Stakeholders in the power sector have asked the Nigerian Electricity Regulation Commission (NERC) to provide clarification on the regulations that guide electricity franchising and Meter asset Provider (MAP) both of which are to operate under the same electricity distribution company (Disco) to avoid confusion or duplication of functions by the two entities.
They said there is the need to provide clarification as to how a franchisee that has been given authority to provide metering is reconciled with the MAP scheme that is already in existence so that there would not be two distinct regimes that may eventually lead to gaps
Under the franchising guidelines, an electricity distribution company (Disco) can engage Franchisees subject to the acceptance of NERC to provide meters or to run distribution franchise on their behalf and give a return to the discos, it is this franchising arrangement when it eventually occurs the stakeholders are saying the commission should clarify.
NERC recently issued the guidelines on Distribution Franchising in the Nigerian Electricity Supply Industry (June 2020) which amongst other things permits Distribution Companies (“Discos”) to deploy methodologies geared towards loss reduction and provision of embedded generation. This implies that Discos would be able to enter into straight bilateral agreements with power generators for the purpose of supplying power to underserved and unserved areas within their franchise areas.
Ola Alokolaro, Senior Partner and heads the Energy and Infrastructure group at ADVOCAAT Law Practice said where clarity is required is where a distribution function is franchised and what would happen to the existing MAPs.
“I guess the contracts would be novated but a franchisee could unreasonably frustrate the incumbent MAP so that its own person can come in and ultimately it is the consumer that will suffer”
He said this is where the clarity is required and how consumers would be protected.
He said if look at India for example, it has successfully introduced distribution franchise which has to the collection of revenue going up significantly in comparison to what the original Disco franchisee was earning and this was purely premised on educating the consumers within the locality they operate.
The same system he said can also be adopted in Nigeria, adding that though NERC has introduced the regulation for franchising, some element needs to be worked out in terms of operability.
“For example, under the franchise guidelines, there is still the metering aspect, even though there is already the MAP regulation as well, how are these two going be married together so that there would not be duplication in terms of regulation is something that needs to be looked at and ensure they aligned in that segment of the electricity value chain. I am talking about both MAP regulation and Franchising regulation,” he said.
In his reaction Ayodel e Oni, Partner at Bloomfield Law Practice said with respect to the franchising framework and the MAP, there is no doubt, any exercise that seeks to ensure proper customer enumeration for the Discos as well improve efficiency in collections and reduction in electricity theft is a welcome development. However, the crucial question to ask is if whether we already have existing legal frameworks for this.
“As you may be aware, the Meter Asset Provider Regulations were issued by NERC in 2018 with the aim of allowing Discos to engage approved and certified Meter Asset Providers to improve the deployment of smart meters in the NESI. Now the Franchising Regulations also seems to allow Discos to engage franchisee to undertake metering and collection. This approach in my view may be counterproductive and create regulatory uncertainty as to the role of the already certified Meter Asset Providers (“MAP”).
He said this is particularly so as the Discos may engage entities who have not been certified as Meter Asset Providers to provide metering services in those franchise areas.
To avoid this conundrum, he explained that it may be crucial for NERC to engage the Discos and require that any supposed franchisee must have been certified as a MAP under the Meter Asset Provider Regulations to ensure that foreign investor concerns are allayed and there is a proper end to end metering policy which is been implemented by the Regulator.
