CBN issues guidelines for financing mass metering for local manufacturers, DisCos
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Charles Abuede
- Scheme aimed at closing metering gap in electricity supply industry
- To enhance efficiency of revenue collection by DisCos
The Central Bank of Nigeria (CBN) has outlined the operational modalities for the financing of the National Mass Metering Programme (NMMP) and provide support to power distribution companies (Downstream) and local meter manufacturers (Upstream) in a bid to close the existing metering gap, enhance the efficiency of revenue collection by distribution companies and thereby facilitate meeting their obligations to other market participants.
The apex bank, in a publication by its director, development finance department, and accessed by Business A.M, revealed that the introduction of the service-based tariff (SBT) in the Nigeria Electricity Supply Industry (NESI) in September 2020 has put amplified stress on the need to close the metering gap within the industry.
“According to the analysis provided by Nigeria Electricity Regulatory Commission (NERC), the current metering gap in the NESI – based on recent customer enumeration data – is over 10 million, this comprises of unmetered customers as well as customers with obsolete meters that need to be replaced. To deal with this, His Excellency, President Muhammadu Buhari approved the National Mass Metering Programme (NMMP) implementation,” the published guidelines read.
The framework further stated that for the DisCos, the facility granted shall have a maximum tenor of 10 years but not exceeding 2030, moratorium on the principal amount for a period shall not exceed 24 months from date of loan disbursement, while the loan facility shall be administered at an interest rate which is not more than 9 per cent per annum or any other rate as may be specified by the central bank and as part of the bank’s Covid-19 relief package, the interest rate to be charged up to 28th February 2021 shall not exceed 5 per cent per annum.
Similarly, a local meter manufacturer shall have the facility granted for a maximum tenor of up to 10 years as determined by the project’s cash flow profile but not exceeding 31st December 2030; moratorium on the principal shall depend on the type and nature of the project but shall not exceed 2 years or the period of completion; while the working capital facility shall be for one year with provision for roll-over, not more than 3 years maximum tenor and the interest rates remain at 9 per cent with the charged interest rate up to 28th February 2021 not exceeding 5 per cent per annum.
However, the apex bank shall provide funds for the intervention; monitor and evaluate the implementation of the scheme, as well as review the guidelines of the facility as may be necessary, while the participating financial institutions (PFIs) shall receive and process requests for funding under the scheme, exercise due diligence, bear the credit risk, disburse the funds from CBN to the approved beneficiaries and also monitor and submit reports on the funded projects periodically.
Meanwhile, the bank in its published framework, further disclosed that whenever a loan is repaid or the facility is otherwise discontinued, the PFIs shall advise the CBN immediately, giving particulars of the credit facility.