The Central Bank of Nigeria (CBN) has unveiled a two-pronged template for accessing its facility under the Nationwide Mass Metering Programme (NMMP), subjecting prospective borrowers and participating banks to stiff conditions.
The guidelines released yesterday addressed the technicalities of funding metering at both upstream and downstream ends of the electricity market.
Titled ‘Framework for Financing of National Mass Metering Programme’, the document provided detailed guides and conditions under two thematic areas: electricity Distribution Companies (DisCos) and local meter manufacturers.
Content of the 10-page document includes eligibility, tenor of loans, prohibited activities, Participating Financial Institutions (PFIs), moratorium, interest rate, collateralisation, loanable amount, application procedure, documentation and sanction.
The upstream (meter manufacturers) and downstream (DisCos) are given specific funding guidelines, while they share documentation processes and requirements.
The facility, the CBN said, is aimed at increasing Nigeria’s metering rate, eliminate arbitrary billing and strengthen the local meter value chain.
Other objectives highlighted are supporting the country’s economic recovery by creating jobs in the local meter value chain, reducing collection losses/increasing financial flows to achieve 100 per cent market remittance obligations of the DisCos, and improving network monitoring capability.
The document pointed out that the “the NMMP CBN facility is restricted to the procurement and deployment of meters and associated infrastructure (software and hardware) to support the metering network” in the case of DisCos.
It listed the eligible activities as the procurement of Nigerian Electricity Regulatory Commission (NERC)-approved meters, payment for installation and deployment of meters as well as procurement of other metering infrastructure related to production and service provision. Others are procurement of backend metering platform and data management systems as well as procurement of customer enumeration services.
The facility will not be used to procure fully-assembled meters from overseas, except those already imported into the country as of September 30, 2020, it stated.
CBN also ruled out funding for importation of related metering infrastructure produced in the country.
The nine per cent interest facility, which will be shared 6:3 by PFIs and CBN, has a tenor of up to 10 years, not exceeding 2030, the document pointed out.
Borrowers will also enjoy a moratorium “on the principal amount for a period not exceeding 24 months from the date of loan disbursement.”
In the case of manufacturers, the guideline added: “The moratorium on principal shall depend on the type and nature of the project, but shall not exceed two years or the construction/completion period.
“Eligible manufacturers must demonstrate a track record of experience in manufacturing key meter components up to the quality standards instituted by the NERC and/or Nigerian Electricity Management Services Agency (NEMSA) and/or Standards Organisation of Nigeria (SON).”
They are also required to demonstrate financial capacity to repay the loan through a sufficient Debt Service Current Ratio (DSCR), commitment to employ local talents as well as a detailed vocational and technical training plan.