Oil prices rebound in Asia, US crude back above $30

Oil prices recovered in Asia on Monday after a steep fall in the previous session, with US crude back above $30 a barrel as traders mulled the impact of a potential freeze by key producers. Crude spiked sharply last week after major exporters held talks on a potential agreement to reduce a global supply glut that has dragged prices to their lowest levels in nearly 13 years this month. Saudi Arabia and Russia, the world’s top crude producers, have agreed to limit production if others followed suit. But crude resumed its downtrend Friday as traders fretted the deal would not gain traction, with analysts cautioning that Iraq and Iran, which is ramping up output after sanctions were lifted, had shown little support. News commercial oil stockpiles in the US, the world’s top oil consumer, continued to build up added to the pressure. At around 0630 GMT Monday, US benchmark West Texas Intermediate (WTI) for delivery in March was up 41 cents, or 1.38 percent, at $30.05. Global benchmark, Brent, for April advanced 38 cents, or 1.15 percent, to $33.39 a barrel. Sanjeev Gupta, who heads the Asia Pacific oil and gas practice at EY, predicted oil prices would remain under pressure and said he sees “little evidence of any relief from the oversupply”. The market will now be “looking for clues on the outlook for crude oil demand from the manufacturing and service sector data from the US and Europe that will be released this week,” he added. Still, Capital Economics said even if the producer talks did not lead to an agreement “they may be the first indication of willingness to act to prevent prices falling further”. “A sustained recovery may require something more substantial, but for now at least oil prices appear to have found a floor,” it said.

Agents can drive microinsurance, says Anchor boss

The Managing Director, Anchor Insurance Company Limited, Mr. Ademayowa Adeduro, has said that insurance agents are relevant channels that can take microinsurance to the grass roots.

He said this during a get together party of the company, where the firm rewarded its outstanding agents and employees with gifts in Lagos.

“The agents are in a best position to sell insurance because people come to them like the artisans and motorcyclists who have to pick up insurance at low premium and they can sustain their business,” he said.

He said the annual event was part of its visions for insurance penetration in Nigeria to sell insurance to every Nigerian, adding that this sector was an area of growth for the country.

Adeduro worried that many industries were closing instead of new ones coming up while many house collapses were still been recorded.

According to him, insurance has a cogent role to play in boosting economic activities in the country.

The managing director said the company had been able to sustain a rewarding relationship with the agents, adding that this group contributed about 23 per cent to its gross premium and 40 per cent to its profitability.

He noted that the company still remained a major player in oil and gas business and was underwriting major risks in the country.

The insurer said the 2016 budget of the country was a promising one for insurance sector because it would play relevant roles in the capital and recurrent expenditures.

He also observed that the insurance regulator was enlightening the MDAs on the need to have insurance desks and do their insurances well.

Adeduro disclosed that the firm obtained licence for microinsurance last year and had done recruitment to develop it.

Union Assurance changes name to Ensure Insurance

Union Assurance Company Plc says it has obtained the approval of the Corporate Affairs Commission and the National Insurance Commission to formally change its brand identity to Ensure Insurance Plc.

The company said in a statement, “The brand known as Union Assurance Company Plc is now ‘rested’ and in its stead is a selfless, responsive, innovative and ambitious brand now known as Ensure Insurance Plc.”

“Our clients will ‘ensure’ that in the event of an accident, death, loss of property, business interruption, product recall, property damage and all other risks and hazards, which we accept to carry on their behalf, we shall make certain that their claims will be paid and restored in a responsive and selfless manner,” it stated.

The firm said this new brand was coming with a talented team of insurance practitioners and experienced personnel drawn from the Nigerian and global firms such as Toyota, Mckinsey and Swiss-Re.

In the quest to be different, the firm stated that it was the first company to secure regulatory approval for a motor product that could settle motor accident claims within 24 hours.

“Ensure is also the first company to offer steep discounts for safer drivers. All female drivers and male drivers above 45 years of age can enjoy an additional 15 per cent discount on their insurance premiums,” it stated.

According to the executive team at Ensure, the insurance landscape will witness a much more competitive and innovative brand in 2016 and insurance consumers will benefit more from buying insurance.

NITEL, MTEL pensioners cry out over 10 years’ unpaid pension

NITEL, MTEL pensioners cry out over 10 years’ unpaid pension

Pensioners of the defunct Nigeria Telecommunication Limited (NITEL) and its mobile arm, Mobile Telecommunications (MTEL) have cried out to President Muhammadu Buhari to end their 10 years of suffering by paying their pension benefits.

The pensioners numbering over 2000 said previous administrations have failed to pay their pension since former President, Olusegun Obasanjo sold and dissolved the organisation in 2006.

Chairman, NITEL, MTEL pensioners, Iko Edem who made the call at a meeting held in Lagos, said previous administrations have not been fair to them. He however, expressed confidence in the administration of President Buhari.

He said they have met with the present officials of the Federal Government and they have shown sympathy to them, adding that following their agitations, government paid them them five years pension as pay off which they rejected.

He said: “Our appeal is to the present government and we believe that they are listening to us. They told us that they feel a lot of injustice has been done to us and that they are looking into the matter. We have representatives in Abuja that is meeting with government and they are advising us on steps to take.

“We made approaches to the past governments to no avail, only to be paid off five years pension right. We rejected it and sued government at an Abuja High court and won. The Bureau of Public Enterprise (BPE) that sold NITEL went to court to appeal the judgment against us and won. We proceeded to the Supreme Court because we were not satisfied and this is the situation as at today.

“It has not been easy for us at the Supreme Court because of the many cases at the Court. Presently, the attention of government is on political cases and that is why they have not heard our case up till now.  We filed our case in May last year and up till now they have not even heard us. But our lawyer has advised us to also go political and to do this; we have to work with the government.

“The present officials of government have sympatised with us. Many of us for instance, served for 35 years. By the constitution of this country, once you have served in any institution, you are entitled to pension for life. It is however, unfair for any government to stop our pensions and ask us to go for life. We are the only pensioners that government asked to go away with five years pension. There are other cases. They initially stopped our pension and when we protested, they paid us five years without negotiating with anyone of us. This is unacceptable to us.”

He stressed that pensioners who served for 35 years or retired voluntarily after 10 years are supposed to earn pension for life, adding that those who were exited from the service and have served 10 years in NITEL are also qualified for pensions.

He noted that they are open for negotiation if they don’t want to pay them pension for life.

We know the conditions for pay off which is that you either pay us 25 years pension salary or negotiate with us and whatever the two parties agree will be binding on us.

How Agencies Frustrate Compulsory Insurance Enforcement

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By simple definition, compulsory insurance is that class of insurance which by law is made compulsory with the ultimate objective of providing protection to third parties and the general public.

Insurance is made compulsory under several laws, regulations, and guidelines but the compliance level is largely frustrating its implementation.

The immediate past commissioner for insurance, Mr Fola Daniel, had earlier in 2011 promised to commence the enforcement of the law, having realised the lukewarm attitude of agencies of government responsible for its enforcement.

Daniel scheduled March of that year for its start and later September of same year. Prior to that determination, then the National Insurance Commission (NAICOM) in 2010 developed the Market Development and Restructuring Initiative (MDRI) to boost insurance penetration in the country. Part of the objectives of the MDRI is to enforce the compulsory insurance under the Insurance Act of 2003.

Generally, the industry performance has been marred by public apathy following very large negative perception about insurance. For better understanding of the subject, the following types of insurance, the Builders Liability – under the Insurance Act 2003/Lagos State Building Control Law 2010, Construction All Risks; Occupiers Liability – under the Insurance Act 2003 and Lagos State Law; Employers Liability (Group Life) under the Pension Reform Act 2004; and Healthcare Professional Indemnity – under the NHIS Act 1999 are under the compulsory insurances. Others are the Motor Third Party Liability – under the Insurance Act 2003 and Builders Liability Insurance.

These types of insurance requires that all owners or contractors of buildings (of more than two floors) under construction must purchase or provide compensation in event of bodily injury, death, and property damage to workers at construction sites and affected members of the public in the event of the collapse of the building, and other construction risks. The penalty for non-compliance is N250,000 plus three years imprisonment.

A record of conviction, sealing, and demolition of the building are the penalties provided under the federal and Lagos State laws.

Under the Occupiers Liability Insurance, all owners or occupiers of public buildings, whether private or public, are required to provide the National Insurance Act 2003 and the Lagos State Building Control Law 2010.

A public building is any building that is not 100 per cent used by the owner for residential purposes. Public buildings include tenement houses, hostels, residential buildings occupied by tenants, lodgers or licensees, and any other building to which members of the public enter and exit for the purpose of educational, recreational, or medical services (for instance schools, cinemas, hospitals, malls, petrol stations, etc). The Occupiers Liability Insurance provides compensation in events of bodily injury, death, and property damage to the business users and members of the public in the event of building collapse, fire, earthquakes, storm or flood.  The penalty for non-compliance is N100,000 plus one year imprisonment, and sealing or demolition of the building under the federal and the Lagos State laws.

The Employers’ Liability (Group Life) Insurance ensures that all employers of labour with more than four employees are required to have the Pension Reform Act 2004. The law requires the employers have insurance that will provide for compensation in the event of death, disappearance, disability, or critical illness suffered by their staff while in service and to subsidise the pension provision in the event of mental or physical disability.

This law applies to both public and private sector employees and means that employees (and their families) have the right to demand for compensation and payment from their employers in the event of injury or death. The penalty for non-compliance with this law is N250,000, record of conviction, and in addition the place of business may be sealed.

For the Healthcare Professional Indemnity Insurance all licenced health care providers and medical practitioners (such as doctors, nurses, pharmacists, etc) are required to have the National Health Insurance Scheme (NHIS) 1999. The law  have insurance that will protect their patients in case of accidents or fatalities (death) resulting from professional negligence. This type of insurance provides compensation to patients and their relatives in the event of involuntary murder, disability, shock, and injury suffered by patients as a result of the negligence of health care providers.

The penalty for non-compliance with this law is a possible revocation of licence by the National Health Insurance Council, a record of conviction, and sealing of the premises.

Also for the Third Party Motor Liability Insurance stipulates that all owners and drivers of motor vehicles, motorcycles, and special type vehicles plying the Nigerian roads are required to have the National Insurance Act 2003. The third party motor liability insures the vehicle against liability to death, bodily injury, or damage to the property of a third party arising from the use of the vehicle. The penalty for non-compliance is a fine of up to N250,000 plus one year imprisonment.

The commission, in trying to ensure compliance described said that it is part of a comprehensive programme code-named “The Nigeria Insurance Market Development and Restructuring,” which was put in place to increase capacity and consumer trust in the insurance industry in Nigeria. According to the NAICOM, 16 insurance products are directly and indirectly made compulsory in Nigeria, but five are very prominent and capable of generating about 55 per cent of the industry premium income.

The NAICOM, alongside other stakeholders, perceive the Insurance Act 2003 and Motor Vehicle (Third Party) Ordinance 1945 as key and should be significantly enforced. The policy provides that no person shall use or cause or permit any other person to use a motor vehicle on the road unless a liability which he may incur in respect of death, bodily injury or damages to the property of a third party is insured with an insurer registered under this Act. The penalty for non-compliance is N250,000 or one year imprisonment or both.

The director-general of the Nigeria Insurers Association (NIA), Sunday Thomas, said that he is deeply concerned about enforcement.

In an interview with LEADERSHIP, Thomas simply said, “In the case of enforcement I am not satisfied at all. It is very disappointing.”

According to him, the NAICOM is not an enforcement agency but a regulator.

It has done what is expected of a regulator to restructure and provide operational guidelines, the rest is for players and law enforcement agencies to take it up from there.

For the compulsory insurances the D-G said they were put in place to boost the sector under the MDRI.

“For these classes of insurance, there are different agencies that should take compliance responsibility.

We have the Town Planning, Police, VIO, FRSC and others.

For us in NIA we have been collaborating with them establishing partnerships and structures to encourage enforcement”, he said.

Electricity Hike: NERC Loses Bid to Suspend Court Proceedings

power-line-transmission

Justice Mohammed Idris of a Federal High Court in Lagos has struck out an application by the Nigerian Electricity Regulatory Commission (NERC) seeking to stay further proceedings in the electricity tariff case. A lawyer and rights activist, Toluwani Yemi Adebiyi, had filed the action against increment in the electricity tariff approved by NERC.

The judge also barred NERC from implementing any upward review in electricity tariff pending the hearing and determination of the suit. The other ruling has to do with the dismissal of NERC’s preliminary objections to the suit.

“It is clear that the applicant has an application before the court seeking for an extension of time to compile and transmit its record at the Appeal Court.

“There is also another motion for leave to rely on the same record of appeal in this present appeal. However, there is no indication that the application has been listed on the cause list or that it had been heard or adjourned for hearing.

“In the circumstance, this court cannot grant a stay of proceedings on an incompetent appeal which is awaiting regularisation at the Appeal Court. The application lacks merit and is dismissed accordingly.”

 The court in favour of the plaintiff, awarded a cost of N10,000.

Justice Idris noted that it will be in the interest of justice if all applications challenging the contempt proceedings are heard first.

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

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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.