Electricity distribution companies (DisCos) have raised concerns over the Federal Government’s directive that prepaid meters should be provided free to all electricity consumers, warning that the policy could destabilise the power sector if funding issues are not addressed.
Operators in the industry argued that the declaration by the Minister of Power, Adebayo Adelabu, failed to reflect the financial and operational realities of metering, especially the question of who would ultimately bear the cost of procurement and installation.
The Federal Government had recently prohibited DisCos and meter installers from charging customers for meters, cautioning that any official found demanding payment would face prosecution. The minister made the announcement during an inspection of newly imported smart meters at APM Terminals in Apapa, Lagos, stating that the meters were procured under the World Bank–funded Distribution Sector Recovery Programme.
He stressed that the meters must be installed at no cost to consumers across all tariff bands, insisting that the directive was aimed at improving billing efficiency and revenue collection in the sector.
“I want to mention that it is unprecedented that these meters are to be installed and distributed to consumers free of charge—free of charge! Nobody should collect money from any consumer. It is an illegality. It is an offence for the officials of distribution companies across Nigeria to request a dime before installation; even the indirect installers cannot ask consumers for a dime. It has to be installed free of charge so that billings and collections will improve for the sector,” Adelabu said.
However, industry operators argued that the so-called free meters would still have to be paid for by DisCos over time, questioning the rationale behind transferring the financial burden to distribution companies.
According to them, meter installers are independent operators and not employees of DisCos, making it unclear who would finance installation under the new policy.
“Those meters you see, someone has to pay for them, and the government expects the DisCos to bear the cost of the so-called free meters. They said the DisCos can pay it over 10 years.
When you ask the DisCos to pay for any capital expenditure, we call it allowable capex. You have to allow it when computing their tariffs; otherwise, it makes their balance sheets toxic,” an official with a distribution company stated.
Another operator warned that the directive ignored key operational realities in the industry.
“We need to know that meter installers are not staff of the DisCos. They are already asking who will pay them if the consumers do not pay. Did the minister consider all those? You said the people should not pay the installers; who should pay them? We, the DisCos, are not the ones installing meters. That role was taken away from the DisCos when Babatunde Fashola was the power minister.
“They said the DisCos have no business with metering. This is the result we are seeing today. Assuming the DisCos are the ones installing meters, you can force them to pay. We will all see the outcome of that pronouncement in the coming days. If the government can pay installers, no problem, but I’m not sure any DisCo will volunteer to pay the installers.”
Some stakeholders described the policy announcement as politically motivated, warning that it could undermine existing frameworks designed to close Nigeria’s metering gap.
“The statement was just a populist statement from a politician. We are not sure if the President sent him that message. He said everything should be free; where is the position of cost recovery? Anything you do in the power sector, you have to first consider who bears the cost. Somebody has to bear the cost to avoid debt piling up.
“The government ought to sit with the Discos and the meter manufacturers to seek advice if the plan is to make sure the people don’t bear any cost, and we will come up with our various contributions. But instead of doing that, the government would go and make unrealistic promises to the public. For instance, the meters are coming in batches, but you have made the masses believe that there are enough meters for everyone. That’s not the reality,” one of the sources stated.
Operators also warned that the declaration could disrupt the Meter Asset Providers (MAP) scheme, which allows customers to purchase meters directly from providers.
“People are now rejecting the Meter Asset Providers scheme because they have heard that meters are free. The minister came up with a very wrong narrative. Has he sat down with stakeholders before going out to say meters are free? How can you say you have enough meters for over five million people? We still have the MAP scheme ongoing, whereby the meter provider sells directly to the customer. MAP is still there because the free meters they are bringing cannot fill the metering gap.
“So, MAP has been going on simultaneously over the years. But this latest statement is now affecting MAP because people don’t know the difference. The government should clarify and let the people know that the free meters can’t go round everyone; they should state the areas that can get the free meters and the category of customers, so that others not captured will know they will have to go for MAP by getting the meters with their money and get a refund through energy credits over time.
“But with the minister’s statement that the free meters are for all customers, nobody will go for MAP again, and I don’t know how badly this will affect local meter suppliers in the MAP scheme,” one of the DisCo operator stated.
They urged the government and regulators to prioritise cost recovery and transparency in policy decisions to avoid financial strain on the sector.
“If he says meter installers should not be paid, who’s going to pay them? The DisCos or the Ministry of Power? Those are the questions the government should answer. The regulator should always talk about cost recovery. From the look of things, the minister does not seem to care much about cost recovery, and he’s happy making political statements.
“He has to tell us who’s going to pay. We agree, people should not pay, no problem, but who will pay? Is it going to be subsidised again? Is the government going to pay for it? If the government says the operators should pay, where will they recover the money from? Every penny has to be accounted for and recovered. The purpose of doing business is cost recovery; if you cannot recover your cost, you will be cutting corners,” another operator stressed.
The DisCos warned that the controversy surrounding the policy could fuel tensions between customers and distribution companies if the government fails to clarify the implementation framework.
“We must always tell the people the truth. I don’t know how the minister intends to do it, but his comments are not helping matters; he’s not even protecting the MAP scheme. He is putting the MAP scheme in jeopardy. Already, customers are fighting their DisCos because the minister made a statement that meters are free for all. How’s that possible? It is a challenge, but we see how it goes,” an official with one of the DisCos said.
