration and investment decision making.”
The apex bank noted that the facility shall be administered at an “all-in” interest rate of not more than 9.0 percent per annum or any other rate as may be specified by CBN.
As part of the bank’s Covid-19 relief package, the interest rate to be charged up to 28th February 2021 shall not exceed five percent per annum.
The CBN said: “Procurement of fully assembled meters from overseas is prohibited except meters imported by Meter Asset Providers (MAP) already in the country as at September 30, 2020 and verified by NERC; and importation of related metering infrastructure that are currently being produced in the country is also prohibited.”
MAPCo to raise N480bn
In a related development, a Nigerian venture, Meter Assets Finance and Management Co (MAPCo), is set to raise N480 billion over the next three years to buy electricity meters and help power distributors plug a revenue gap in Africa’s most populous nation. Less than 10 percent of Nigeria’s 41 million households have their electricity consumption metered, and half of those are faulty, according PricewaterhouseCoopers.
As a result, distribution companies have to estimate bills, resulting in disputes that delay payments.
MAPCo hopes to end that by raising funds to purchase and supply meters to consumers, Onion Omonforma, chief executive officer of New Hampshire Capital, told Bloomberg.
New Hampshire Capital, FBNQuest and Kairos Investments Africa are helping to package and structure the venture for investors to either buy equity or inject debt into the company.
“The electricity distribution firms will then have the money to go back and buy more meters and the cycle continues, paving the way to close the meter gap,” he said.