Low oil prices and output are believed to have taken serious toll on the Nigerian federal government revenue, hence the country could only collect about half of its budgeted revenues in the first five months of this year.
According to Bloomberg, total earnings by the federal government from January to May were N1.48 trillion ($3.8 billion), which was 56% of targeted revenue for the period, quoting the Finance Minister Zainab Ahmed, during a presentation to lawmakers last Thursday. Also, earnings from crude sales accounted for about half of the total revenues with non-oil income contributing the balance.
“Although Nigeria’s total production capacity is 2.5 million barrels per day, current crude production is about 1.4 million barrels per day – in compliance with the Organization of the Petroleum Exporting Countries’ (OPEC) production quota – and an additional 300,000 barrels per day of condensates, totaling about 1.7 million barells per day,” Ahmed had said.
Oil production will average 1.86 million barrels a day in 2021, rise to 2.09 million barrels a day in 2022, and 2.38 million barrels in 2023. The report said on the expenditure side, N1.25 trillion was spent on debt service and N1.32 trillion for personnel cost, including pensions, Ahmed said.
Discos Fail to Remit 236.5bn, Customers Consume N293b Electricity in 5 Months
Electricity distribution companies (DisCos) in Nigeria have called on the Nigerian Electricity Regulatory Commission (NERC) to review the current minimum remittance order to sustain the gains of power sector reforms.
The Managing director of Abuja Electricity Distribution Company (AEDC), Ernest Mupwaya, who spoke on behalf of other DisCos during a public hearing by the House of Representatives Committee on Power last weekend, said the overall Aggregate Technical, Collection and Commercial (ATC& C) losses moving average (m.a.) keeps decreasing, and has reached a new record of 43.3%, whereas six Discos have losses below 50%.
“However, contrary to the tendency of the other DisCos, Yola DisCo deteriorated or increased its Aggregate Technical, Collection and Commercial (ATC&C) losses trajectory, with a loss level of 67.6% by the end of September 2019. In effect, for the last three years the private Discos were able to reduce their ATC&C losses by almost 10 points; however, Yola DISCO increased it by 12 points.
“Perpetuating the ‘squeezing’ regulations of the minimum remittance and capping of estimated billing will extend the challenges of YEDC to the rest of the Discos and it will cost as twice (in time and money) to get back to where DisCos are today,” Mupwaya stated.
The leaders of the distribution companies said these are among the issues that should be resolved before the implementation of a service-reflective tariff can yield the desired effects in the Nigerian Electricity Supply Industry (NESI).
They also argued that considering the fact that remittance levels are already low, capping of estimated bills will exacerbate liquidity situation. “Capping of estimated bills when the metering level is at 40% is suicidal for the entire sector.
“Instead, we recommend that implementation of the new service-reflective tariff order that was scheduled to go into existence by July 1st, 2020, should have a one-year transition period, from its effective date. During this period the minimum remittance thresholds would be graduated every quarter,” the Discos’ spokesperson said.
Other suggestions by the Discos include the creation of specialised electricity courts and fast-tracking of court processes for energy theft and related offences such as vandalism, alignment of MYTO ATC&C losses with Discos’ reality, re-introduction of fixed charge to align with the capacity charge as presently.
“Nigeria is the only country without fixed charge as well as proper risk alignment along the value chain,” he said. The Discos further advocated for credit-free balance sheets to make them credit-worthy.
“Historical tariff shortfalls and MDA debts as at December 2019 (N1.7 trillion as noted by government and N2.3 trillion as recalculated by Discos), should be taken off Disco books. The practical impact of the shortfall is that Discos have a negative balance sheet of -N80 billion to -N250 billion. The clean-up of the DisCos’ balance sheet is necessary to make them creditworthy.
“Also, NBET and MO should be mandated to assume the tariff shortfall and MDA debt and then issue credit notes to Discos and, henceforth, the liability should not be associated with the Discos,” he said.
Analysts are raising concern for a possible oil price war if the non-compliance by some Organisation of Petroleum Countries (OPEC) members, such as Nigeria and Iraq persists.
One of the analysts, Director School of Energy Economics, Policy and Commerce, University of Tulsa’s Collins College of Business, Tom Seng, was quoted by The Nation alleging that Nigeria is exporting more than its OPEC quota, and that that Saudi Arabia was in talks with the country to secure compliance.
“Nigeria continues to export more than what their OPEC curtailment level is supposed to be, as reported by tanker-watchers. Saudi Arabia is in talks with the country to get them to agree to get in line and make up for the non-compliance so far.
“The Saudis have even threatened a price war if Nigeria and others, such Angola and Iraq, continue to fail to comply with the cartel’s agreed-upon curtailments. West Texas Intermediate managed to close out the week above $40, the highest level since early March,” he told Rigzone news agency in an interview.
According to the U.S. Energy Information Administration (EIA), April oil production averaged 12.1 million barrels per day (bpd) vs. March’s 12.7 million bpd, indicating higher output curtailment than previously thought based on the weekly reports, giving some bullish strength to prices.
“This week’s EIA Weekly Petroleum Status Report showed a decidedly bullish inventory decrease of 7.2 million barrels for last week vs. Analysts’ forecasts for a decline of a mere 100,000 barrels. It was the first decline in several weeks and has brought the level down from its record high of about 540 million barrels. The American Petroleum Institute (API) had reported a large, 8.2 million-barrel decrease – closer in-line with the government’s report.
“However, total motor gasoline stocks increased by 1.2 million barrels while distillates fell 600,000 barrels. And, although it increased, refinery utilisation at 75.5% is still low for what would normally be the case during the summer driving season.
Inventory at the key oil storage hub at Cushing, Okla., declined for the eighth straight time last week, and total inventory now stands at 46 million barrels. U.S. oil production last week held at 11 million bpd. The U.S. oil rig count is now at its lowest point since June 2012 and is 603 lower than year-ago levels.
“Natural gas inventories increased last week by 65 billion cubic feet (Bcf), the actual five-year average for this time of year. Analysts had forecasted a build of 79 Bcf but total gas stored still remains at 18 per cent above the five-year average and 30 per cent over last year’s level at this time,” Seng was further quoted in the interview.
Another analyst, Senior Energy Services and Equipment Analyst in Equity Research, B. Riley FBR, Inc, Tom Curran, said since June 1, operators in certain dry shale gas areas have been restarting idled compression units, some of which had been placed on standby status.
Department of Petroleum Resources (DPR) has said that about four technical partners have been given permits to render services to the oil and gas industry in Gombe.
Controller, DPR Gombe state field office, Mr Yahaya Maishera, dropped the hint during a technical session organised for its oil and gas technical partners in the state. He said the technical session, which took place recently, was necessary, adding that every company working with DPR will henceforth be accredited.
According to him, petroleum drilling and production regulation indicates that no company shall operate either technical or oil service without being registered and issued permits to carry out such services by the DPR.
The DPR chief said, “We realised there is a lot of gaps between them; some will not follow procedures, while some do not submit relevant reports. So, what we did in-house was local management to meet to enable us (DPR) to test their technical capability whether they can render these services,” Maishera said.
According to him, during the session with a technical partner after his presentation, the DPR observed some loopholes and advised on the need to improve and key into new ways of doing things as enshrined in the petroleum laws.
He said the technical session would be continuous, adding, “We also open ways for other accredited companies that have oil and gas industry permits to come to the field; there are lots of challenges and there is a lot of jobs here.”
He stated that the local content law had made things easy, and that all the companies that Gombe DPR engaged in technical session were all owned by Nigerians and rendering technical services. The DPR Controller called on stakeholders to inform the Department immediately “if they are not satisfied with the services rendered to them by the technical partners”.
The recent price change in the petroleum pump price by the Petroleum Products Price Regulation Agency (PPPRA) has drawn various reactions from the downstream stakeholders in the oil and gas sector.
Although, the agency insist that the monthly guiding prices would still allow reasonable returns to operators, many of the stakeholder operators like Independent Petroleum Marketers Association of Nigeria (IPMAN), Major Oil Marketers Association of Nigeria (MOMAN), and the Petroleum Products Retail Outlets owners Association of Nigeria (PETROAN) complain of the effect of the price changes to their business.
However, while most of these groups, including the Nigerian Labour Congress (NLC), have called for possible street protest against the government, the PETROAN President, Dr Billy Gillis-Harry, in this interview, holds a different opinion. Harry who is also President, Bilview Energy Limited, insists that only a round-table, stakeholders’ engagement between the various downstream group operators, the leadership of PPPRA, NNPC, the Department of Petroleum Resources (DPR), and the ministry of petroleum resources, will solve the problem.
Excerpts
While announcing the pricing regime for July, the PPPRA said the new prices allow reasonable returns for downstream operators. Are you not impressed with that?
If it is not favourable to other players in the downstream, who are openly protesting in the media and all over, it cannot be favourable to PETROAN. However, while we are not happy, we do not think any street protest or shutting down our outlets will solve any problem.
The position PETROAN members occupy in the petroleum value chain is critical. So, we need to thread with a lot of caution.
Are you saying that the stakeholders in the downstream sector are not involved whatsoever in the fixing of the prices by the PPPRA?
If we are, you won’t read of the repeated complaints and concerns. As major stakeholders in the industry, we are worried about the incessant, monthly price changes. I totally agree that there should be a complete price review, but it should not be left only in the hands of the PPPRA. That is our position. This is even as deregulation is being taunted as being in force in the downstream sector.
What do you mean by incessant price changes?
I am sure you noticed that price variations from March till this July have not been consistent, or followed any pattern. A proper review involving the major stakeholders will deal with the situation.
Are you not surprised that the deregulation of the petroleum pricing regime in Nigeria is not backed by any law?
That is part of the problems we are complaining about. We, in PETROAN verily support the adopted deregulation, in the belief that it is the best for us all in the sector, and as Nigerians. But I tell you this; we want this deregulation to be backed by law.
What we have currently is a happenstance that came through a decree during the military regime. Now we have a National Assembly that can engage due process and legalize deregulation now.
Is PETROAN happy that the subsidy regime has ended, in view of the benefits to retail outlets?
I don’t know about any benefits as you put it. We run our outlets according to provisions of the law, and we operate under the supervision of relevant authorities, whose operatives come over to our shops, even without notice to do their jobs.
Let me answer your question; we, the retail outlets of the petroleum industry are happy that the petroleum subsidy is gone. But as I said before, we want a situation whereby the price modulation and presentation need to have a conclusive stakeholder review.
As part of the efforts to promote quality science education in Nigeria and other parts of Africa, Chevron co-sponsored the inaugural edition of the Summer Engineering Academy (SEA)virtual conference, organised by the Africa Leadership Academy (ALA).
This initiative is designed for highly motivated and talented high school students from Nigeria and Angola, who are interested in a career in Science, Technology, Engineering and Mathematics(STEM).
A total of 18 students (15 Nigerians and 3 Angolans) from various high schools participated at the event and generated proposals for which they tried to gain investment support by tackling the “Engineering Design Challenge” question: What technology would help my community navigate an epidemic?
Chevron has partnered with ALA since 2016 to support the AfriSTEM programme which is designed to establish an AfriSTEM center of excellence through the recruitment and funding of STEM scholars into ALA’s Diploma programme. A group of Nigerian students at the virtual event won the best presentation award.
Highlighting the objectives of the event, Mr Monday Ovuede, Director, CNL/NNPC Joint Venture, who was one of the judges at the conference’s final presentation, conveyed Chevron’s continued commitment to the development of STEM education in Nigeria and other parts of Africa.
“I think the Nigerian students’ performance at the event shows that Nigeria has young talents with the drive and ability for critical thinking. What we need is to continue to support and replicate events like this by providing the necessary artisan and technical support to enable our talented youths to bring their ideas into reality,” he stated.
Mr. Ovuede, who described Chevron’s involvement in the programmes as apt and valuable, advocated the establishment of technical competition among Nigerian and African universities in different fields related to STEM to further boost development of the country and the continent.
Also speaking at the gathering, Pedro Cesaltino, Manager, Chevron South Africa Business Unit and the guest Speaker at the closing ceremony of the event, noted that the Summer Engineering Academy represents for the young people a very unique opportunity to be part of what’s going on in the world, and set themselves up to make a big difference.
Explaining further on Chevron’s commitment to STEM, CNL’s General Manager, Policy, Government and Public Affairs, Mr Esimaje Brikinn highlighted some of the initiatives embarked upon by Chevron and its partners to advance STEM education in Nigeria.
According to him, these efforts include the investment by Chevron and the Agbami parties, of about N8.4 billion on the Agbami Medical and Engineering Professional Scholarships (AMEPS).“Since inception, over 16,300 students from all the states of Nigeria have benefitted from the Agbami Medical and Engineering Scholarships, which has recorded a total of 715 first class graduates. The Agbami parties have also donated 39 science laboratories and nine hybrid libraries to schools in different parts of the country,” he noted.
Mr Brikinn stated that since 2016, Chevron and its Agbami parties have been organizing STEM symposiums and exhibitions in Nigeria with the objective to identify challenges and opportunities in Nigeria’s STEM education reforms and provide strategies to ensure that STEM education is elevated to a national priority.
Shell Companies in Nigeria (SCiN) including Shell Petroleum Development Company Limited (SPDC), Shell Nigeria Exploration and Production Company (SNEPCo) and Shell Nigeria Gas (SNG) have contributed in various ways to the development of the economy.
Shell Nigeria
Besides contributions through payment of taxes and royalties, among others, they have also through their social investment projects, helped to impact in positives ways the lives of their host communities and Nigerians. In their 2020 Shell Briefing Notes – an annual scorecard of the Royal Dutch oil giant, they listed what they did in 2019 and beyond as responsible corporate citizens.
Nigeria is a thriving and vibrant country, offering opportunities for people to improve their livelihoods. These opportunities are mirrored by the scale of the challenges to provide affordable energy, education, healthcare and conditions for local businesses to grow.
To enable the citizens attain these goals, Shell has in various ways under its social investments initiatives, created projects that helped Nigerians and communities to grow.
In its 2020 Briefing Notes, the oil giant said its operating arms in Nigeria – SPDC, SNEPCo and SNG, in 2019, made direct social investments of $40 million in Nigeria, making the country the largest concentration of social investment spending in the Shell Group.
These investments, the company said, include access to affordable healthcare, supporting education, enterprise support, accelerating access to energy, assistance and safety.
The Shell Nigeria Briefing Notes gives update on activities and programmes undertaken by several Nigerian companies either wholly-owned by Shell or in which Shell has an interest. Together these are referred to as the Shell Companies in Nigeria (SCiN). SCiN comprises SPDC – a wholly-owned Shell subsidiary that operates an unincorporated joint venture (SPDC JV) in which SPDC holds a 30 per cent interest; two other wholly-owned Shell subsidiaries SNEPCo and SNG, and the Nigeria Liquefied Natural Gas (NLNG) Limited; an incorporated joint venture in which Shell has a 25.6 percent interest.
SCiN undertakes two types of social investment activities – Direct social investment across Nigeria and Community-driven development programmes and initiatives in the Niger Delta. Direct social investment focuses on community and enterprise development, education, community health, access-to-energy, road safety and biodiversity, which was added in 2018.
Community-driven development programmes and initiatives in the Niger Delta focus on various themes as determined by benefitting communities and delivered through a Global Memorandum of Understanding (GMoU). There are 39 active GMoUs in Abia, Bayelsa, Delta, Imo and Rivers States. According to the Brief Notes, Shell Companies in Nigeria have invested in healthcare and education initiatives in Nigeria for decades and they continue to support a range of programmes.
In 2019, three new GMoUs were deployed and 10 GMOUs renewed. The GMoUs provide a secure five-year funding for communities to implement development projects of their choice. GMoU projects cover community health, education, enterprise development and social infrastructure, such as improved water and power supply, and sanitation. Since 2006, a total of $252 million has been disbursed to communities through these GMoUs.
It also noted that since 2010, more than 27,000 babies have been delivered safely at Obio Cottage Hospital, a secondary health care centre in Port Harcourt, while the Community Health Insurance Scheme was also launched in 2010 at the Hospital.
Promoting Innovation
In 2018, Nigerian Yolo Bakumor Smith, CEO of De-Rabacon Plastics, won the first-ever Shell LiveWIRE Top Ten Innovators Awards for his business. De-Rabacon is a Nigeria-based plastic recycling and waste management Solution Company that recycles end-consumer plastics to viable commercial products such as pavement blocks, buckets, cans, and carpets.
“There is often a paper-thin line between success and failure in business, especially for a start-up. The training, support systems and valuable networks I have gained over the last five years courtesy of Shell LiveWIRE, have gone a long way to ensure that my business start-up, De-Rabacon Plastics is thriving.
“Shell’s approach to supporting local enterprises to grow and excel is enabling us to scale up our business and focus on designing eco-friendly, energy-efficient and affordable products. Today, my organisation employs 16 people and has recycled over 800,000 tonnes of plastic waste. We plan to achieve two million tonnes by the end of 2020,” Yolo said.
Access to Affordable Healthcare
Shell has supported community health programmes in Nigeria since the 1980s with equipment and pharmaceutical donations, emergency care and screening services, hospital maintenance and focused interventions on HIV/AIDS, malaria, cancer and vision care. Currently, Shell seeks to increase access to health services, introduce health insurance schemes and strengthen health systems.
According to the Briefing Notes, Shell continues to work with key stakeholders to achieve universal health coverage by increasing access to health and the uptake of services in the communities. The SPDC Joint Venture (JV) and SNEPCo support 20 healthcare centres and signature intervention projects throughout the country, which include Health-In-Motion community care programme, Community
Health Insurance Scheme
Health-in-Motion (HIM) is a mobile health outreach programme that takes free medical services to where people live and work. Funded by the SPDC JV and SNEPCo, it reaches an average of 50 communities annually. In 2019, HIM services benefitted 27,490 individuals in Imo, Bayelsa, Delta, Rivers and Ogun States. Since its launch in 2010, more than 667,000 people have benefitted from the programme.
The Community Health Insurance Scheme (CHIS) is a partnership between SPDC, Rivers State Government and local communities. The programme aims to provide affordable, quality healthcare to the
people of Rivers State. CHIS was launched in 2010 at Obio Cottage Hospital, a secondary health care centre, just a short walk from the SPDC JV offices in Port Harcourt. CHIS costs individuals $30 per year and covers about 95 per cent of people’s health care needs. Since 2010, more than 67,000 people have been enrolled.
In 2019, nearly 8,500 new clients registered. The hospital has also seen an increase in the uptake of services. For example, the average number of patients using the facility increased from about 600 at inception to about 7,700 per month in 2019, making Obio one of the most utilised health facilities in the region.
This successful pilot has now been expanded to three other locations including the Oloibiri Health Programme (OHP), highlighting the possibility for extended healthcare coverage in Nigeria.
The Oloibiri Health Programme is a Shell-sponsored local government initiative in the Ogbia area of Bayelsa State. It is designed to improve health outcomes in an innovative and holistic way. The initiative included a full refurbishment of the Kolo General Hospital, which was inaugurated in July 2019.
More broadly, the initiative focuses on improving and maintaining health, not just treating illness. It strengthens local healthcare systems by upgrading and integrating facilities, training and supporting local healthcare and community workers and ensuring a reliable supply of medicines.
The programme has seen increase in service utilisation to 4,210 patients in 2019 from an average of 833 patients in 2017. It has also provided training for over 130 health workers at community, local and state government levels. In addition to this, it has trained 117 volunteers as facility-based extension workers in house-to-house healthcare.
To anchor the sustainability of the OHP, the initiative aims to establish the Oloibiri Health Foundation that will institute the Ogbia Health Insurance Scheme akin to the scheme in place at the Obio Cottage Hospital. The scheme will be launched with a one-time contribution from Shell and the Bayelsa State Government.
Supporting Education
Since the 1950s, the Shell scholarship schemes have supported several thousands of students many of whom are among Nigeria’s business, political and social leaders. In 2019, the SPDC JV and SNEPCo invested $7.8 million in scholarships. Since 2011, the schemes have awarded more than 9,400 secondary school grants and over 6,000 university grants to students.
The SPDC JV and SNEPCo invest in the Cradle-to-Career scholarship programme, which pays for children from rural communities to attend some of the country’s top secondary schools. The SPDC JV has awarded a cumulative 600 Cradle-to-Career (c2c) scholarships in the Niger Delta. In 2014, SNEPCo began offering these scholarships to applicants across the country, and so far, 471 students have benefitted. Since 2010, more than 1,000 students have received scholarships. The scholarships cover the full cost of tuition, travel, accommodation, uniforms, books and laptops.
For the best tertiary education, Shell invests in advancing education through university scholarships, student exchange programmes and focused research. Since 2011, the SPDC JV and SNEPCo have awarded more than 6,000 university scholarships. As part of the drive to motivate students and reward the high performers in the University Scholarship Scheme, the highest-achieving students are then also given the opportunity to participate in the SPDC JV Students Industrial Work Experience (SIWE) programme.
The SPDC JV also established the Shell Niger Delta Post Graduate scholarship programme which has benefitted 92 students from the region over the last decade. The programme offers one-year scholarships to three UK universities for studies related to the oil and gas industry. The SPDC JV, in collaboration with the University of Benin, funds a Centre of Excellence (CoE) in Geosciences and Petroleum Engineering and in 2017, collaborated with the Rivers State University to set up a CoE, which specialises in Marine and Offshore Engineering. By the end of 2019, over 75 students had graduated from the programmes and over 81 per cent of these graduates are currently employed.
Enterprise Support
Shell works to improve the chances for Nigerians to achieve their ambitions. In addition to providing access to loans to small and medium businesses which could become Shell suppliers and contractors, there is also the LiveWIRE youth enterprise development programme. LiveWIRE was launched in Nigeria in 2003 and provides training and finance to young people between the ages of 18-35 to start or expand their own businesses. In 2019, 140 people benefitted from the LiveWIRE programme, receiving training in enterprise development and management, as well as business start-up grants.
More than 7,000 Nigerian youths have so far been trained under the programme and almost 4,000 young entrepreneurs were provided with business grants. Two Nigerian enterprises were shortlisted in 2019 for the Shell Global Top Ten Innovators Awards – a global competition, which highlights and rewards businesses that demonstrate excellence in innovation as well as giving entrepreneurs a chance to shine on a global platform. The enterprises were FarmToJuice and Foods Nigeria Limited and Basiled Energy Ventures. FarmToJuice produces juices, processing any waste into livestock feed and using a biogas digester to provide energy. Basiled provides solar lamps, solar installation maintenance and repair and solar battery recycling services.
In 2014, Shell extended LiveWIRE to Ogoniland despite the SPDC JV no longer producing oil and gas in the area. Shell’s aim was to help raise living standards and reduce crude oil theft in the area through the promotion of sustainable alternative livelihoods.
This was in line with one of the recommendations of the 2011 United Nations Environment Programme (UNEP) Report for the restoration of the Ogoni environment. In 2018, 100 Ogoni youths from communities near the Trans Niger Pipeline participated in training with 80 top performing trainees receiving business start-up funding amounting to more than $90,000.
In 2019, the Ogoniland programme gave way to a livelihood programme led and executed by the Hydrocarbon Pollution Remediation Project (HYPREP), an agency established by the federal government and to which the SPDC JV contributes funds. The programme will train 1,200 Ogoni women in various skills.
Every year Shell LiveWIRE supports thousands of individuals to access the knowledge, skills, networks and resources to turn their business ideas into successful enterprises which provide a sustainable income, create jobs and drive innovation. The purpose of LiveWIRE is to improve opportunities for young people to realise their potential through the creation and development of their own businesses.
Humanitarian Assistance
For many years, Shell has sustained a culture of care by supporting humanitarian programmes in Nigeria to save lives, especially during crisis and disaster. In 2017, a contribution of more than $3 million to the Mercy Corps and Family Health International programme benefitted over 70,000 displaced persons in north eastern Nigeria.
In 2018, SPDC provided relief materials worth $1 million to communities hit by floods in the Niger Delta and two other severely impacted states in the country. In 2019, SNG continued to demonstrate its commitment to road safety in Nigeria by extending existing collaboration with the Federal Road Safety Corps in Ogun State to Rivers State.
The campaign has held 26 road safety awareness events and reached more than 5,000 people since its launch in 2007. SNG also held a one-day hydrocarbon training for firefighters from Abia and Ogun States to further strengthen their capability.
Since 2018, SPDC and SNEPCo have committed $6 million to the government-driven strategic intervention projects for Internally Displaced Persons (IDP) in Yobe and Borno States. The projects focus on immediate relief and critical support development related to health, water and sanitation, education and shelter.
Access to Energy
Shell aims to provide a reliable electricity supply to 100 million people, primarily in Africa and Asia by 2030. Nigeria features in that vision. Despite its oil and gas resources, Nigeria has one of the highest levels of energy poverty in the world. In addition to investing in Nigeria’s gas development and distribution network, Shell has established All-On to boost off-grid supply to homes and small businesses in the Niger Delta.
All-On, an impact investing company, became operational in 2017 and is an independent Nigerian company that works with partners to increase access to commercial energy products and services. In December 2019, Shell made a significant additional long-term financing commitment to All-On.
Rystad Energy has said that global awards for floating production, storage and offloading (FPSO) vessels will likely be limited to a single unit in 2020, as exploration and production firms slash budgets and activity.
The company also believes that hit by the second industry downturn in five years, similar to the previous downturn, awards are set to recover next year, with seven projects likely to be sanctioned.
Rystad Energy is an Oslo, Norway based independent energy research and business intelligence company providing data, tools, analytics and consultancy services to clients worldwide. Offshore Energy reported yesterday that Modec, a floating solutions provider for the offshore oil and gas industry, won the only contract so far awarded in 2020 and will supply a new built FPSO for Woodside’s Sangomar development in Senegal.
The vessel, which will be the first FPSO to operate in Senegal, will be supplied on a turnkey basis and feature topsides capable of handling 100,000 barrels per day (bpd) of oil and 130 million cubic feet per day (cfd) of gas.
“Rystad Energy estimates that the total greenfield capex for Sangomar phase 1 will be around $4.2 billion, Offshore Energy said. it said that for the remainder of 2020, Rystad does not expect to see any new FPSO contracts being awarded. “Over the last 10 years, only 2016 saw a lower level of activity when not a single FPSO contract was awarded,” the report noted.
However, from 2016 activity quickly rebounded with 27 awards in the three-year period from 2017 to 2019. “This time too, we expect to see a speedy comeback in FPSO sanctioning with seven projects expected next year, including Bacalhau and Mero 3 in Brazil and Payara (Prosperity) in Guyana”, the report quoted Aleksander Erstad, energy research analyst in Rystad Energy.
Aside from new FPSO contracts, three charter contract amendments were disclosed in the second quarter of 2020. The first contract amendment was for Altera Infrastructure’s (previously Teekay Offshore) Petrojarl Knarr, which has been on contract with Shell since 2015. The amendment extends the charter period from March 2021 to March 2022. Under the previous agreement, Shell would pay a penalty if they terminated the contract before 2025.
This termination penalty has been removed in return for a new production and an oil price tariff. The day-rate is also set to fall from March 2021 as low oil prices hurt the field’s profitability. It now seems likely that Shell will shut down the field a few years down the road. Liquids production at Knarr averaged 12,000 bpd in 2019.
The agency noted that in India, Bumi Armada and Shapoorji Pallonji Group received a notification from ONGC about their intention to extend the charter contract for the Armada Sterling FPSO. The seven-year fixed portion of the charter contract expired on April 19 and ONGC now has six annual extension options that can be exercised. The length of the current extension is not yet disclosed as contract formalizations have stalled due to the Covid-19 lockdowns in India.
Mammoet Demobilizes Equipment at Dangote Refinery - Orient Energy Review
With the final 1,240tonne propylene mounded bullet installed at Dangote Petroleum Refinery and Petrochemical complex in Nigeria, Mammoet is demobilizing equipment it has deployed there over the past two years.
Mammoet was contracted to assist in the construction of the refinery in 2018. The scope consisted of receiving, inland transport, on site lifting and installation of hundreds of refinery components.
Sourced globally and consisting of multiple shipments, these components were delivered to the purpose-built Dangote Quay Lekki in Lagos. They were then transported to the project site. Prior to installation, the components were stored temporarily on freshly paved Enviro-Mat; which Mammoet describes as its innovative and sustainable solution for native soil improvement, which was deployed to provide the main crane hard stands.
To optimize the construction process and schedule and ensure the highest levels of construction uptime, Mammoet says it has drawn on its diverse fleet of heavy lifting and transport equipment. “This has included conventional trailers and trucks, Self-Propelled Modular Trailers (SPMTs), plus mobile and crawler cranes ranging in capacity from 250tonnes to 1,600tonnes,” the report said.
Mammoet reportedly brought two of its largest super heavy lift ring cranes with lifting capacities up to 5,000tonnes – the PTC 200 DS and PT 50 – to bring maximum efficiencies to the execution of the project. Their lifting capacity, combined with a long reach and a small footprint, enabled more efficient approaches to lifting and installing heavy and oversized components, such as a 3,000tonne regenerator- which Mammoet claims is “the heaviest item ever transported over a public road in Africa” and a 2,000tonne crude column “ – the largest crude column in the world.
Throughout the duration of the project Mammoet transported 239 items from the jetty to site, with a combined weight of 84,905tonnes and installed 154 items with a combined weight of 68,415tonnes, Africa Oil + Gas Report said.
Over 100 Mammoet professionals worked on this project for around two years adhering to the strictest safety standards – ensuring transportation and installation activities were efficiently scheduled and safely executed. Precise planning and thorough coordination were crucial to minimize delays and additional costs, maximizing the project’s efficiency.
During the project, Mammoet and its partner in Nigeria – Northridge Engineering, contributed to the local community by ensuring that the operations created value and opportunities by supporting local employment, training and encouraging local businesses to be part of the supply chain. Fifty four local employees were crucial to this work, covering a range of skills including SPMT operators, crane riggers and drivers. Mammoet also subcontracted work to 43 Nigerian businesses throughout its two years on site.
Dangote refinery is a 650,000 barrels per day (bpd) integrated refinery and petrochemical project under construction in the Lekki Free Zone near Lagos, Nigeria. It will be Africa’s biggest petroleum refinery and the world’s biggest single-train facility.
Once onstream, the refinery will increase the country’s oil exports and reduce its reliance on imports of petroleum products, thereby boosting economic growth in Nigeria and generating thousands of jobs.
Gaz du Cameroun (GDC) says it is terminating its gas supply agreement with ENEO Cameroon (ENEO) with immediate effect, having reached a 30-day agreed remedy period, ESI Africa reported yesterday.
Gaz du Cameroun is a fully integrated energy utility company that has pioneered the production and distribution of gas in Cameroon. Gaz du Cameroun (GDC), is a 100% owned subsidiary of Victoria Oil and Gas plc, a UK listed company, supplying gas to customers in Douala, Cameroon. ENEO is majority-owned by Actis LLP (51%), a London-based investment company, with the Government of Cameroon owning 44%, and its employees owning the remaining 5%.
Leading up to this event, Victoria Oil & Gas (VOG), whose wholly-owned subsidiary GDC is the onshore gas producer and distributor with operations located in the port city of Douala, has provided an update and summary on the gas sales agreement with ENEO.
The Logbaba power station was commissioned in April 2015, supplying 30MW of electricity to the grid. The supply was interrupted in January 2018 as ENEO faced its own cash flow and debtor problems but restored in December 2018.
On 14 September 2019, the generator supplier suspended operations at ENEO’s Logbaba site due to non-payment of invoices by ENEO. Consequently, Gaz du Cameroun has not been required to supply gas to ENEO since that date but has continued to invoice ENEO based on Take-or-Pay provisions as per the binding term sheet.
The ESI Africa report quoted Roy Kelly, the chief executive of VOG, saying: “Over the last few months, the management has conducted a thorough review of the business identifying key issues which need firm and decisive action. It is nonetheless regrettable that the Company has had to take this extreme action now, but all other approaches have failed to secure timely payment of aged debt, putting the company’s cash flow under pressure.”
GDC reportedly supplied natural gas to ENEO at its Logbaba power plant since 2015 despite ENEO’s poor payment record. GDC has made repeated requests in writing and in person to the senior management of ENEO to discuss a method of settlement of its burgeoning debt, which now stands at $16 million receivables ($9 million net to GDC) as at the end of June 2020.
Furthermore, the fully termed agreement and payment guarantee that were due to quickly follow the binding December 2018 term sheet have not been forthcoming. As a result of this untenable situation, GDC served a notice of Event of Default on ENEO pursuant to the signed binding term sheet on 2 June 2020, which included a 30-day remedy period, the report said
“As we have reached the expiry of this remedy period, GDC has no alternative but to terminate the gas supply agreement with immediate effect. VOG will now rigorously pursue this unpaid debt via the legal channels available to it, including a penalty payment of three months’ fees as a result of termination as per the signed term sheet,” the company said.
While ENEO has been the highest offtaker by volume when it is online, it has been paying by far the lowest gas price amongst our large customer base, explained VOG. The company said in a statement that replacing the revenue generated by ENEO sale will therefore require significantly lower sales volumes.
“The board of VOG has been reviewing strategy in light of the continued non-payment by ENEO and possible termination. The Company’s strategy going forward will be to seek out replacement revenue in two phases: connection to high value, privately-owned, credit-worthy customers, near our infrastructure in the first phase, followed by similar customers in clusters requiring more capital to tie-in. This strategy will be outlined in more detail in the near future,” the statement read.
VOG has stipulated that it will continue to publish more comprehensive quarterly updates.
Chevron Nigeria Limited (CNL), operator of the NNPC/CNL Joint Venture, is aware of the circulation of false recruitment information posted by unscrupulous persons and organizations in the name of CNL in several media and online channels, advertising job positions in CNL.
Additionally, fraudulent job offers have reportedly been sent through emails, text messages and phone calls by individuals purporting to be staff or representatives of CNL, with the intent to defraud their victims.
CNL hereby dissociates itself from such false job recruitment information and offers of employment contracts published in any newspaper, web site, email, poster, handbill or any other medium. CNL did not make or authorize such publications.
Explaining further, the General Manager, Policy, Government and Public Affairs of CNL, Esimaje Brikinn, stated that, “Members of the public are hereby notified that Chevron Nigeria Limited does not, and will not require applicants to make any payments towards processing any job application. Recruitment advertisements requesting candidates to pay money, at any point during the recruitment process, are not from CNL.”
Mr Brikinn also explained that CNL does not solicit job applications or initiate recruitment processes through emails, posters, handbills, text messages, social media or phone calls.
He advised job seekers to always check the company’s website at http:/www.careers.chevron.com and national newspapers for job advertisements from CNL.
The General Manager affirmed that CNL will not respond to enquiries about fraudulent advertisements and job offers.
…Accuse them of ‘hiding behind’ covid19 Kenya Power has been thrown into a tricky balancing scheme in procurement of electricity as the Corona virus pandemic hit the east African country, causing a significant drop — about eight per cent per month — in electricity demand in Kenya.
The East African news agency reported there are protests from independent power producers (IPPs), when it became clear that Kenya Power was planning to completely lock them out.
Last month, a consortium of six IPPs wrote to the Energy and Petroleum Regulatory Authority (EPRA) over the interpretation of a clause in the power purchase agreement (PPA) that allows a party to suspend or terminate the performance of its obligations when circumstances beyond their control arise.
At the centre of the dispute is an argument by the IPPs that the struggling utility has abused the force majeure provision by altering contracted power capacity and payments on grounds that national power consumption has fallen due to the Covid-19 pandemic.
The IPPs say Kenya Power has no unilateral right to alter the contracted capacity and capacity payments, arguing that the risk of a decline in the national demand for electricity under the PPAs is borne by Kenya Power and not IPPs.
“Whether the Covid-19 pandemic and its effects qualify as a force majeure under the PPAs, the risk of a decrease in the national demand for electricity is a risk that Kenya Power, and not the IPPs, should take under the PPAs,” says their letter dated May 15, 2020 and signed by Gulf Power, Iberafrica, Tsavo Power, Triumph Power, Rabai Power, and Thika Power.
“Without this fundamental principle, the PPAs are unbankable and would never have been financed in the first place. Regardless of whether a reduction in the demand for electricity has occurred due to force majeure or otherwise, Kenya Power does not have a unilateral right to adjust the contracted capacity or capacity payments under the PPA.”
The East African learnt that the national control centre (NCC), the facility that Kenya Power uses to match supply with consumption demand and allocates power to customers according to their daily, weekly or seasonal demands, has become a focal point of the IPPs pushing for uptake of their electricity.
“The pressure at the NCC is unprecedented because every producer wants Kenya Power to absorb their electricity. The situation is worsened by the fact that we have so much electricity in the country because the dams are full,” a senior manager at Kenya Power told the The EastAfrican. With Kenya having developed a mechanism of electricity uptake based on least cost generation mix to cushion consumers from high electricity prices, Kenya Power has opted to prioritise the procurement of electricity from cheap sources mainly geothermal, hydro, wind and solar.
To protect itself from lawsuits considering that it has bidding power purchase agreements (PPAs) with the IPPs, Kenya Power, which last month issued a profit alert, has opted to issue the IPPs with force majeure notices, effectively stating its inability to buy power from them.
However, in a protest letter addressed to the Energy and Petroleum Regulatory Authority, the IPPs have accused the company of hiding behind the Covid-19 pandemic to conceal its procurement system that had resulted in massive oversupply of electricity.
Lake Turkana Wind Power (LTWP), which operates the 310MW windfarm in Turkana, is among producers that have been forced to develop an operational work plan with Kenya Power that balances generation with uptake.
LTWP has a low-cost initial tariff of $0.095 per kilowatt hour (kWh) for the first six years of operations that would be adjusted downwards to 0.084 per kWh for the remaining 14 years of its 20-year PPA with Kenya Power.
The Kenya National Bureau of Statistics in its first quarter economic report paints the picture of the crisis facing the electricity sub-sector after supply recorded a decelerated growth of 6.3% compared with a growth of 7.8% in the first quarter of 2019.
During the period, generation from hydro expanded by 29.8% compared with 22.7% in 2019 while generation from geothermal grew by 10.6% compared to a contraction of 2.3% same period in 2019.
By end of last year, the country’s installed capacity stood at 2,819 MW against a peak demand of 1,912 MW. Geothermal remains the major source of electricity in Kenya accounting for 45 per cent of total generation.
Despite the excess capacity amidst muted growth in demand, Kenya Power has continued to sign PPAs with new producers, further exposing the company to worsening financial performance.
In the financial year ended June 2018, the company posted a net profit of $17.6 million, from $48.3 million realized in 2017, the EastAfrican said. For the year ending June 2019, the company’s performance continued on a downward trend, and posted a net profit of $2.4 million.
A report said yesterday that there had been fresh Coronavirus lockdowns in the United States making it difficult for a rise in the demand for gasoline.
The report by Hellenic Shipping News said the market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Brent crude futures were up 5 cents, or 0.12%, to $43.34 by 1139 GMT, after gaining 0.5% on Wednesday, while U.S. West Texas Intermediate (WTI) crude futures dipped 14 cents, or 0.3%, to $40.76, after rising 0.7% the previous day.
“Support will disappear after this week as coronavirus cases are surging in several U.S. states,” the report quoted Tamas Varga at PVM Oil Associates, who added that a fall in prices was likely. Data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts expected, as demand hit its highest level since March 20.
But a spike in coronavirus cases across several U.S. states raised the prospect of renewed lockdowns that would likely dent any sustained recovery in fuel demand, the report said. That kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.
U.S. gasoline demand was falling in areas where lockdowns were being reinstated, although on the East Coast, where coronavirus infections were under control, it was recovering well, Lachlan Shaw, head of commodity research at National Australia Bank, said.
The United States reported more than 60,000 new COVID-19 cases on Wednesday, the biggest increase reported by a country in a single day. Libya, whose ports have been blockaded since January, is trying to resume exports after the state oil firm lifted force majeure at its Es Sider oil terminal on Wednesday. However, a tanker was prevented from entering the port.
US COVID-19 New Lockdowns Dim Hopes for Gasoline Demand Recovery A report said yesterday that there had been fresh Coronavirus lockdowns in the United States making it difficult for a rise in the demand for gasoline.
The report by Hellenic Shipping News said the market is also in a holding pattern ahead of a meeting on July 15 of the market monitoring panel of the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Brent crude futures were up 5 cents, or 0.12%, to $43.34 by 1139 GMT, after gaining 0.5% on Wednesday, while U.S. West Texas Intermediate (WTI) crude futures dipped 14 cents, or 0.3%, to $40.76, after rising 0.7% the previous day.
“Support will disappear after this week as coronavirus cases are surging in several U.S. states,” the report quoted Tamas Varga at PVM Oil Associates, who added that a fall in prices was likely. Data from the U.S. Energy Information Administration showed U.S. gasoline stockpiles fell by 4.8 million barrels last week, much more than analysts expected, as demand hit its highest level since March 20.
But a spike in coronavirus cases across several U.S. states raised the prospect of renewed lockdowns that would likely dent any sustained recovery in fuel demand, the report said. That kept the benchmark crude contracts in tight ranges this week, although holding above $40 a barrel.
U.S. gasoline demand was falling in areas where lockdowns were being reinstated, although on the East Coast, where coronavirus infections were under control, it was recovering well, Lachlan Shaw, head of commodity research at National Australia Bank, said.
The United States reported more than 60,000 new COVID-19 cases on Wednesday, the biggest increase reported by a country in a single day. Libya, whose ports have been blockaded since January, is trying to resume exports after the state oil firm lifted force majeure at its Es Sider oil terminal on Wednesday. However, a tanker was prevented from entering the port.
The United Nations Development Programme (UNDP) in collaboration with the Sudanese Standards and Metrology Organization (SSMO)/UNDP on Monday launched a ‘Solar Lab’ to provide testing and certification services for solar energy technology.
The UNDP said in a statement that the lab’s core function is to ensure the quality and longevity of imported solar systems, and support Sudan’s solar revolution. The statement points out that in a large and high sunshine hours country like Sudan, solar energy offers significant opportunities and a way to rebuild better post-Covid-19.
“The opening of this facility constitutes a great leap forward in the renewable energy sector in Sudan,” said Dr Omar Abdullah Ibrahim, Director of Planning and Studies at SSMO. “The establishment of the laboratory and the setting of standards for solar energy systems enables SSMO to ensure that imported solar systems conform to the approved technical and environmental standards,” Ibrahim stated further.
With many of Sudan’s imported solar systems being refurbished, testing guarantees the quality, authenticity, and reliability of these products, which will provide up to 20 years of renewable energy for Sudanese users.
The Solar Lab, funded by the Global Environment Facility (GEF), UNDP, SSMO and Ministry of Energy and Mining, will test and certify 20-30 imported solar panels, systems, and solar-powered water pumps per day – with thousands already destined for Sudan’s agricultural sector.
The lab’s establishment follows the creation of national, globally-aligned solar technical standards by the SSMO, and will also support solar technology research and technical improvements.
“Sudan has an opportunity for a solar revolution, transforming agriculture, transport and many other sectors. Solar energy can unlock economic potential, break reliance on petroleum products with their fuel and subsidy costs, create jobs, boost productivity and protect the environment.
“In Northern State, an agricultural solar power trial increased productivity and land use by almost 50 per cent, while eliminating fuel costs, and crop loss due to limited fuel supply,” said Selva Ramachandran, UNDP Sudan’s Resident Representative.
Ramachandran continues: “Facing the socioeconomic impacts of Covid-19, we must build forward. Solar energy is one way to make that happen, and the Solar Lab is a crucial step.”
In addition to funding, SSMO and the Ministry have contributed a team of technical experts and engineers for the lab’s operation – supported with UNDP training – as well as land and equipment. Additional engineers from the University of Khartoum have been trained and will be involved in the lab’s operations.
SSMO is a Government of Sudan entity established to coordinate Sudan’s engagement with regional and international organisations, including the International Standards Organization (ISO). SSMO operates 15 testing and certification laboratories across Sudan. Adding solar technology expands SSMO’s mandate and expertise, ahead of the UNDP / Global Environmental Facility roll-out of 1,469 solar-powered water irrigation pumps to farms in Northern State by 2021.
The Solar Lab and “Solar for Agriculture” initiatives are part of UNDP Sudan’s broad efforts to drive solar and wind energy in agriculture, transport, housing, and infrastructure. Combined, UNDP Sudan aims to reduce climate impact and reliance on imported fossil fuels, generate livelihoods and increase Sudan’s economic potential.
The Nigerian government has concluded plans to set up an agency to be known as National Acreage Management Strategy (NAMSTRA) before the end of this year. The agency will be responsible for putting in place strategies to determine and manage the nation’s periodic bid rounds in the oil and gas industry.
Director of the DPR, Mr Sarki Auwalu, who dropped the hint at a webinar, stated that setting up the agency is necessary given the role of the marginal fields to national revenue and economic development, and the fact that the last bid round was about 17 years ago.
He said that there was a need to determine Nigeria’s potential oil basins and when to call for bid rounds, a good reason for the country to be competitive within the sub-Saharan region. He stated that NAMSTRA will have enough in its hands given the nation’s available seven basins comprising the Benue (North-central), Sokoto (North-west border), Chad (North-east), Bida (Central, along the Niger valley), Dahomey (South- west), Anambra (South-east) Basins and the Niger Delta (South coastal), including the deep water.
“The establishment of NAMSTRA would help the country to decide the next bid round after assessing the commercial viability of the basins.
“NAMSTRA will also help to determine how prolific such basins will be in a bid round process,” he stated.
He added that no fewer than 10 companies had sought for each of the marginal field put out for bid this year, which translates to about 600 companies in all bidding for the 57 oil fields. “First I will say that we have really witnessed an increase in bidders after the extension of the deadline to June 21. There has been almost 30% increase in participation.
“If you are making a bid or auctioning any oil field, you need to get 10 people per field really going after the field. We have 57 fields and we have over 600 companies. So, we can say that we are celebrating success so far. After the extension, we are moving according to schedule and now we are in the phase where we do pre-qualification for the bidders to apply. Everything is going perfectly.” He said .
However, the DPR director said oil and gas companies that have become successful in the 2020 marginal fields bid rounds had just two years to deliver their first oil.
According to him, the federal government expects bidders to have both funding and technicalities already prepared for production and should launch into exploration immediately upon winning, adding that the bidding process is electronically-based.
Auwalu explained that the federal government will give the winners support in terms of providing advisory roles on how to meet their target. “Already, we have 16 marginal field operators producing in the country, and we have seen how they went about it. So, the government is prepared to help winners succeed by giving them aggressive work implementation tactics,” he said.
The webinar was organised by the Nigerian Association of Petroleum Explorationists (NAPE), with the theme: “Nigeria Marginal Field Bid Round: Implications, Challenges and Opportunities”.
Nigerian National Petroleum Corporation (NNPC) has said that it paid about N1.7 trillion to the Federation Account Allocation Committee (FAAC), between February 2019 and February 2020. In the national oil company’s full monthly financial report released on Tuesday, the company stated that it remitted N148.53 billion to the FAAC in February 2020.
The report said that in the same February, the NNPC recorded a total export of $370.69 million, indicating a decrease of 14.75% compared to the previous month.
Crude oil export sales contributed $281.14 million (75.84 per cent) of the dollar transactions compared with $336.65 million contribution in the previous month; while the export gas sales amounted to $89.55 million in the month.
“In February 2020, NNPC remitted the sum of N148.53 billion to the FAAC. From February 2019 to February 2020, total NNPC remittances to FAAC is N1.706 trillion; out of which federation and JV received the sum of N763.35 billion and N942.80 billion respectively.
“A total export sale of $370.69 million was recorded in February 2020; decreasing by 14.75 per cent compared to last month. Crude oil export sales contributed $281.14 million (75.84 per cent) of the dollar transactions compared with $336.65 million contribution in the previous month; while the export gas sales amounted to $89.55 million in the month.
“February 2019 to February 2020 crude oil and gas transactions indicated that crude oil & gas worth $5.19 billion was exported”, the financial report said.
The report also put total export receipt at $282.32 million for February 2020 as against $626.80 million in January 2019, pointing out that contribution from crude oil amounted to $171.24 million while gas and miscellaneous receipts stood at $85.65 million and $25.43 million respectively.
“Of the export receipts, $161.39 million was remitted to the Federation Account while $120.93 million was remitted to fund the JV cost recovery for the month of February 2020 to guarantee current and future production.
Total export crude oil and gas receipt for the period of February 2019 to February 2020 stood at $5.38 billion. Out of which the sum of $3.70 billion was transferred to JV Cash Call as first line charge”, it stated.
The corporation said that in January 2020, total crude oil production in Nigeria increased by 3.46 mb or 5.69 per cent at 64.26 mb with daily average of 2.07 mb/d.
However, it added that “production was disrupted by the shutdown of the TFP at Forcados for repairs while Bonny NCTL was shut down due to leaks on ROW near Boro /Awoba axis.
“Production was also interrupted at Bonga, Egina, Brass, Erha, Usan, Amenam, Ogo Ocha and Ima terminals due to lube oil loss, pump issues, loss of power, riser protector replacement, pipeline repairs, and flare management.”
NBS Says Nigerian Enjoy Electricity Only 7hrs Daily - Orient Energy Review
Nigeria’s National Bureau of Statistics (NBS), has said that of the 24 hours in a day, residents enjoy an average of only 6.8 hours electricity from national grid. Drawing from a survey published on Wednesday, the NBS said the report exposes the critical and epileptic power situation faced in the country.
The published survey, titled “Nigeria Living Standards Survey,” which was done in collaboration with the World Bank, involved responses collated from about 22,110 households nationwide.
The survey also discovered that in the remaining hours of the day, Nigerians either stay in the dark or adopt alternative energy sources, including power generating sets or solar systems. The survey stated that slightly over 63% of households have access to electricity from various sources, and the numbers however vary depending on location.
For instance, in Taraba state, only 19.2% of households reported having electricity, compared with the over 98% of households with access to power in Lagos.
The 82.2% Nigerians, who reported that the national grid was the main source where they get electricity from, said they only enjoyed power for only 6.8% per day, while they run on generators for 4.1 hours per day.
The survey also stated that respondents confirmed that they experienced 10 blackouts in the past 7 days in an average duration of 12 hours in each instance.
Nigeria is endowed with large oil, gas, hydro and solar resource, and it already has the potential to generate 12,522 megawatts (MW) of electric power from existing plants, but most days is only able to generate around 4,000 MW, which is insufficient.
Power supply difficulties cripple the agricultural, industrial and mining sectors and impede the Nigeria’s ongoing economic development. The energy supply crisis is complex, stems from a variety of issues and has been ongoing for decades.
The power plant currently proposed would output around 10% of the country’s power which is twice as much as recommended. Nuclear energy also requires a stable energy grid to be maintained and that independent off site power is needed, which Nigeria does not have.
The President of the Nigerian Senate, Ahmad Lawan, has said that the allegations of financial recklessness and misappropriation of funds leveled against the interim management committee of the Niger Delta Development Commission (NDDC) are weighty hence the decision by the Senate to commence investigations.
The Commission is a federal government intervention agency established by Nigerian president Olusegun Obasanjo in the year 2000 with the sole mandate of developing the oil-rich Niger Delta region of Nigeria.
While declaring open an investigative public hearing by the Senate Ad-Hoc Committee on the Investigation of the Alleged Financial Recklessness in the Niger Delta Development Commission, Lawan underscored the need for the prudent application of public funds by Ministries, Departments and Agencies of Government (MDAs).
“Financial recklessness is not an attribute that anyone can afford, whether rich or poor. It is even worse with the poor, or for the organisation or a country with limited resources. This is the reason we have always highlighted the need for prudence in the application of public resources.
“The NDDC is an important statutory agency that is supposed to improve the lot of the Niger Delta community. It is, therefore, unacceptable to hear about inappropriate use of resources, or outright financial recklessness,” Lawan said.
According to the Senate President, the weighty allegations of misappropriation of public funds to the tune of N80 billion by the interim management committee of the NDDC prompted the upper chamber to investigate the Commission.
He urged stakeholders present at the hearing to cooperate with the Ad-Hoc Committee. Lawan assured the public of the Senate’s commitment to fairness and transparency in the discharge of its constitutional responsibility.
“This Senate is a responsive Senate, and it was partly the reason we made up this all-important committee in our sitting on Tuesday, 5th May 2020 to investigate the Alleged Financial Recklessness at the NDDC.
I am happy the Ad-hoc committee has made excellent progress by requesting and receiving vital information from identified stakeholders.
“This public hearing should further help the committee get more information, to enable them to come to a pleasant conclusion on the facts on ground, before reporting back to the Senate,” he said.
Chairman of the Senate Ad-Hoc Committee investigating financial recklessness in the NDDC, Senator Olubunmi Adetumbi, in his welcome address said the panel in line with its mandate, seeks “to holistically investigate all financially related allegations, mismanagement and misappropriation and the breach of the extant procurement processes as enshrined in the public procurement Act 2007.”
The lawmaker added that the exercise is not aimed at witch-hunting any individual, groups, persons or institutions, but to get at the root of the matter, that will aid in repositioning the NDDC to effectively deliver on the mandate on which it was established, to block leakages of financial mismanagement as well as promote the effective utilization of its resources for the overall development of the people of the Niger Delta region.
The Federal Government has signed a Memorandum of Understanding with Sealink Promotional Company Limited on the use of Ajaokuta jetty landing port, adding that it is a giant stride in the actualisation of its bid to develop and diversify the economy.
The Minister of Mines and Steel Development, Arc Olamilekan Adegbite who signed the MOU on behalf of the Federal Government on Wednesday in Abuja, said the use of waterways as means of transportation has the huge economic benefits.
Adegbite said the benefits of water of transport will increase the volume of commerce, remove the huge logistics challenges encountered on the road as well as reduces the damage done to the roads by heavy duty trucks as well as decrease the high cost of road maintenance.
According to the Minister, the project is being executed in conjunction with Nigeria Export Import Bank (NEXIM), adding that it’s geared towards utilising the commercial value of the jetty as well as the effective usage of the waterway, the Director, Press and Public Relations, Ministry of Mines and Steel, Edwin Opara, made said in a statement.
“The Ministry of Mines and Steel Development has taken a giant stride in the actualisation of its bid to develop the economy and diversify from crude oil. To this end the Ministry has signed a Memoranda of Understanding (MoU) with Sealink Promotional Company Limited on the use of Ajaokuta jetty landing port.
“The project which is being executed in conjunction with Nigeria Export Import Bank, NEXIM, is geared towards utilizing the commercial value of the jetty and effective usage of the waterway.
“Adegbite revealed that the use of the Ajaokuta jetty as landing port for the internal waterways would enable goods to be transported easily and at a cheaper rate and increase commercial activities around the jetty.
“He applauded the collaboration, saying that such Public Private Partnership would aid in economic growth and improve infrastructural development.
“He saluted the doggedness of the team in bringing the project to fruition and assured of the Ministry’s full support.
The House of Representatives on Wednesday bemoaned the power gridlock Nigeria is faced with, stating that the power generation companies (GenCos) and the distribution companies (DisCos), have failed Nigerians.
The lawmakers made the declaration at the inaugural Investigative hearing by the Adhoc Committee on Power Sector Reform chaired by the Majority Leader of the house, Rep. Ado Doguwa.
The committee was inaugurated by the Speaker of the House of Representative, Mr Femi Gbajabiamila following a resolution of the House at plenary to investigate and review activities in the power sector.
The Chairman of the Adhoc Committee and Majority Leader of the House of Representative, Ado Doguwa, said that the committee liaised with experts and relevant stakeholders as part of the efforts towards ensuring that it fulfills its commitment of a comprehensive review of all legislation in the power sector.
He said, “There is no gainsaying that the power sector is critical to our nation’s industrialisation and development. Interestingly, we are made to understand that the greatest issues bedeviling the sector after the unbundling of the defunct National Electric Power Authority, NEPA, is the inability to effectively transmit and distribute electricity supply across the country.
“The inability of some of these institutions to meet the covenant obligations they entered into at the time of privatization has reduced the capacity to enable reliable and quality electricity supply for both domestic and commercial use.”
Acknowledging electricity operators’ complaint on electricity tariffs not being cost-reflective, Doguwa said that while Nigerians appreciated the efforts of institutions created from the unbundling of Power Holding Company of Nigeria, particularly the GENCOs which now have the capacity to generate over 10,000 megawatts of electricity, said the power sector needed more funds and effective gas supply system to meet its obligations.
According to him, it has become clearer that the DISCOs and transmission companies needed to do more to improve electricity supply in the country. “Sadly, it appears to the common man that there is hike in electricity tariff without corresponding increase in quantity and quality of electricity supply.
“This is, indeed, the crux of the matter under the mandate of this ad hoc committee,” he added.
The Adhoc committee chairman hinted that part of the FG’s effort to improve the power supply situation brought about by the inability of value chain players to meet their basic obligations, it invited the German government to help the poor state of power in Nigeria.
“This is the situation that crystallised in what is now called the Siemens Intervention deal. lncidentally, the above and many other concerns are the reasons we invited various stakeholders and well-meaning Nigerians to this hearing,” he added.
Earlier, the Speaker House of Representatives, Femi Gbajabiamila, while declaring the hearing open, said the power sector problems had led to poor supply of electricity over the years and dampened the hope of Nigerians for industrialization and overall development the country.
“It is no longer news that despite huge investments in the power sector, little progress may have been made. ‘’
“It is becoming increasingly, worrisome that successive governments have been unable to fix the issue of power in our country, with the current state of electricity supply apparently dampening the hopes of landmark industrialization and national development.
“It is our belief that you shall be equipping the committee with ample information on the status of the power sector, next lines of action and the inter-play between major players in the sector,” Gbajabiamila said.
Peace Obi
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