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Power Generating Firms Perform Below 30% – Report

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The Minister of Power, Works and Housing, Babatunde Fashola
  • Power Generating Firms Perform Below 30%

The combined performance of all the privatised thermal power generating stations in the country was less than 30 per cent in the third quarter of 2016 despite being managed by private investors.

Industry operators blamed the poor performance of the power generating stations on the recurrent vandalism of pipelines that supply gas to the facilities.

An analysis of the performances of the privatised thermal power plants in the months of July, August and September showed that the Delta, Geregu 1, Sapele 1, Egbin and Olorunsogo 1 performed poorly in the period under review, as none of them could supply up to 50 per cent of their electricity generation capacities to the national grid.

Industry data obtained by our correspondent in Abuja revealed that the contributions of the privatised thermal plants to the national electricity grid in July, August and September were 27.42 per cent, 28.25 per cent and 29.22 per cent, respectively.

Their combined average electricity delivery to the grid in the third quarter of this year was 28.29 per cent, regardless of the fact that they were being managed by private entities since their official handing over to investors in November 2013.

A further analysis of the industry showed that the hydro power generating stations contributed more to the country’s electricity grid in the period under review, as they supplied 34.25 per cent of the electricity.

The National Integrated Power Plants contributed 13.42 per cent of electricity to the grid during the three-month period, while the independent power producers supplied 24.05 per cent of electricity in the third quarter.

On their monthly performances, industry data showed that in July, the three hydro power stations, Shiroro, Jebba and Kainji, contributed 33.15 per cent to the national electricity grid.

In the same month, the seven IPPs namely: Omoshoto 1 & 2; Afam VI, which is operated by Shell; Okpai; Ibom Power; Rivers and Paras contributed 28.09 per cent, while the privatised thermal power stations in Delta, Geregu 1, Sapele 1, Egbin and Olorunsogo 1 provided 27.42 per cent.

Also, the NIPPs, which include Sapele 2, Geregu 2, Odukpani, Ihovbor and Gbarain contributed 11.35 per cent in July.

In August, the three hydro power stations made a combined contribution of 36.64 per cent to the national grid, which was a marginal rise from the 33.15 per cent recorded in July.

In the same month, the privatised thermal plants contributed 28.25 per cent of the power in the national electricity system, as against the 27.42 per cent in July, while the NIPP plants upped their contribution to 13.31 per cent in August from 11.35 per cent recorded in the preceding month.

A reduced contribution came from the independent power producers as their contribution was 21.8 per cent in August compared to 28.09 per cent in July.

For September, the contribution of the hydro power stations dropped to 32.95 per cent, while there was a slight increase in the contribution of the privatised thermal power stations as they provided 29.22 per cent of electricity to the grid.

Also, there was an increase in the contribution of the NIPPs and the IPPs as they supplied 15.59 per cent and 22.24 per cent electricity respectively to the national grid in September.

The Managing Director, Frontier Oil Limited, one of the major suppliers of gas to the gas-fired power plants, Mr. Dada Thomas, told our correspondent that the vandalism of gas pipelines had drastically impacted the supply of the product to the power plants.

This, he said, had contributed immensely to the poor performance of the privatised thermal power plants across the country.

Thomas said, “Why are people blowing up gas lines? It is suicide to blow up gas lines and it can be classified as an economic sabotage, because when you do that, everybody suffers. People in the Niger Delta suffer, those in Lagos suffer as well as others in Kano, for such acts cut down electricity supply.”

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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Crude Oil

IOCs Stick to Dollar Dominance in Crude Oil Transactions with Modular Refineries

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Crude Oil - Investors King

International Oil Companies (IOCs) are standing firm on their stance regarding the currency denomination for crude oil transactions with modular refineries.

Despite earlier indications suggesting a potential shift towards naira payments, IOCs have asserted their preference for dollar dominance in these transactions.

The decision, communicated during a meeting involving indigenous modular refineries and crude oil producers, shows the complex dynamics shaping Nigeria’s energy landscape.

While the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had previously hinted at the possibility of allowing indigenous refineries to purchase crude oil in either naira or dollars, IOCs have maintained a firm stance favoring the latter.

Under this framework, modular refineries would be required to pay 80% of the crude oil purchase amount in US dollars, with the remaining 20% to be settled in naira.

This arrangement, although subject to ongoing discussions, signals a significant departure from initial expectations of a more balanced currency allocation.

Representatives from the Crude Oil Refinery Owners Association of Nigeria (CORAN) said the decision was not unilaterally imposed but rather reached through deliberations with relevant stakeholders, including the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

While there were initial hopes of broader flexibility in currency options, the dominant position of IOCs has steered discussions towards a more dollar-centric model.

Despite reservations expressed by some participants, including modular refinery operators, the consensus appears to lean towards accommodating the preferences of major crude oil suppliers.

The development underscores the intricate negotiations and power dynamics shaping Nigeria’s energy sector, with implications for both domestic and international stakeholders.

As discussions continue, attention remains focused on how this decision will impact the operations and financial viability of modular refineries in Nigeria’s evolving oil landscape.

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Energy

Nigeria’s Dangote Refinery Overtakes European Giants in Capacity, Bloomberg Reports

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Aliko Dangote - Investors King

The Dangote Refinery has surpassed some of Europe’s largest refineries in terms of capacity, according to a recent report by Bloomberg.

The $20 billion Dangote refinery, located in Lagos, boasts a refining capacity of 650,000 barrels of petroleum products per day, positioning it as a formidable player in the global refining industry.

Bloomberg’s data highlighted that the Dangote refinery’s capacity exceeds that of Shell’s Pernis refinery in the Netherlands by over 246,000 barrels per day. Making Dangote’s facility a significant contender in the refining industry.

The report also underscored the scale of Dangote’s refinery compared to other prominent European refineries.

For instance, the TotalEnergies Antwerp refining facility in Belgium can refine 338,000 barrels per day, while the GOI Energy ISAB refinery in Italy was built with a refining capacity of 360,000 barrels per day.

Describing the Dangote refinery as a ‘game changer,’ Bloomberg emphasized its strategic advantage of leveraging cheaper U.S. oil imports for a substantial portion of its feedstock.

Analysts anticipate that the refinery’s operations will have a transformative impact on Nigeria’s fuel market and the broader region.

The refinery has already commenced shipping products in recent weeks while preparing to ramp up petrol output.

Analysts predict that Dangote’s refinery will influence Atlantic Basin gasoline markets and significantly alter the dynamics of the petroleum trade in West Africa.

Reuters recently reported that the Dangote refinery has the potential to disrupt the decades-long petrol trade from Europe to Africa, worth an estimated $17 billion annually.

With a configured capacity to produce up to 53 million liters of petrol per day, the refinery is poised to meet a significant portion of Nigeria’s fuel demand and reduce the country’s dependence on imported petroleum products.

Aliko Dangote, Africa’s richest man and the visionary behind the refinery, has demonstrated his commitment to revolutionizing Nigeria’s energy landscape. As the Dangote refinery continues to scale up its operations, it is poised to not only bolster Nigeria’s energy security but also emerge as a key player in the global refining industry.

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Crude Oil

Brent Crude Hits $88.42, WTI Climbs to $83.36 on Dollar Index Dip

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Brent crude oil - Investors King

Oil prices surged as Brent crude oil appreciated to $88.42 a barrel while U.S. West Texas Intermediate (WTI) crude climbed to $83.36 a barrel.

The uptick in prices comes as the U.S. dollar index dipped to its lowest level in over a week, prompting investors to shift their focus from geopolitical tensions to global economic conditions.

The weakening of the U.S. dollar, a key factor influencing oil prices, provided a boost to dollar-denominated commodities like oil. As the dollar index fell, demand for oil from investors holding other currencies increased, leading to the rise in prices.

Investors also found support in euro zone data indicating a robust expansion in business activity, with April witnessing the fastest pace of growth in nearly a year.

Andrew Lipow, president of Lipow Oil Associates, noted that the market had been under pressure due to sluggish growth in the euro zone, making any signs of improvement supportive for oil prices.

Market participants are increasingly looking beyond geopolitical tensions and focusing on economic indicators and supply-and-demand dynamics.

Despite initial concerns regarding tensions between Israel and Iran and uncertainties surrounding China’s economic performance, the market sentiment remained optimistic, buoyed by expectations of steady oil demand.

Analysts anticipate the release of key economic data later in the week, including U.S. first-quarter gross domestic product (GDP) figures and March’s personal consumption expenditures, which serve as the Federal Reserve’s preferred inflation gauge.

These data points are expected to provide further insights into the health of the economy and potentially impact oil prices.

Also, anticipation builds around the release of U.S. crude oil inventory data by the Energy Information Administration, scheduled for Wednesday.

Preliminary reports suggest an increase in crude oil inventories alongside a decrease in refined product stockpiles, reflecting ongoing dynamics in the oil market.

As oil prices continue their upward trajectory, investors remain vigilant, monitoring economic indicators and geopolitical developments for further cues on the future direction of the market.

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