Power distribution companies (DisCos) have expressed reservations over the recent directive by Minister of Power, Adebayo Adelabu, mandating that prepaid meters be provided free of charge to all electricity customers. The announcement has sparked concerns among DisCo operators, who argue that the minister’s declaration lacks consultation with key stakeholders, particularly meter installers and suppliers.
During an on-site inspection at APM Terminals in Apapa, Lagos, Adelabu issued a strong warning, declaring that the Federal Government would no longer allow electricity distribution companies or meter installers to charge customers for meters. The meters, procured under the World Bank-funded Distribution Sector Recovery Programme, are to be installed free of charge for all consumers, regardless of their customer category. Adelabu emphasized that any attempt to collect payment would be deemed illegal and punishable.
“This is unprecedented: these meters will be distributed free of charge,” Adelabu stated, adding that it would be an offence for DisCo officials or even third-party installers to request any payment. He stated that the initiative aimed to improve billings and collections in the sector, thereby benefiting both consumers and the electricity distribution system.
However, several anonymous DisCo officials expressed skepticism about the practicality of the government’s directive. They pointed out that while the meters are being described as “free,” the cost of installation would still be borne by the DisCos over a span of 10 years. These operators questioned why the government was expecting them to bear the installation costs, considering that meter installers are not employees of the DisCos, but third-party contractors.
“One way or another, someone has to pay for these meters,” one official explained. “The government expects DisCos to cover the cost, but when you ask us to pay for capital expenditures, we need to factor that into our tariffs. Otherwise, it makes our financials unworkable.”
Another operator raised concerns about the implications for Meter Asset Providers (MAP), the program that allows private meter vendors to sell meters to customers directly. The MAP scheme, which has been operating alongside government meter distribution programs, faces challenges from Adelabu’s announcement. With the government’s promise of free meters for all, many customers are now shying away from purchasing through MAP, potentially undermining the scheme’s viability.
“People are abandoning the MAP program because they’ve been told that meters will be free. The minister has sent the wrong message by not consulting with stakeholders first,” a source said. “How can he promise free meters for millions of customers when we still have a metering gap? The free meters will not be enough for everyone.”
Operators also warned that the new directive could lead to confusion among consumers who are unaware of the distinction between free government meters and those available through the MAP scheme. They urged the government to clarify the categories of customers eligible for free meters and explain the process clearly to avoid further disruption in the market.
Furthermore, the cost recovery issue remains a critical concern. DisCos argue that any initiative in the power sector must consider who will bear the costs to avoid financial instability. “The question remains: who will pay the installers if the consumers aren’t charged? Is it the DisCos or the Ministry of Power?” one operator asked. The concerns were echoed by another, who criticized the minister’s apparent disregard for cost recovery in his political statement.
Call for Government Clarification
DisCos have called on the government and the regulator to engage in consultations with industry stakeholders to develop a sustainable metering strategy. The regulatory framework should always take into account the cost recovery mechanisms to ensure the sector’s long-term financial health.
While the government’s intention to provide affordable and accessible electricity meters is commendable, the execution of this plan, according to DisCo officials, could create long-term operational and financial challenges unless there is a clearer, more realistic approach.
