Home Business Electricity Tariff: CBN introduces framework for financing meter acquisitions

Electricity Tariff: CBN introduces framework for financing meter acquisitions

by News Echo
2 minutes read

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 private financial groups to raise about N480 billion credit facility for meter acquisitions across the electricity value chain. The CBN 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.

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