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Discos: No Plan to Raise Electricity Tariffs

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  • Discos: No Plan to Raise Electricity Tariffs

Dousing mounting concerns over another hike in electricity tariffs, the Association of Nigerian Electricity Distributors (ANED) wednesday said it had no plan to increase the current tariffs being paid by consumers.

ANED’s Executive Director, Research and Advocacy, Mr. Sunday Oduntan, disclosed this in a telephone interview with the News Agency of Nigeria (NAN) in Lagos.

He said the electricity distribution companies (Discos) had not submitted any proposal to the Nigerian Electricity Regulatory Commission (NERC) on a tariff increase.

“It is not true that we want to the increase tariff by 200 per cent because we do not have any right to do so.

“When you talk about tariff review or increase, it is the responsibility of a regulator and that work belongs to NERC.

“We should understand how the system works because it is the work of the regulator to decide whether there should be tariff review or not and not Discos,” said the ANED official.

He urged the National Assembly to reconsider the stoppage of the bond provided by government to address the liquidity challenge bedeviling the power sector.

“We are not asking for subsidy but that government should step in and provide a bond,” he said.

Oduntan said that the business of electricity distribution was currently not bankable because no bank would lend the Discos money with the huge deficits on their books.

TCN Targets 6,000MW

In a related development, the House of Representatives Committee on Power has ordered the Transmission Company of Nigeria (TCN) to shun any financial or monetary requests from its former management contractor, Manitoba Hydro International Nigeria Limited.

This is as the TCN pledged to strive to attain the generation target of 6,000 megawatts (MW) before the end of this year.

The committee issued the directive during an oversight visit to TCN late Tuesday, where members of the committee also queried why the company had been unable to execute most of its projects despite having received more than 50 per cent of its 2016 budgetary appropriation.

The lawmakers also expressed their displeasure over the inability of TCN to install a tower testing facility in Nigeria, particularly as there is no such facility in sub-Saharan Africa.

The committee chairman, Hon. Dan Asuquo, said Manitoba, which managed TCN for the last three years, did not add any value to the development of the nation’s power sector.

“No penny should be paid to Manitoba, or else you’ll go to jail. Manitoba has been here for three years, and there’s nothing to show for it. We can see that Manitoba did not add value to our system when they were here.

“Our capacity was no where near where we are now but since they left, Nigerian engineers that understudied them have been in charge and are responsible for raising our capacity to 5,500MW.

“In view of this, they should not be paid if they come up with any request,” he said.

Speaking on the tower testing facility, Asuquo said the TCN ought to have taken the initiative to provide the facility, as its unavailability undermines technology development in Nigeria.

“We ought to have taken advantage of that which would have saved us foreign exchange and stopped capital flight since samples of the towers have to be taken abroad for testing.

“This is arm twisting us to go abroad considering the fact that we have the resources that can turn this into a huge revenue generating facility on the continent of Africa.

“Even allied sectors like the steel rolling mills in this country stand to benefit,” Asuquo said.

The Managing Director of Transmission Service Provider (TSP), Mr. Tom Owan blamed factors beyond the control of the TCN for its inability to execute some projects despite the availability of funds.

Some of the factors include social issues at project locations, contract variations, and the challenge of clearing equipment from the seaports. He however added that most of the issues were close to resolution.

He said the TCN’s target was to increase power generation to 6000MW before the end of the year.

The House, in adopting the report of the Committee on Power, had advised the federal government not to renew Manitoba’s contract which expired in July 2016, due to the inability of the company to meet its key performance indicators (KPIs) under the management contract.

Meanwhile, the Federal Executive Council (FEC) yesterday approved the construction of the 215MW Kaduna power plant following a memo presented by the Minister of Power, Works and Housing, Mr. Babatunde Fashola (SAN).

Fashola said the project, which would be completed by next year, was expected to add 215MW to the national grid. He said part of the power would be dedicated to Kudan Dam in Kaduna State to support the industrial complex there.

Fashola said council also approved the construction of a sub-station to evacuate 40MW of power from the Gurara hydro electric power station, phase one, to connect to Kaduna and to enable it interconnect to the Mamdo transmission sub-station. This, he said, would strengthen the transmission grid.

Fashola said measures had been put in place to ensure that power generation does not drop during the dry season.

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

Crude Oil

Oil Prices Decline on Rising India COVID-19 Cases, U.S Inflation Concerns

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Global oil prices extended a decline on Friday following a 3 percent drop on Thursday as coronavirus cases rose in India, one of the world’s largest oil consumers.

Brent crude oil, against which Nigerian oil is priced, declined by 35 cents or 0.5 percent to $66.70 a barrel at 5 am Nigerian time on Tuesday while the U.S West Texas Intermediate (WTI) fell by 28 cents or 0.4 percent to $63.54 per barrel.

The commodity super cycle rally just hit a hard stop and the energy market doesn’t know what to make of Wall Street’s fixation over inflation and the slow flattening of the curve in India,” said Edward Moya, senior market analyst at OANDA.

The crude demand story is still upbeat for the second half of the year and that should prevent any significant dips in oil prices,” he added.

Prices dropped over a series of key economic data that stoke inflation concerns and forced experts to start thinking the Federal Reserve could raise interest rates to curb the surge in inflation.

An increase in interest rates typically boosts the U.S. dollar, which in turn pressures oil prices because it makes crude oil more expensive for holders of other currencies.

This coupled with the fact that India, the world’s third-largest oil consumer, recorded more than 4,000 COVID-19 deaths for a second straight day on Thursday, dragged on the oil outlook in the near term.

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Brent Crude Rises to $69 on IEA Report

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Oil prices rose after the release of the International Energy Agency’s (IEA)  closely-watched Oil Market Report, with WTI Crude trading at above $66 a barrel and Brent Crude surpassing the $69 per barrel mark.

Prices jumped even though the agency revised down its full-year 2021 oil demand growth forecast by 270,000 barrels per day (bpd) from last month’s assessment, expecting now demand to rise by 5.4 million bpd. The downward revision was due to weaker consumption in Europe and North America in the first quarter and expectations of 630,000 bpd lower demand in the second quarter due to India’s COVID crisis.

The excess oil inventories of the past year have been all but depleted, and a strong demand rebound in the second half this year could lead to even steeper stock draws, the IEA said yesterday, keeping an upbeat forecast of global oil demand despite the weaker-than-expected first half of 2021.

However, the upbeat outlook for the second half of the year remains unchanged, as vaccination campaigns expand and the pandemic largely comes under control, the IEA said.

Moreover, the global oil glut that was hanging over the market for more than a year is now gone, the agency said.

“After nearly a year of robust supply restraint from OPEC+, bloated world oil inventories that built up during last year’s COVID-19 demand shock have returned to more normal levels,” the IEA said in its report.

In March, industry stocks in the developed economies fell by 25 million barrels to 2.951 billion barrels, reducing the overhang versus the five-year average to only 1.7 million barrels, and stocks continued to fall in April.

“Draws had been almost inevitable as easing mobility restrictions in the United States and Europe, robust industrial activity and coronavirus vaccinations set the stage for a steady rebound in fuel demand while OPEC+ pumped far below the call on its crude,” the IEA said.

The market looks oversupplied in May, but stock draws are set to resume as early as June and accelerate later this year. Under the current OPEC+ policy, oil supply will not catch up fast enough, with a jump in demand expected in the second half, according to the IEA. As vaccination rates rise and mobility restrictions ease, global oil demand is set to soar from 93.1 million bpd in the first quarter of 2021 to 99.6 million bpd by the end of the year.

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Crude Oil

OPEC Expects Increase In Global Oil Demand Raises Members’ Forecast on Crude Supply

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The Organisation of Petroleum Exporting Countries (OPEC) yesterday lifted its forecast on its members’ crude this year by over 200,000 bpd and now expects demand for its own crude to average 27.65mn bpd in 2021.

This is almost 5.2mn bpd higher than last year and around 2.7mn b/d higher than an earlier estimate of the group’s April production.

According to the highlights of the organisation’s latest Monthly Oil Market Report (MOMR), OPEC crude is projected to rise from 26.48 million bpd in the second quarter to 28.7 million bpd in the third and 29.54 million bpd in the fourth quarter of the year.

The report also indicated a fall in Nigeria’s crude production from 1.477 bpd in February to 1.473, a difference of just about 4,000 bpd before rising again in April to 1.548 million bpd, to add 75,000 bpd last month.

OPEC stated that its upward revision of members’ crude was underpinned by a downgrade in the group’s forecast for non-OPEC supply, which it now expects to grow by 700,000 bpd to 63.6mn b/d against last month’s report’s projection of a 930,000 bpd rise to 63.83mn bpd.

The oil cartel projected that US crude output would drop by 280,000 bpd this year, compared with its previous forecast for a 70,000 bpd decline.

On the demand side, OPEC kept its overall forecast unchanged from last month’s MOMR, stressing that it expects global oil demand to grow by 5.95 million bpd to 96.46 million bpd this year, partly reversing last year’s 9.48mn bpd drop.

Spot crude prices fell in April for the first time in six months, with North Sea Dated and WTI easing month-on-month by 1.7 percent and 1 percent, respectively.

On the global economic projections, the cartel said stimulus measures in the US and accelerating recovery in Asian economies might continue supporting the global economic growth forecast for 2021, now revised up by 0.1 percent to reach 5.5 percent year-on-year.

This comes after a 3.5 percent year-on-year contraction estimated for the global economy in 2020.

However, global economic growth for 2021 remains clouded by uncertainties including, but not limited to the spread of COVID-19 variants and the speed of the global vaccine rollout, OPEC stated.

“World oil demand is assumed to have dropped by 9.5 mb/d in 2020, unchanged from last month’s assessment, now estimated to have reached 90.5 mb/d for the year. For 2021, world oil demand is expected to increase by 6.0 mb/d, unchanged from last month’s estimate, to average 96.5 mb/d,” it said.

The report listed the main drivers for supply growth in 2021 to be Canada, Brazil, China, and Norway, while US liquid supply is expected to decline by 0.1 mb/d year-on-year.

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