April 24, 2018
The Nigerian Electricity Regulatory Commission (NERC or the Commission) issued the Meter Asset Provider (MAP) Regulations 2018 (Regulations) on 8 March 2018. The Regulations, which is effective 3 April 2018, now mandates all Distribution Licensees (Distribution Companies or DisCos) to engage the services of MAPs in meeting their metering targets and provides rules for such engagement.
The Regulations defines a MAP as a person that is granted a permit by NERC to provide metering services which may include meter financing, procurement, supply, installation, maintenance and replacement. Prior to the issuance of the Regulations, the responsibility for metering customers was handled exclusively by the DisCos. Under the Regulations, DisCos remain responsible for meeting NERC’s assigned metering targets, but they are required to engage the services of MAPs.
Prospective MAPs are required to submit an application for a MAP permit to NERC. The tenure of a MAP permit shall be for a period of 15 years. The DisCos are responsible for engaging the services of MAPs to operate within their franchise area, but they must adopt the procurement process outlined in Schedule II of the Regulations. DisCos are also obligated to conclude the procurement process for the engagement of the first set of MAPs within 120 days from commencement of the Regulations.
The Regulations prescribes clear provisions on payment of metering service charge, ownership of meters, access rights to meters and metering assets, damage, repair and replacement of meters and standards for meters amongst other things. It also prohibits the DisCo, its core investors, subsidiaries, affiliates, directors and their relatives from setting up, owning shares or holding directorships and senior management positions in the MAP.
Regulation 11(3) requires DisCos to execute a Metering Service Agreement (MSA) with MAPs for deployment of meters. The MSA shall provide for the recovery of the cost of a meter asset plus a reasonable return over a period of 10 years. A Service Level Agreement shall also be executed between the MAP and DisCo to provide for Key Performance Indicators for the MAP.
Even though the Regulations seeks to provide standard rules to ensure better efficiency in the NESI, the modality for creating this “standardization” needs to be carefully worked out given the liberty granted to MAPs and DisCos to create terms of agreement for themselves in MSAs.
The issuance of the MAP Regulations by the NERC is indeed laudable as it is expected that increased metering will help DisCos address the incidence of revenue loss. It is however necessary for DisCos and potential MAPs to engage their legal and tax consultants for advice on efficient business structures to best manage their tax and financial affairs.