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Power Sector Loses N549b Yearly to Gas Constraints



Gas Plant
  • Power Sector Loses N549b Yearly to Gas Constraints

Nigeria’s power sector is losing an average of N549 billion yearly to gas supply challenges. The situation has continued to deprive the country of over 2,479 Mega Watts (MW) daily.

According to the Nigerian Electricity Supply Industry (NESI), the sector is losing an estimated N1.525 billion daily due to power generation constraints.

Further analysis showed that losing N1.525 billion daily to lack of gas to power plants, translated to N45.75 billion monthly.

NESI said, in its daily power generation analysis, that the country recorded line constraint of 394.5MW and high-frequency constraints of 303MW as at October 12, 2016. It explained that the revenue losses were calculated using a net, average and levelised tariff of N20/kWh. The agency stressed that in gross terms, this implies average end-user tariffs of circa N32/kWh inclusive of all Aggregate Technical and Commercial losses (ATC&C) and export sales if one adopts the assumptions contained in MYTO 2.1.

NESI, which noted that 85 per cent of the combined installed capacity of power plants in Nigeria was fuelled by gas, added that “availability of gas molecules is low due to insufficient production, economic disincentives, inadequate infrastructure and frequent vandalism.”

Corroborating NESI, the Nigerian National Petroleum Corporation (NNPC) stated that gas supply dropped from the 619 mmscfd in August 2015 to 405 mmscfd in July this year to generate an average power of about 1,911mw compared with 2,694mw generated in the same period of the previous year.

Specifically, power generation from gas-fired plants has been dropping steadily from 3,472mw in August 2015 to 2,017mw in May 2016 and to 1,911mw in July 2016.

On individual basis, Eko Electricity Distribution Company Plc (EKEDP) is losing about N2.5 billion monthly in revenue.

The Chief Executive Officer, Oladele Amoda, said that the company used to generate above N4 billion monthly but it had dropped to about N1.5 billion.

“The drastic drop in power supply within our network has affected the company’s operation deeply. It has also impacted on the revenue and business activities significantly,’’ he said. According to him, the shortfall has adversely impacted on the ability of the company to make capital investment in metering, network expansion, equipment rehabilitation and replacement that are critical to service delivery.

Speaking on the solutions to gas supply crisis, the President, Nigerian Gas Association (NGA) and Chief Executive Officer of Oando Gas & Power, Bolaji Osunsanya, described the current challenge as man-made, noting that it would require a multifaceted approach to address the key drivers of the disruption.

The approach, he said, would include a combination of dialogue, an alignment of interests, applicable sanctions, and fair treatment.

“For one, the creation of an appropriately constituted and independently audited host community fund would be a way of further positioning the oil and gas communities as key stakeholders.

“In the interim, the government needs to increase the engagement and involvement of community leaders and influencers to create the necessary awareness regarding the crippling effects of the current disruptions in the Niger Delta on the environment and the local economy.

“The government must also consider other initiatives to expand the supply of gas into the market. Such an initiative would be tailored to ensure that the gas is deliberately developed for supply into the market.”

To the Managing Director of Frontier Oil Limited, Dada Thomas, Nigeria’s gas-to-power value chain itself is terminally sick in the emergency ward and infested with a number of crippling diseases chief among which are the primary diseases of vandalism of oil and gas facilities and sector illiquidity.

According to him, vandalism of oil and gas facilities is topical and has brought the Nigerian oil and gas industry and the power sector on its knees.

Thomas stated: “We are all witnesses to the impact that this is having in all sectors of the Nigerian society presently. Indeed the government has only achieved 51.3 per cent of its half-year budget target in 2016.

“This is because there has been vandalism of not only oil facilities, but gas facilities and pipelines. In the past six weeks, the third party-owned gas evacuation system through which our company – Frontier Oil Limited – transports gas has been sabotaged twice resulting in the loss of about 450 megawatts of power from the nation’s generation capacity thereby worsening an already dire situation.”

He emphasised the need for the Federal Government to introduce quick win initiatives that will put a stop to vandalism of oil and gas assets and ensure oil and gas production ramps back up to circa 2.2 million barrels of oil production per day and 5,000mw of power generation.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade experience in the global financial markets.


US Senate Passes $1.9 Trillion Stimulus Package



US Senate Passes $1.9 Trillion Stimulus Package

President Biden’s $1.9 trillion economic stimulus plan would have far-reaching effects on society as the country tries to turn the corner on a pandemic that has killed more than half a million people in the United States.

The mammoth bill approved by the Senate on Saturday would provide direct payments to Americans, extend jobless benefits and provide a huge financial infusion to states and local governments as well as to schools to help them reopen. It provides funding for priorities like coronavirus testing and vaccine distribution. And it amounts to an ambitious antipoverty program, offering significant benefits for low-income people.

Here’s a guide to what’s included in the plan, which is scheduled to go before the House for final approval on Tuesday and then would head to Mr. Biden for his signature.

Individuals making under $75,000 and married couples making under $150,000 would receive direct payments of $1,400 per person. The bill would also provide $1,400 per dependent.

The payments would gradually decrease above those income levels and disappear entirely above an income cap: $80,000 for individuals and $160,000 for married couples.

Those caps were lowered from the thresholds in the House’s version of the stimulus plan, which set the cutoffs at $100,000 for individuals and $200,000 for married couples.

The Senate bill extends unemployment programs through early September, including the $300-per-week federal supplement provided in the last stimulus plan passed in December.

Mr. Biden had proposed bumping up that supplemental benefit to $400 per week, which the House agreed to, but the Senate kept it at $300 weekly.

The Senate bill also includes a provision intended to avert surprise tax bills for people who lost jobs, waiving federal income taxes for the first $10,200 of unemployment benefits received in 2020 for households earning under $150,000.

For 2021, the bill would temporarily expand the child tax credit, which is currently worth up to $2,000 per child under 17. Under the legislation, the tax credit would be as much as $3,600 for children up to age 5 and as much as $3,000 for children 6 to 17.

The bill would make the full value of the credit available to low-income people who are currently ineligible or receive only a portion. And for the second half of this year, it would have the federal government send advance payments of the credit to Americans in periodic installments, akin to a guaranteed income for families with children.

The legislation would also expand the child and dependent care tax credit for 2021, and it would expand the earned-income tax credit for workers without children for this year as well. Through 2025, it would exempt student loan forgiveness from income taxes.

The bill would provide funding for vaccine distribution as well as coronavirus testing, contact tracing and genomic sequencing. It would give money to the Federal Emergency Management Agency as well.

It would provide $350 billion for states, local governments, territories and tribal governments, and it contains about $130 billion for schools. It also includes funding for colleges and universities, transit agencies, housing aid, child care providers and food assistance.

In addition, the bill contains funding to help businesses, including restaurants and live venues, and it includes a bailout for multiemployer pension plans that are financially troubled.

The bill would temporarily increase subsidies for people purchasing health insurance through the Affordable Care Act’s marketplaces. It includes billions of dollars for public health programs and veterans’ health care.

It also seeks to help those who have lost jobs keep the health insurance coverage they had through their employer, covering the full cost of premiums through a federal program called COBRA through September.

As part of the stimulus plan, Mr. Biden wanted to raise the federal minimum wage, which is now $7.25 per hour, to $15 per hour.

The stimulus bill passed by the House would increase the wage to $15 per hour by 2025, but the Senate parliamentarian said the provision violated the strict rules that Senate Democrats had to follow to pass the bill through a special process that shielded it from a filibuster and allowed for its approval with only Democratic support. A vote in the Senate on Friday to add the wage increase back to the bill failed.

The Senate bill also dropped funding for a rail project in Silicon Valley in Northern California and a bridge between upstate New York and Canada, two provisions that were included in the House bill and drew criticism from Republicans.

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Seplat Petroleum Pays US$564.165 Million to Federal Government in 2020



Seplat Petroleum, an indigenous Nigerian upstream exploration and production company, announced it paid a total sum of US$564.165 million to the Federal Government in 2020.

In the report on payments made available to the Nigerian Stock Exchange and seen by Investors King, Seplat Petroleum paid US$389.576 million to the Nigerian National Petroleum Corporation (NNPC) as production entitlement in 2020.

Production entitlement is the government’s share of production in the period under review from projects operated by Seplat.

This comprises crude oil and gas attributable to the Nigerian government by virtue of its participation as an equity holder in projects within its sovereign jurisdiction (Nigeria).

Also, Seplat paid US$130.009 million to the Department of Petroleum Resources in 2020. A breakdown of the amount showed US$111.633 million was paid as royalties while US$18.376 million was paid as fees.

Similarly, US$579,361 was paid as a fee to the Nigeria Export Supervision Scheme.

The energy company made another payment of US$17.935 million in fee for 2020.

While the Nigerian Content Development and Monitoring Board received US$4.826 million in fee from Seplat in 2020.

Seplat paid US$21.239 million in taxes to the Federal Inland Revenue Service in 2020.

Therefore, Seplat Petroleum paid a total sum of US$564.165 million to the Federal Government in the 2020 financial year. See the details below.

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FIRS Sets N5.9 Trillion Revenue Target for 2021




FIRS to Generate N5.9 Trillion Revenue  in 2021

Mohammed Nami, the Chairman of Federal Inland Revenue Service, FIRS, on Friday said the agency is projecting total revenue of N5.9 trillion for the 2021 fiscal year.

Nami stated this while meeting with the House of Representatives Committee on Finance led by Hon. James Falake on the Service’s 2021 budget defence of its proposed Revenue and Expenditure Estimates.

According to the Chairman, N4.26 trillion and N1.64 trillion were expected to come from non-oil and oil components, respectively.

However, Nami put the cost of collecting the projected revenue at N289.25 billion or 7 percent of the proposed total revenue for the year, higher than the N180.76 billion spent in 2020 to fund the three operational expenditure heads for the year.

He said: “Out of the proposed expenditure of N289.25 billion across the three expenditure heads, the sum of N147.08 billion and N94.97 billion are to be expended on Personnel and Overhead Costs against 2020 budgeted sum of N97.36 billion and N43.64 billion respectively. Also, the sum of N47.19 billion is estimated to be expended on capital items against the budgeted sum of N27.80 billion in 2020. The sum is to cater for on-going and new projects for effective revenue drive.

Speaking on while the agency failed to meet its 2020 target, Nami said “There’s lockdown effect on businesses, implementation directive also for us to study, research best practices on tax administration which involves travelling to overseas and we also have to expand offices and create offices more at rural areas to get closer to the taxpayers, we pay rent for those offices and this could be the reason why all these things went up.

“And if you have more staff surely, their salary will go up, taxes that you’re going to pay on their behalf will go up, the National Housing Fund contribution, PENCOM contribution will go up. Those promoted you have to implement a new salary regime for them. There’s also the issue of inflation and exchange rate differential”, he said.


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