BREAKING: FG Deducts N100 Billion From May Revenue As Second Tranche Of Presidential Metering Initiative Funding

The Federal Government has set aside N100 billion as the second tranche of the Presidential Metering Initiative (PMI). According to the Federal Account Allocation Committee (FAAC) disbursement report for June 2024 by the National Bureau of Statistics (NBS), the amount is from revenue made in May and shared in June......See Full Story>>.....See Full Story>>

Nairametrics earlier reported that N120 billion was deducted from April revenue as the first tranche of the PMI.

It means a total of N220 billion has been deducted from the federation account for this initiative.

In May this year, Adebayo Adelabu, Minister of Power, said that the government will provide an initial N75 billion as seed capital while the Nigerian Sovereign Investment Authority (NSIA) pledged to inject a minimum of N250 billion annually for the initiative’s duration.

The minister also disclosed that the initiative will leverage debt financing from diverse financial institutions to bolster the PMI’s resources.

The Managing Director of Abuja Distribution Electricity Distribution Company (AEDC), Mr. Victor Ojelabi, recently said that the PMI will unlock about N1 trillion in revenue currently tied up in the Nigerian Electricity Supply Industry (NESI) due to a large number of unmetered customers.

Under the initiative, the Nigerian Electricity Regulatory Commission (NERC) announced the approval of N21 billion for the 11 electricity Distribution Companies (DisCos) to provide meters for end-use customers at zero cost.

This information was contained in ORDER NO: NERC/2024/072 on The Operationalization of “Tranche A” of the Presidential Metering Initiative Under the Framework of Meter Acquisition Fund.

FG plans to deduct N700 billion from Federation Account

During the FAAC meeting for May 2024, Dr Ali Mohammed, Director, Home Finance Dept., Ministry of Finance, noted that the Special Assistant to President on Energy had forwarded a memo for consideration by FAAC with a request of N700 billion financing requirement for the PMI.

According to the minutes of the meeting seen by Nairametrics, he said the PMI was aimed at reducing the cost of meters to ensure that every consumer was metered for increased revenue from the electricity sector.

• At the meeting, a Commissioner of Finance, in a South-South state expressed that FAAC members expected details on the implementation modalities of the proposed PMI, not a request for a N120 billion deduction from the Federation Account.
• Another Commissioner of Finance in another state noted that no agreement was reached with stakeholders to warrant the current deduction and called for transparency and accountability.
• A South West Commissioner of Finance questioned the use of public funds for privately owned DISCOs, citing accountability concerns.

Responding, FAAC Chairman and Minister of Finance, Wale Edun, emphasized the project’s urgency and called for understanding, noting that delaying the deduction would negatively affect implementation.

What you should know

While campaigning for the presidency, Bola Tinubu released a manifesto outlining a plan to eliminate estimated billing and ensure that all Nigerian homes and businesses are equipped with prepaid meters.

• However, under his administration, the number of estimated billing customers has seen the largest growth rate both quarterly and yearly, based on data from the NBS up to 2022.
• Nairametrics earlier reported that the federal government’s plan to eliminate estimated billing by the end of 2024 faces significant hurdles, as evidenced by the recent increase in the number of customers on estimated billing across Nigeria’s electricity distribution companies (DisCos).
• The Nigeria Electricity Report by the National Bureau of Statistics (NBS) for the first quarter of 2024 shows a 10% quarter-on-quarter increase in estimated billing customers, as the metering gap widens.
• The number of customers on estimated billing rose from 5.83 million in Q4 2023 to 6.43 million in Q1 2024, marking a notable 10% increase.
• On a year-on-year basis, the rise in estimated billing customers is equally significant. From Q1 2023 to Q1 2024, the number of estimated billing customers increased by 8% from 5.96 million.
• This increase occurs as the government continues to subsidize customers not on Band A, while Band A customers on estimated billing are still required to pay based on estimation.

It further highlights a persistent issue within the Nigerian electricity sector the inability to adequately meter all customers to bridge the metering gap despite various initiatives, leading to reliance on estimated billing.