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54% of Electricity Consumers Have no Meters – Sahara Group

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Rotimi Onanuga

A total of 2.8 million electricity consumers in Nigeria have no prepaid meters, the Business Leader  (Distribution), Sahara Group, the firm with majority stakes in Ikeja Electricity Distribution Company, Mr. Rotimi Onanuga, has said.

The figure represents about 54.15 per cent of 5, 172, 979, the total number of power consumers in the country.

Onanuga, who spoke at the 2016 Huawei Connect conference in Shanghai, China, also said manufacturing and trade enterprises as well as private homes spent an average of N3.5tn (about $21.9bn) annually on diesel and petrol for power generation.

He added that the huge amount was due to the unstable power supply in the country.

He said that the IKEDC had been able to distribute 61,000 meters within its area of coverage, but stated that the target was to distribute at least 300,000 meters on or before April 2017.

Onanuga listed some challenges facing power generation and the quick deployment meters to include high-line loss rate and serious electricity theft.

“The line loss rate can reach up to 40 per cent, which is much higher than that of European and American countries, pegged at eight per cent.

“Twenty per cent of consumers committed electricity theft and difficulties exist in supervision and regulation,” he said.

He expressed regret about the energy crisis in Nigeria “given that it is the most populous country in Africa, boasting a population of 173 million, which accounts for 16 per cent of the total population of Africa.”

He said, “Despite rich energy reserves, the enactment of the Power Reform Act, and continual government investments, Nigeria’s power supply still faces serious challenges with the fast development of the social economy.

“As the largest economy in Africa, Nigeria vigorously develops its infrastructures and invests primarily in four fields: energy generation, power transmission, power distribution, and renewable energy.

“Yet due to the unstable power supply, manufacturing enterprises, trade enterprises and common families spend an annual average of N3.5tn to purchase diesel and gasoline for power generation.”

The Sahara Group business leader also listed the difficulties in electricity fee collection as another challenge being faced by the IKEDC, saying that the payment period was often as long as three to four months, thereby delaying capital withdrawal.

Meanwhile, the Sahara Group said that it had contracted Huawei Technologies for its Internet of Things solution, which would aid the IKEDC to improve its performance in area of power supply and metering.

Onanuga said, “$1.4m has been paid to Huawei, spanning over a period of over two years, from January 2015 to April 2017, to enable it to set up its IoT solution in solving our power problems.”

The Sahara Group boss explained that the Ikeja Electric was already deploying the Huawei AMI Solution, “which provides a complete set of components, including smart meters, concentrators (Huawei IoT gateway AR530 series), and an electricity operation and management system.”

The Rotating Chief Executive Officer, Huawei Technologies, Eric Xu, said that infrastructure in Africa was less developed, while Information Technology was still in its rudimentary level.

He said, “Africa needs new operating model to provide modern services for its populace.”

According to him, Huawei will provide better solutions to Africa, especially to governments that will help in the transformation of the continent.

       

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Commodities

Economic Strain Halts Nigeria’s Cocoa Industry: From 15 Factories to 5

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cocoa-tree

Once a bustling sector, Nigeria’s cocoa processing industry has hit a distressing low with operational factories dwindling from 15 to just five.

The cocoa industry, once a vibrant part of Nigeria’s economy, is now struggling to maintain even a fraction of its previous capacity.

The five remaining factories, operating at a combined utilization of merely 20,000 metric tons annually, now run at only 8% of their installed capacity.

This stark reduction from a robust 250,000 metric tons reflects the sector’s profound troubles.

Felix Oladunjoye, chairman of the Cocoa Processors Association of Nigeria (COPAN), voiced his concerns in a recent briefing, calling for an emergency declaration in the sector.

“The challenges are monumental. We need at least five times the working capital we had last year just to secure essential inputs,” Oladunjoye said.

Rising costs, especially in energy, alongside a cumbersome regulatory environment, have compounded the sector’s woes.

Farmers, who previously sold their cocoa beans to processors, now prefer to sell to merchants who offer higher prices.

This shift has further strained the remaining processors, who struggle to compete and maintain operations under the harsh economic conditions.

Also, multiple layers of taxation and high energy costs have rendered processing increasingly unviable.

Adding to the industry’s plight are new export regulations proposed by the National Agency for Food and Drug Administration and Control (NAFDAC).

Oladunjoye criticized these regulations as duplicative and detrimental, predicting they would lead to higher costs and penalties for exporters.

“These regulations will only worsen our situation, leading to more shutdowns and job losses,” he warned.

The cocoa processing sector is not only suffering from internal economic challenges but also from a tough external environment.

Nigerian processors are finding it difficult to compete with their counterparts in Ghana and Ivory Coast, who benefit from lower production costs and more favorable export conditions.

Despite Nigeria’s potential as a top cocoa producer, with a global ranking of the fourth-largest supplier in the 2021/2022 season, the industry is struggling to capitalize on its opportunities.

The decline in processing capacity and the industry’s current state of distress highlight the urgent need for policy interventions and financial support.

The government’s export drive initiatives, aimed at boosting the sector, seem to be falling short. With the industry facing over N500 billion in tied-up investments and debts, the call for a focused rescue plan has never been more urgent.

The cocoa sector remains a significant part of Nigeria’s economy, but without substantial support and reforms, it risks falling further into disrepair.

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Energy

Nigeria’s Power Sector to Get $7.5bn from $30bn African Electrification Initiative, Says Minister Adelabu

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Power - Investors King

Minister of Power Adebayo Adelabu has said that Nigeria is set to receive a portion of a $30 billion investment aimed at electrifying Africa.

During a visit to Splendor Electric Nigeria Limited, Adelabu revealed that the World Bank and the African Development Bank (AfDB) have committed to this ambitious initiative with Nigeria slated to receive approximately $7.5 billion, or 25% of the total fund.

The groundbreaking initiative is designed to extend electrification to an additional 300 million Africans over the next five years.

This large-scale project aims to address the energy deficit that has long plagued the continent and is expected to transform the power infrastructure significantly.

Adelabu expressed optimism about Nigeria’s role in the project, citing the country’s large population and ongoing power sector reforms as key factors in securing a substantial share of the funds.

“I want to inform you of the proposal or the intention, which is at an advanced stage, by the World Bank and the African Development Bank to spend about $30 billion to extend electrification to an additional 300 million Africans within the next five years. Nigeria is going to participate fully in this. I am confident that nothing less than 20% or 25% of this fund would come into Nigeria because of our population,” Adelabu stated.

The minister’s visit to Splendor Electric Nigeria Limited, a porcelain insulator company, underscores the government’s commitment to involving local businesses in the electrification drive.

The investment will focus on enhancing and upgrading power infrastructure, which is crucial for improving electricity access and reliability across Nigeria.

Despite the promising news, Nigeria continues to face significant challenges in its power sector. The country’s power grid has suffered frequent collapses, with the Nigerian Bureau of Statistics reporting less than 13 million electricity customers and frequent nationwide blackouts.

The International Energy Agency highlighted that Nigeria’s national grid experienced 46 collapses from 2017 to 2023, exacerbating the nation’s energy crisis.

To combat these issues, the government is also advancing the Presidential Power Initiative, a project in collaboration with Siemens, which aims to build thousands of new lines and numerous transmission and injection substations.

Adelabu noted that the pilot phase of this initiative is nearing completion and that Phase 1 will commence soon.

With over 200 million people and a chronic energy shortfall, Nigeria’s power sector is in urgent need of overhaul.

The additional $7.5 billion from the African Electrification Initiative represents a critical step toward achieving reliable and widespread electricity access.

The investment is expected to stimulate not only infrastructure development but also economic growth, creating opportunities for local companies and improving the quality of life for millions of Nigerians.

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Crude Oil

Oil Prices Climb as Markets Eye Potential US Rate Cuts in September

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Crude oil - Investors King

Oil prices rose during the Asian trading session today on speculation that the U.S. Federal Reserve may begin cutting interest rates as soon as September.

Brent crude oil, against which Nigerian oil is priced, increased by 32 cents to $82.95 a barrel, while U.S. West Texas Intermediate crude oil climbed 34 cents to $80.47.

The anticipation of rate cuts stems from recent U.S. inflation and labor market data indicating a trend towards disinflation and balanced employment, according to ANZ Research.

The Federal Reserve is set to review its policy on July 30-31, with expectations of holding rates steady but providing clues for potential cuts in September.

The potential rate cuts could stimulate economic activity, increasing demand for oil. This optimism has been partially offset by recent concerns over China’s slower-than-expected economic growth, which could dampen global oil demand.

President Joe Biden’s announcement to not seek re-election and endorse Vice President Kamala Harris had minimal impact on oil markets.

Analysts suggest that U.S. presidential influence on oil production is limited, although a potential Trump presidency could boost oil demand due to his stance against electric vehicles.

In response to economic challenges, China surprised markets by lowering key policy and lending rates. While these measures aim to bolster the economy, analysts remain cautious about their immediate impact on oil demand.

With OPEC+ production cuts continuing to support prices, the focus remains on the U.S. Federal Reserve’s next moves.

Any decision to cut rates could further influence oil prices in the coming months, highlighting the interconnectedness of global economic policies and energy markets.

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