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Fashola: 11 Discos Frustrating NERC’s Regulatory Duties

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Electricity
  • 11 Discos Frustrating NERC’s Regulatory Duties

The Minister of Power, Works and Housing, Mr. Babatunde Fashola has alleged that the 11 electricity distribution companies (Discos) have become stumbling blocks to the smooth regulation of the power sector by the Nigerian Electricity Regulatory Commission (NERC).

He also said the Discos were largely responsible for the delay in the settlement of debts owed them by federal government agencies that consumed electricity without paying.

Speaking recently when he inaugurated a transmission line built under the National Integrated Power Projects (NIPP) by the Niger Delta Power Holding Company (NDPHC) in Akwa Ibom State, the minister said that there were instances where the Discos have by their actions impinged on NERC’s regulatory responsibilities.

The minister made the allegation on the back of repeated media advertisements and promotions by the Discos in which they consistently absolved themselves of the failings of the sector.

He specifically noted that the Discos have irrespective of their excuses, failed to also tell Nigerians that they have mostly refused to submit their annual statement of accounts to the NERC as required by the reform law, as well as frustrated attempts by NERC to activate their pacts in the Transitional Electricity Market (TEM) which should bind them to objective service delivery.

Both occasions, Fashola added, have impacted on the progress of the sector.

He said in the past three years the Discos have refused to submit their audited financial reports to NERC), and when the commission wanted to activate their contractual obligations as contained in the TEM, they dragged it to court and frustrated its efforts.

“Advert should also have told Nigerian public how many Discos have gone to court to frustrate the attempt by NERC to hold them to their contracts so that they can pay the Gencos who have been sacrificing, the gas producers who have not received payment and who have continued to act patriotic,” said Fashola.

He added: “It is important to remind all of us that the privatisation exercise that transferred the distribution companies was not held as a contract with an association. It was between Nigeria and the distribution company.

“So, while I respect the right of an association, the constitution guarantee the freedom of association, the Federal Government will not pay over N100 billion to anyone under the aegis of an association. That is not how to solve it.”

He stated that as regards the debt claims of the Discos, the government will treat them individually upon its honest verification of their claims and not with their association, adding that his request for them to submit records of their claims have been largely rebuffed by the Discos.

“We won’t pay estimate. The figure must remain clear in naira and kobo terms. And we will do our work. I think that the advert that the Discos issued should also have conveyed information to the Nigerian public about how many of them have supplied details of their audited accounts for the last three years. And we have been asking them to provide it,” he explained.

Fashola also said on the operational difficulties of the Discos: “Those Discos who cannot run the business must be honest with themselves now and begin to look for options either to raise capitals, to get more strategic partners in or to do whatever they consider appropriate within the framework of their contract in order to get on with this job.”

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

Brent Crude Oil Approaches $70 Per Barrel on Friday

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Crude oil

Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension

Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.

Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.

Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.

While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.

According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.

“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”

Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.

The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.

I do believe we’re headed for a much healthier supply and demand environment” she said.

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Crude Oil

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

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opec

Oil Jumps to $67.70 as OPEC+ Extends Production Cuts

Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.

OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.

Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”

Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.

Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.

Experts have started predicting $75 a barrel by April.

“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”

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Gold

Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin

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Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges

Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.

The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.

The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.

We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.

Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.

Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.

In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.

The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.

 

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