Power distribution companies have raised concerns about the directive issued by the Minister of Power, Adebayo Adelabu, mandating that prepaid meters be provided free to all customer categories.

Speaking anonymously due to the sensitive nature of the issue, industry operators said the announcement appeared more political than practical, noting that it failed to reflect consultations with key stakeholders, particularly meter installers and service providers, according to The Punch.

On Thursday, the Federal Government prohibited electricity distribution companies and meter installers from charging customers any fees for prepaid meters, warning that those caught extorting consumers would face prosecution.

The directive was issued by the Minister of Power, Adebayo Adelabu, during an on-site inspection of newly imported smart meters at APM Terminals in Apapa, Lagos.

According to Adelabu, the meters were procured under the World Bank–funded Distribution Sector Recovery Programme and are to be installed for consumers at no cost, adding that any request for payment would be considered a criminal offence.

He added that the meters would be distributed to all electricity customers, irrespective of their service band classification.

“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, DisCo operators said the meters labelled as free by the Federal Government would still be financed by the distribution companies over a 10-year period.

They noted that the DisCos could not absorb the installation costs, questioning the rationale behind the government’s decision to make them bear the financial burden.

They explained that meter installers are not employees of the DisCos, stressing that the cost of installation must be borne by someone.

“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 said, “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.”

The officials characterised Adelabu’s remark as a populist pronouncement typical of a politician.

“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.

The operators also warned that the declaration of free meters could undermine the Meter Asset Providers scheme, which enables individuals to purchase meters if they choose to do so.

“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.

The stakeholders urged the government and the regulator to factor in cost recovery when designing and implementing such policies.