DisCos reject FG’s free meter plan
Electricity distribution companies (DisCos) have pushed back against the Federal Government’s declaration that prepaid electricity meters must be installed free of charge for all categories of consumers, warning that the directive could worsen financial pressures in Nigeria’s already fragile power sector if cost recovery concerns are not addressed.
The disagreement followed a recent directive by the Minister of Power, Adebayo Adelabu, who announced that prepaid meters procured under the World Bank–supported Distribution Sector Recovery Programme should be installed for electricity consumers at no cost.
The minister also warned that any DisCo official or installer found demanding payment from customers would face prosecution.
Adelabu made the announcement during an inspection of newly imported smart meters at APM Terminals in Apapa, Lagos, describing the initiative as a major step towards improving billing efficiency, boosting revenue collection, and restoring consumer confidence in the electricity market.
However, operators within the power distribution segment say the declaration oversimplifies a complex issue and fails to clarify who ultimately bears the cost of meter procurement and installation.
DisCos reject FG’s free meter plan over cost recovery concerns
Several DisCo officials, who spoke anonymously due to the sensitivity of the matter, said the minister’s statement appeared more political than technical, arguing that meters labelled as “free” would still be paid for by distribution companies over time.
According to the operators, the current structure requires DisCos to amortise the cost of the meters over a period of up to 10 years, a burden they say must be recognised within the sector’s tariff framework to avoid further weakening their balance sheets.
“Those meters are not free in the real sense,” one DisCo official said.
“Someone has to pay for them, and the expectation is that the DisCos will carry the cost and recover it over time. If that cost is not treated as allowable capital expenditure when tariffs are set, then it becomes a problem.”
The operators stressed that any additional financial obligations imposed on DisCos without corresponding tariff adjustments could make their operations unsustainable, particularly in a sector already grappling with liquidity shortfalls, legacy debts, and rising operating costs.
Another major concern raised by the DisCos is the issue of installation. Industry sources noted that meter installers are not employees of distribution companies but independent service providers who must be paid for their work.
“If consumers are told not to pay installers, then who pays them?” another operator asked.
“The DisCos are not directly responsible for meter installation. That responsibility was removed years ago. Without a clear payment structure, installers will simply stop work.”
Stakeholders recalled that during a previous reform phase under a former power minister, DisCos were explicitly barred from direct involvement in metering, leading to the creation of alternative frameworks such as the Meter Asset Providers (MAP) scheme.
The MAP scheme allows private meter providers to sell meters directly to customers, with the cost refunded gradually through energy credits. According to DisCo operators, this arrangement has helped narrow Nigeria’s metering gap, albeit slowly.
However, they warned that the government’s blanket declaration that meters are now free for all consumers risks undermining the MAP scheme entirely.
“People are already refusing to participate in MAP because they believe meters are now free,” one official said.
“That narrative is dangerous. The free meters coming in batches cannot cover the entire metering deficit, which runs into millions.”
Industry players argue that the government has not sufficiently communicated the limitations of the free meter initiative, including the fact that meter rollouts will be phased and targeted, not universal or immediate.
They warned that unrealistic public expectations could fuel consumer frustration, disputes with DisCos, and even vandalism of power infrastructure if promised installations fail to materialise quickly.
Beyond the operational concerns, the DisCos also questioned the absence of stakeholder consultation before the announcement was made. They said meaningful engagement with distribution companies, meter manufacturers, installers, and the electricity regulator would have produced a more workable solution.
“The government should have sat down with stakeholders first,” an operator said. “If the goal is to ensure consumers do not pay upfront, there are structured ways to achieve that without destabilising the market.”
Power sector analysts note that cost recovery remains a core principle of electricity market sustainability. Without it, they warn, investment dries up, maintenance suffers, and service quality deteriorates.
“If the government insists that consumers must not pay, that is fine,” another DisCo source said.
“But the government must then clearly state who pays and how the cost is recovered. Is it a subsidy? Is it budget-funded? Or is it another obligation being quietly transferred to operators?”
The operators also expressed concern that the directive could discourage local meter manufacturers and suppliers, many of whom depend on predictable demand from the MAP framework and other structured procurement channels.
Nigeria’s metering gap, estimated at over five million customers, has long been identified as a major contributor to estimated billing disputes and revenue leakages in the power sector. While the Federal Government’s intervention is seen as positive in principle, industry stakeholders insist that execution must align with commercial realities.
They urged the Nigerian Electricity Regulatory Commission and the Ministry of Power to clarify the scope of the free meter programme, define eligible customer categories, and communicate transparently with the public to avoid confusion.
For now, the standoff highlights the broader tension between political promises and economic fundamentals in Nigeria’s power sector, as DisCos warn that well-intentioned policies could backfire if cost recovery and stakeholder coordination are ignored.
