One of the major challenges confronting the power sector is poor metering, which has led to huge losses on the part of consumers and power distribution firms. In this interview, chairman/CEO, MOMAS Electricity Meter Manufacturing Company (MEMMCOL), Mr. Kola Balogun, believes that adequate metering will resolve issues around energy theft and commercial losses.
He warned against the continuous importation of meters, saying the trend was destroying local capacity. He stressed that local producers have the capacity to meet 30 per cent in-country demand. He also spoke on the need for a robust road map for the sector. Excerpts:
Power sector constraints
The power sector is faced with various challenges that have to do with lack of ownership of the entire power sector value chain. In taking ownership, somebody must define a proper road map. So, to define the goals of the power sector reform is to ensure that power is made available to Nigerians at a reasonable tariff. But today, what we have is inter-agency rivalry and arrogance among the stakeholders.
The problem with the power sector is more than classroom exercise, it is meant for people who are on ground and who know where the shoe pinches. We are promoting a technology that does not belong to us, as against promoting a technology that is created in the country to promote Nigerian conditionality. Every nation encourages its peculiarities and then domesticates the technological capability. Our technology has the capability to address power sector issues.
Thank God the Federal Government, recently, increased tariff on imported meters; I am telling you today that none of the Meter Asset Providers (MAP) has contacted me for the 30 per cent local content meter manufacturing involvement. They go ahead to pay Chinese companies 70 per cent of meter importation order, but fail to patronise indigenous meter manufacturers.
Capacity of indigenous meter manufacturers
The same question was what some foreign investors, who wanted to set up factories in Nigeria, asked me. They said that the few factories set up in Nigeria have not been optimized to full capacity.
First and foremost, we must be able to prove that indigenous manufacturers are not meeting local demand. Let me tell you the procedure of ordering a meter. If you want to order a meter from China today, you would be asked to pay 30 per cent before the shipments are done and then pay the balance of 70 per cent within a minimum of three months.
But if they want to buy from the local manufacturers, they will not give notice. What you have is that they want to pay and take immediate delivery of the meters, forgetting that procurement is a process.
As we speak, I have over 20,000 meters manufactured in my factory, which is over N5 million.
To borrow N5 million from the bank is not easy, I cannot continue to produce when I am not sure of patronage or anything from any of the MAP licensees. These are the issues we need to address. We must ensure everybody respects the sanctity of local content because we have the capacity to produce more than what we have presently and we can grow it, but the capacity has not been stated.
The Ministry of Power needs to investigate if truly we cannot meet the set target, just as they are doing to foreign firms. We are under-utilised. We need the intervention of all the agencies to drive local content because that is the only way to solve the problem of the power sector. The solutions are here, we need to be given the opportunity to implement them.
The importation of foreign-made meters is destroying the development of indigenous manufacturers. Therefore, we should commend the effort of government for increasing the tariff of imported meters. The closure of the border is yielding good results in the country. How it has increased the production of rice farmers is the same thing we need in the power sector. We need to take a bold step to see that the increased tariff on imported meters remains. We have one of the best facilities to produce electric meters in the entire West Africa, which anybody can attest to.
I can boldly attest to the fact that adequate metering of consumers will solve energy theft in Nigeria, be it by-pass, revenue leakages, technical losses, the meters are designed to solve the problem, our local problems.
Developing indigenous capacity/employment
Let me explain some of the things that can improve the power sector. Today, we need to enhance our infrastructure on the distribution value chain because power generation is increasing tremendously. The Federal Government is trying to spend more money on transmission but the distribution network needs to be improved upon and we are providing a way forward to improve distribution infrastructure. We are doing so by ensuring that all the substations and all the technical and commercial losses are reduced significantly to the barest minimum in order to deliver power to consumers. If you have meters in all customer premises and the network/infrastructure cannot support it to deliver power, it is a wasteful investment.
Let me also tell you what is happening in the metering sector. We are promoting technology that does not belong to us, whereas we have our own locally developed technology, purely designed and made in Nigeria, that can solve all our problems, but stakeholders are frustrating those efforts. There are some ideological frameworks being imposed on the sector, which is not supposed to be so. They are supposed to listen to us all and know our technical capability. They should promote local content in order to drive home the message to the end users. The ministry needs to do more by calling all the stakeholders to define new road maps in achieving optimisation of delivering stable electricity to consumers at a fairly competitive tariff.
I am not against tariff review but then the power must be available to consumers and the meters must also be available. If you install 1 per cent of smart meters in a substation that has 90 per cent, you can’t achieve energy reconciliation with such margin. What we are saying under MAP is that we want to install smart meters where the rest are not smart. That’s why we said that the most important value chain in the distribution sector is to do infrastructural and substations enhancement so that our substations will be stable and devoid of technical and commercial losses.
We have so many ideas that can improve the off-grid and mini-grid system that will make some areas in Nigeria to have 24/7 power supply by providing some local design and infrastructure upgrade. What government needs to do is to call all stakeholders and look at the new road map of achieving optimisation in our power sector.
We cannot solve the problem of Nigeria’s power sector by academic exercise. It is important that all the stakeholders have one thing in mind – our power sector must work, we must have reference cases where we can boast of our success story. We need to start creating success stories by ensuring uninterrupted power supply. That should be the new ‘next level’ agenda for government.
There is need for government to jail somebody for contravening the Local Content Act; people need to be punished for flouting the law. It is when the violators of the law are punished that they will know the importance of creating the local content law in the power sector. If people contravenes the Executive Order 5 on the local content, such people should be punished because, until some people are punished, people would not sit up and embrace the law.
There is need for us to create employment opportunities in the power sector to take jobless people from the street because there are so many items coming into the country, which can be produced locally.
It is the collaboration of agencies and ministries that can address the challenges in the power sector. Enough of deceit in the sector. We should not depend on outsiders to clean our power sector. We can do it ourselves. The power sector degradation is as a result of attitude as Nigerians, and we can fix it ourselves.
MAP/increased tariff on meters
I am of the opinion that meter importation is a total contravention of the Local Content Act. If the regulation says you must patronise indigenous manufacturers by 30 per cent and you do not fulfil same and you are now fulfilling 70 per cent importation of meters, that is an aberration and contravention that the law must address.
I am confirming to you that none of the MAP licensees has approached me to buy meters, much less meeting the 30 per cent provided for by regulation despite signing a memorandum of understanding.
So, the 35 per cent levy by government is a welcome development aimed at increasing local capacity. The non-adherence to the 30 per cent for indigenous meter manufacturers is an issue that should not be treated with kid gloves.
I can confirm to you that indigenous meters have passed all the requisite tests, validated and confirmed fit for deployment to consumers by all agencies responsible for standardisation in the power sector.
I don’t have problems with importing components and raw materials, which I still pay 5 per cent on. Why would someone go and import meters without first fulfilling the 30 per cent procurement in-country?
I can declare my capacity if I am encouraged to do so and same goes for other local meter manufacturers. So, we need to sit down and find out ways to address the anomalies in the system. We need to develop our technological capability to address our power sector challenges. Everybody should come and manufacture in Nigeria, we have what it takes in to produce locally in Nigeria.
The regulation says that when you are to import 1,000 meters, 300 must be purchased locally while 700 can be imported. The only exception for you to import all the 1,000 meters is if the indigenous manufacturers cannot meet up with the 300 meters order. Fortunately, we have the capacity to meet the 30 per cent statutory requirement for local supplies. Then you must keep patronising local companies, but our MAP licensees would rather send money to China, to the detriment of the local manufacturers. Meanwhile, if they want to deal with local companies, they will be asking for credit. I have never seen this kind of people in my life. I have never seen where people will deliberating ground their local firms in favour of foreign companies, it is absurd.
Ensuring efficient service delivery
That is the responsibility of the Ministry of Power and its agencies. The ministry is to emphasise the importance of local content in the sector to its agencies, manufacturers and power distribution companies. The ministry also needs to chart a new road map for the sector on what needs to be achieved on a timely basis.
The minister should order that each Disco should improve on its feeder network and give quarterly reports on their performance.
There must be a centralised data system collation process by the regulator in order to know the exact number of consumers we have in the country. It’s not by request but as one-stop shop, where they can see all consumers of power. They should have a supervisory council to supervise the performance of the entire Discos. And, of course, I believe we have the technology to do it.
Like I said earlier, the ministry should champion a new road map for the power sector. The new road map should be target-driven and this, I believe, will change the face of the power sector, with defaulters being penalised for infractions or failing to meet set targets.
The Nigerian Electricity Management Services Agency would have to effectively play its role, especially as to how many networks they supervise. The regulator should regularly check and balance the level of compliance to determine if it is in tandem with extant regulations.