Meter Asset Providers (MAPs) have indicated a 25-30 per cent increment in the price of pre-paid electricity meters but stated that if the Central Bank of Nigeria (CBN) makes foreign exchange available at an official rate, there might be no need for the review.
It noted that the upward review would capture the devaluation of the naira, inflation among others while saying that the proposed 30 per cent is open for negotiation.
Speaking with our correspondent, a top official of the association who did not want his name in print said the devaluation of the naira has led to a rise in input costs, necessitating the need for a review.
“The cost value of the official dollar has increased from 325 to 405 official rate. Look at that percentage, so the increase MAPs are proposing is to cover the higher cost of dollars. The proposed increment will capture the devaluation of naira and other things.
“We want to consolidate our meter volumes to make it viable for local production of some materials we currently import. For instance, Nigeria has lots of local petrochemical capacity and meter boxes are made from polycarbonate, a petrochemical material.
“Large domestic demand for polycarbonate will encourage related industries like petrochemicals to invest in equipment and processes required for its local manufacture.”
An energy economist at the University of Ibadan, Prof. Adeola Adenikinju noted that the basic economic principle is that if the cost of operation increases, then the price has to be adjusted.
“If they are operating in an environment where inflation is rising, it is okay. They have to adjust to be able to meet up with their commitment either to the accreditor or otherwise to be able to build operations.”
He, however, urged the Nigerian Electricity Regulatory Commission (NERC) to check if the percentage that Maps are requesting is commensurate with what obtains in the Nigerian economy.
“For instance, if they are asking for 30 per cent, what the regulator should do is to evaluate whether the increase in price that they are asking for is justified. No matter what happened in the past, whether they are doing well or not, is immaterial. But the regulator should check how much increase is permitted so they don’t take advantage of the situation”.
President, Nigeria Consumer Protection Network (NCPN), Kayode Olubiyo, also stated that the request for the increment was necessitated by factors described as human element misalignment with fiscal and non-fiscal policies of the government.
“The meter manufacturers import meters and with port congestion and unnecessary bottleneck in bureaucracy and delay in the clearing of the meter from the port, the burden of all these among others, justifies the demand.
“The foreign exchange disparity equally impacts on the cost of the meter. It, therefore, lies on the government to take proactive steps and react proactively to the demand by the meter manufacturers.
He added that MAPs should be given priority in terms of exchange rate allocation and access to facilities as many claims their non-performance is tied to the fact that funding was not given as and when due.
“They don’t have access to the official exchange rate. Access to credit facilities is very important, most manufacturers don’t have access to credit facility and there are general complaints that their non-performance is tied to the fact that the fund they are expected to get from the money approved for National Mass Metering Programme (NMMP) is being delayed in payment.