NERC Considers Price Adjustment for Prepaid Meters Amid FX Challenges.
The Nigerian Electricity Regulatory Commission (NERC) is contemplating a potential increase in the price of Prepaid Meters, responding to mounting production costs encountered by meter manufacturers. Sources familiar with the matter, speaking to Nairametrics, disclosed this development.
The regulatory body is evaluating options that may include allowing market dynamics to dictate meter pricing, a departure from the current practice where prices are set by NERC.
Reasons for Price Consideration Manufacturers, foreseeing an impending price adjustment by NERC, have halted issuing invoices to Distribution Companies (Discos). The anticipated price hike is attributed to the Foreign Exchange Crisis impacting the economy, resulting in escalated production expenses and inflationary pressures on manufacturers.
Recently, NERC penalized 11 Distribution Companies (DisCos) nationwide for overcharging unmetered customers, imposing a fine of N10.5 billion.
Amidst these developments, Distribution Companies have ceased processing new meter applications, anticipating a forthcoming announcement from NERC regarding revised pricing. Customers awaiting meters have experienced delays, with some expressing frustration over the prolonged wait despite prior applications and payments.
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Impact of FX Crisis on Manufacturing The Manufacturers Association of Nigeria (MAN) anticipates that Nigeria’s manufacturing sector’s capacity utilization will hover around 50% due to forex-related challenges and high inflation. This limitation is expected to persist until mid-2024, hindering manufacturing performance.
Previous Price Adjustment In September 2023, NERC revised the price of prepaid meters upwards in response to prevailing economic conditions. The circular, signed by NERC Chairman Sanusi Garba and Commissioner Dafe Akpeneye, saw single-phase meter prices rise to N81,975.16 and three-phase meter prices to N143,836.10.
With inflation currently at a 27-year high of 29.90% and the Naira depreciating against the Dollar, consumers may soon face further price increases, potentially exceeding N100,000 for a single-phase meter and N150,000 for a three-phase meter.
In conclusion, the Nigerian Electricity Regulatory Commission’s contemplation of adjusting prepaid meter prices reflects the ongoing challenges posed by the foreign exchange crisis and inflationary pressures. This potential increase underscores the need for proactive measures to mitigate the impact on consumers and the electricity sector as a whole.
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