NERC, DISCO Deliberate over Senate Stance on Electricity Tariff

Discos in the country have said it is becoming difficult to meet their payment obligations to the government

After a brief meeting with the Nigeria Electricity Regulatory Commission on Monday, power distribution companies have insisted that the increase in electricity tariffs across the country would be implemented regardless of a resolution by the Senate mandating them to revert to the old rate. They stated that the major challenge facing operators in the sector was the fact that the Senate had passed a resolution asking NERC and the Federal Ministry of Power, Works and Housing to suspend the increase in tariffs.

One of the CEO of Disco said, ”The meeting that was to happen today with NERC did not hold as expected and it is not because of any disagreement.”

“It was actually because some of our members could not make it to Abuja. Flights were delayed from Kano and some other parts of the country. So the meeting was adjourned and will be held at a later date when everybody will be able to make it to Abuja.”

The Executive Director, Association of National Electricity Distributors, an umbrella body for the Discos, Mr. Sunday Oduntan, confirmed that the meeting was adjourned, but pleaded with Nigerians to support the power firms.

“We should all try hard to build this industry and I can assure you that NERC and the Discos are working together on this issue,” he said.

New Electricity Tariff Will Encourage Private Investment In Power Sector – NESG

electricity power station

The Nigerian Economic Summit Group has expressed its support for the implementation of the electricity tariff, which took effect on February 1, 2016, saying the new tariff regime would encourage private sector investment in the power sector.

The NESG, a private sector think-tank and policy advocacy group, said in a report that the country’s persistent electricity supply shortage presented serious obstacles to the growth and development of the economy.

It said this shortage of reliable power in sufficient quantity to meet the increasing requirements of a rapidly growing economy was predicted to be affecting the Gross Domestic Product growth by between two per cent and four per cent per annum.

The group noted that as of February 14, 2016, peak generation in the country was 4,741 megawatts for a population of 160 million people, compared to Algeria, another African country, which has 11,000MW for a population of 39 million people.

“Egypt has 24,000MW for a population of 88 million people. South Africa has 40,000 MW for a population of 53 million people, and Brazil has 100,000 MW for a population of 204 million people,” said NESG.

It said, “Under the former pricing regime, the combined sum of electricity prices and tariffs is far below industry’s costs. Unless these prices were raised significantly, the industry will never be viable (or seen to be heading in the direction of financial viability), and the private sector will not invest.

“Without private investment, the country will remain in the dark and extinguish any prospects for economic growth and development.”

According to the NESG, the rule of thumb for any developed industrial nation is that at least 1,000MW of electricity generation and consumption is required for every one million head of population. This rule provides a useful indicator as to the scale of the investments that need to be made in the Nigerian electricity supply industry over the coming years.

Cummins Power To Boost Sapele 300megawatt Project Output

Power transformer & SF6 CB to Enersis - Chile

The nation’s power industry is about to receive a boost as one of Nigeria’s leading independent power providers, Cummins Power Generation Nigeria Limited, has rolled out an action plan leading to the building of the 300 megawatts Africa’s largest gas-fired power plant with Sapele Power Plc (SPP).

According to the Power Purchase Agreement (PPA) signed with SPP, Cummins will invest in the construction, operation and maintenance of the plant to ensure continuous power supply and Sapele will then evacuate the power through the national grid.

The plant will operate on natural gas and utilise the cogeneration waste heat recovery technology of Cummins gas engines, one of the most efficient on the global market, designed and manufactured in the United Kingdom, making the project both economically viable and environmentally friendly.

SPP operates Nigeria’s second largest power plant with installed capacity of 1020MW, capable of meeting the energy needs of around 750,000 homes at full capacity.

The chairman, SPP, Anthony Onoh, who outlined some of the strategies to be deployed by the company to achieve the set target, explained:“We have put together a detailed business plan for the phased and sustainable actualization of this goal.

The first phase of this plan focusing on capacity recovery is billed to bring plant output to 250MW by Q2 2016, with the return to service of a third steam turbine unit.

“The second phase of the plan will triple plant output in the short-mid term through a mix of projects such as the present project with Cummins.

Sapele Power Plc, leveraging its parent company’s pedigree in the energy and oil and gas industries, is poised to facilitate the timely implementation of this project. Our growth plan is driven by strong transaction economics, a robust and expanding sector supported by favourable government, fiscal terms, and strong potential financial results.”


Nigeria, Qatar Push for Production Cuts to Raise Oil Prices


The Nigerian and Qatari governments have reached out to Saudi Arabia and Russia, the world’s two biggest oil producers and exporters, to cut oil output.

This is coming after Tuesday, February 23, meeting between President Muhammadu Buhari and Saudi Arabia King, Salman Bin Abdulaziz Al Saudi, during which they both committed to work towards a stable oil market and a “rebound of oil prices”,

A presidency source revealed that the decision to push for output cuts was an offshoot from the lukewarm reception by the markets to last week’s news of Russia and Saudi Arabia’s decision to freeze oil output as January levels.

According to the source, said the Nigerian government, while welcoming the decision to cap output by Saudi Arabia and Russia, the announcement was insufficient to raise crude prices due to the supply glut in the market.

He said: “By OPEC estimates, there is an excess inventory of some 1 million barrels per day, so the objective it to convince Saudi Arabia and Russia to each cut production by at least 500,000 barrels per day in order to lift prices.

“We are pushing for this because even though Iran, which is currently producing about 500,000 per day and is attempting to ramp up production to pre-sanction levels, we all know it will take some months before it can increase production and exports to 1 million barrels per day due to the absence of investments when the sanctions were in place over their nuclear programme.

“So the Minister of State for Petroleum, Dr. Ibe Kachikwu, is reaching out to Russia through back channels to go beyond the output freeze by taking 500,000 barrels off the market, while his counterpart in Qatar is talking to the Saudis to do likewise.

“The target is to remove 1 million barrels per day from the markets to support prices and see if oil can stabilise at $50 per barrel.”

The presidency official disclosed that the reason Russia and Saudi were being targeted was because they are the largest producers and can afford production cuts in contrast to smaller producers.

Buhari is scheduled to visit Qatar before the end of this week and is expected to hold talks with the country’s ruler on the issue.

However, attempts to get Saudi Arabia and Russia to cut output could prove to be a hard sell, as Saudi Arabia, which has remained adamant about retaining market share and taking out costlier US shale oil producers, on Tuesday again ruled out production cuts by OPEC.

The kingdom’s oil minister, Ali bin Ibrahim Al-Naimi, who spoke at the 35th annual HIS Energy CeraWeek convention holding in Houston, Texas, said keeping production at the January levels was the beginning of a long process to raise prices but restated that member countries would not cut production even if they say they would, according to USA Today.

“If we can get all of the major producers to agree not to add additional barrels, then this high inventory we have now will probably decline in due time.

“It is not like cutting production. That is not going to happen because many countries are not going to deliver. Even if they say they will cut production, they will not deliver.

“There is no sense wasting our time seeking production cuts. That will not happen,” he said.

“90% Petrol Sold in Abuja is Adulterated” – Experts


Experts in fuel refining and storage have observed that about 90 per cent of premium of motor spirit, PMS, popularly called petrol sold to consumers in the federal capital territory are bad fuel.

They noted that the adulteration of petroleum products has led to consumers’ vehicles, generators and other equipment having problems.

It is in a bid to overcome some of these challenges faced by consumers in the use of petroleum products that the International Institute for Petroleum, Energy Law and Policy (IIPELP) in collaboration with the Consumers Protection Council (CPC) organized a one-day familiarization workshop on the Strategic Management of Fuel for various organizations across different sectors of the Nigerian economy.

IIPELP Vice President Allen Martin said at the workshop that the body in conjunction with the CPC will start conducting audits of local petrol stations throughout Nigeria starting with Abuja.

Director General of CPC Dupe Atoki, said great focus should be in reducing the risk of petrol contamination and ensure fuel is safe for the end user.

Minister, Oil Sector Stakeholders to Meet Over Low Oil Price


The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu and other industry stakeholders will convene in Abuja next month to provide insights into the way forward for the Nigerian oil and gas industry amid the low oil price environment. The minister had confirmed his participation as the guest of honour and host minister at the 25th edition of its Annual Oloibiri Lecture Series and Energy Forum taking place on March 3, 2016.

According to the Chairman, SPE Nigeria Council, Mr. George Kalu, this year’s edition would bring together experienced exploration and production industry experts, who would provide insights into how to advance Nigeria’s oil and gas activities to mitigate the effect of low oil prices and chart the right course towards sustainable future for the industry.

The E&P executives that will speak at the event are the Managing Director/Chief Executive Officer, First E&P Development Company, Mr. Ademola Adeyemi-Bero; the Director, Department of Petroleum Resources, Mr. Modecai Baba-Ladan; the Managing Director, Shell Nigeria Exploration and Production Company, Mr. Bayo Ojulari; the Managing Director, ExxonMobil Nigeria, Mr. Nolan O’Neal; the Group Executive Director, E&P NNPC, Dr. Maikanti Baru, and the Chairman, PETAN and Managing Director, Oildata Inc., Mr. Emeka Ene

PPMC Nabs Pipepline Vandals With 1,500 Jerrycans of Petrol


The Pipelines and Products Marketing Company, a subsidiary of the Nigerian National Petroleum Corporation, has recovered over 1,500 jerrycans of petrol siphoned by vandals at Ogere Waterworks in Ogun State.

Topline Leighton, a private security which monitors and patrols PPMC’s pipelines along the System 2B, said the discovery of the oil theft was made on Monday.

The Security Coordinator, Topline Leighton Limited, Mr. Adetona Adigun, said the private pipelines surveillance firm was engaged by the PPMC to monitor the NNPC/PPMC System 2B products pipelines from Atlas Cove Depot in Lagos to Mosimi in Ogun State and other areas in South-west region.

Adigun, who addressed journalists at Ogere Waterworks, said the firm had made a series of discoveries of fuel theft from the System 2B network, which accounts for 60 per cent of petrol supply in the country.

“We have achieved a landmark, which nobody has made, here at Ogere Waterworks in Ogun State. Over 1,500 of jerrycans full of petrol were seized from vandals, together with their equipment.

“This is our commonwealth, and with the collaboration of other security agencies – police, Navy, Civil Defence Corps, we are ready to match them in ensuring that our national assets are secured. It is not going to be business as usual.’ he said.

He said that three suspected vandals were arrested, adding that they would be handed over to the appropriate security agency for prosecution.

“All the arrests that we have been able to make have kept the vandals at bay. We have been having products pumped from Lagos to Mosimi, to Ibadan and to Ilorin. So, now our next line of action is to expand our operations.

“On December 25, 2015, we made a discovery in Ajebo, Ogun State that made the Managing Director of PPMC to come around. We also made another discovery at Ilase and at Robert Island Village, close to the Atlas Cove.

Oil firms’ cash flows worsen, banks jittery

Nigerian indigenous oil and gas firms are recording negative cash flows as the plunge in global oil prices lingers, a development that has sent shivers down the spines of many banks.

Nigerian banks have in recent years increased their exposure to the nation’s oil and gas sector, providing financing for asset acquisitions and development by indigenous firms.

Industry players, who spoke at the 13th Aret Adams Annual Lecture Series in Lagos on Thursday, lamented that the low oil price had severely affected their operations, leading to huge cuts in capital expenditure and affecting their ability to repay loans.

The Managing Director and Chief Executive Officer, Seplat Petroleum Development Company Plc, a major Nigerian independent oil and gas firm, Mr. Austin Avuru, said, “Exploration and production companies are now constrained. I think the banks are more nervous than the operating companies in Nigeria.

“We saw a profit warning yesterday (Wednesday) from First Bank describing impairments that are likely to erode their P&L bottom line when they publish their 2015 results. That is a warning to shareholders and investors and that is because of their exposure to the upstream segment of the oil and gas industry.”

He said exploration investments had almost dried up, adding that the implications would become evident later as addition to reserves would flatten out.

Avuru said, “When people ask me how we are doing, I say we are under water. If you can survive at the end of 2017 under this regime, you will be in business for all time. I suspect that there will be a lot of dead bodies by the end of 2017.

“The biggest problem with the independents is that we are all heavily leveraged. You borrowed to buy our assets. You borrowed to work the assets, and deployed critical capital expenditure so that you can ramp up production; so that you can repay your debts. Then came the drop in price. You cannot grow production because you don’t have the free cash flow to do that. You need production, even more production in this price regime.

“So our biggest problem is our discussion with our bankers. Most of us are now cash negative. As I said, you need more cash to do investment to grow oil production to be able to meet your obligations and that is exactly what you don’t have. For the majors, usually what they need to do is cut capex, fire some employees to balance their books and explain to their shareholders why they are reducing marginally the dividend payout.”

Avuru said the service companies had been hardest hit, adding, “57 per cent of the land rigs in Nigeria today are idle. Each of these will ordinarily be employing some 210 people. In 2013, we were operating seven rigs in Seplat, we dropped our last rig in November 2015. We don’t have a rig working for us now. Service companies are in serious trouble.”

The Managing Director and Chief Executive Officer, Chevron Nigeria Limited, Mr. Clay Neff, who described the drop in oil prices as dramatic by any scale or stretch, said, “We are going through challenging times. Development work has dropped significantly. New projects are being slowed down because the economics don’t justify going forward.”

He stressed the need to address the funding challenge facing joint venture oil and gas assets in Nigeria, putting the cash call arrears owed by the Nigerian National Petroleum Corporation at over $5bn.


Dangote distributes rice seedlings to Jigawa farmers

The President of the Dangote Group, Aliko Dangote, has inaugurated itsthe 8,000-hectare Rice Out-growers’ Scheme in Hadejia, Jigawa State, with the distribution of rice seedlings to farmers.

According to a statement by the group, the scheme, which is part of its partnership with government at all levels to reduce Nigeria’s food imports, has the potential to provide 10,000 direct and indirect jobs.

It said the rice project being executed by the Dangote Rice Limited would be replicated in six other states of the federation.

It said the project was the fallout of a Memorandum of Understanding signed between Dangote and the Federal Government, on the one hand, and the Jigawa State Government on the other.

Dangote lamented that the Nigerian agricultural commodities and food imports’ bill had averaged over N1tn in the past two years, with items such as sugar, wheat, rice and fish accounting for 93 per cent of the amount.

He described the situation as unacceptable, adding that this informed his decision to go into agriculture

According to him, under the Dangote Rice Out-growers Scheme, farmers will be given training and other necessary inputs with guaranteed buy-back at agreed prices.

The Minister of State for Agriculture, Senator Heineken Lokpobiri, was quoted as saying that the Federal Government was ready to support the scheme and make it a success.

The Jigawa State governor, Alhaji Badaru Abubakar, thanked Dangote Rice Limited for choosing the state as a pilot for the project and pledged the readiness of his administration to provide the needed support.

The governor said he had no doubt that the project would succeed in turning around the economy of the state, noting that the company’s exploits in other sectors such as cement, sugar, and lately, oil and gas, was an indication that Jigawa was lucky to host the Dangote rice scheme.

N/Delta: Chevron, IITA partner to train 40 youths in agriculture

A female farmer

Chevron Nigeria Limited (CNL)and International Institute of Tropical Agriculture (IITA) Ibadan, had concluded arrangement to train 40 youths from the Niger Delta region in agriculture.

Mr Deji Haastrup, General Manager, Government and Public Affairs of Chevron, disclosed this on Thursday in Warri at an event to kick-start the programme.

Haastrup said that the youths would be trained on aquaculture, cassava, plantain, banana production and processing.

He said the programme tagged ‘’Agropreneurship’’ would offer an opportunity for large scale employment leading to self-reliance.

”The pilot programme incorporates young people from the Egbema-Gbaramatu Communities Development Foundation and the Itsekiri Regional Development Committee.

”Other parties that are collaborating with CNL and IITA are the Delta Government and the Foundation for Partnership Initiatives in the Niger Delta (PIND),” he said.

Haastrup said the current programme would gulp about N188million.

He said that CNL would continue to support the people of Niger Delta with a view to making life meaningful for them.

Mrs Clementina Arubi, representative of the General Manager, NNPC-NAPIMS, stressed the need for economic diversification through other ventures, especially agriculture rather than over-dependence on oil.

Also, Mr Michael Johnny, Chairman Egbema-Gbaramatu Communities Development Foundation, in his remarks, commend the effort of the parties that organised the agricultural programme.

He, however, solicited for scholarship for the people as part of the initiatives to widen their horizon.