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Firms Risk Suspension of Licences Over N345m Unpaid Fines

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  • Firms Risk Suspension of Licences Over N345m Unpaid Fines

Some electricity firms are at the verge of losing their licences three years after privatisation for failing to comply with the rules and regulations in the power sector.This is because many electricity firms are contravening the Nigerian Electricity Regulatory Commission (NERC) Electricity Industry (Enforcement) Regulations 2014, which specified strict action against any form of unruliness in the sector, even as many are yet to pay over N345 million cumulative fines imposed by NERC.

This is because many electricity firms are contravening the Nigerian Electricity Regulatory Commission (NERC) Electricity Industry (Enforcement) Regulations 2014, which specified strict action against any form of unruliness in the sector, even as many are yet to pay over N345 million cumulative fines imposed by NERC.

Lack of compliance and adherence to industry rules are some of the reasons weakening the capacity of NERC to effectively regulate the industry and institute credible electricity operations in the country.Indeed, the regulator would have used part of the money realised from such penalties to execute some of its programmes, which are being challenged by paucity of funds.

For instance, the Commission had recently fined Afam Power Plant, and Eko Electricity Distribution Company (EKEDC) the sum of N66.6 million for failing to submit audited financial reports for 2013 and 2014.

Already, the fines imposed on the firms have since attracted additional N62 million, being the cumulative for five per cent interest daily for I9 days following the expiration of the two weeks grace granted by NERC, which expired on the December 22, 20I6.In a statement, the Acting Chairman, NERC, Dr. Anthony Akah, explained that Directive 162 of NERC found Afam Power in breach of its licensing terms and other operating conditions when it failed to file

In a statement, the Acting Chairman, NERC, Dr. Anthony Akah, explained that Directive 162 of NERC found Afam Power in breach of its licensing terms and other operating conditions when it failed to file audited financial report for 2014, and subsequently liable to pay N18.510 million.Similarly, Directive 163 found EKEDC in violation of its licensing terms and other operating condition over late submission of its 2013 and non-submission of 2014 audited financial reports. The company is, therefore, liable to pay N48.09 0million fine.

Similarly, Directive 163 found EKEDC in violation of its licensing terms and other operating condition over late submission of its 2013 and non-submission of 2014 audited financial reports. The company is, therefore, liable to pay N48.09 0million fine.

Both Directives signed by Akah and General Manager, Legal, Licensing and Environment, Olufunke Dinneh, expected the companies to pay their fines within two weeks beginning from December 9, 2016 when the directives were signed.

Such impunity is not restricted to the Eko and Afam alone, as virtually all the electricity companies in Nigeria had at one point or another been fined by NERC, except for a few, many of them adamantly refused to pay the fines, which under the law is supposed to attract additional five per cent daily upon the expiration of the grace period.

Electricity firms such as Ibadan Electricity Distribution Company (IBEDC); Ikeja Electricity Distribution Company (IKEDC); Port Harcourt Electricity Distribution Company (PHED); and a host of others had been fined for failing to satisfactorily treat various service complaints by their customers as well as not submitting their statutory quarterly operations reports.

Specifically, Ibadan, Ikeja, Port Harcourt and Enugu Discos in August last year, were fined N24.56 million for various infractions under the Electric Power Reform Act 2005.For failing to submit its audited financial report since 2013, NERC imposed another fine of N37.5 million on the PHED in November of the same year.

A copy of Electricity Industry (Enforcement) Regulations 2014, obtained by The Guardian spelt out the punishment for such offences.The document stated: “Without prejudice to any provision of the Act or any other regulatory instrument, the Commission may suspend any license if, in its opinion: the licensee has been found pursuant to the regulations to have breached any term or condition of its license, the breach of which is expressly declared by the license terms and conditions to render it liable to suspension or cancellation; or the financial position of the licensee is such that the licensee is unable to fully and efficiently discharge the duties and obligations imposed by the licence.”

Commenting further on the sanctions Akah, said: “The Commission would do whatever is required to ensure discipline in the Nigerian Electricity Supply Industry (NESI). It is only when stakeholders endeavour to play by the rules that we can begin to reap maximum benefits of the privatisation in the Sector.

“We expect the operators to act in good faith and in line with the industry rules, standards and conditions for their licenses as the Commission will not compromise on international best practices. Customers are also expected to fulfill their obligations to their service providers by paying their bills and not to engage in electricity theft”.

A source in NERC however told The Guardian yesterday on the telephone that it will no longer be business as usual for the electricity firms this year, as the Commission will be implementing the provisions of the Electricity Industry (Enforcement) Regulations 2014.

“NERC is no longer going to allow unruly behaviours in the sector and we are going to melt out the necessary punishment if found contravening the law,” the source added.

Spokesman for Eko Disco, Godwin Idemudia, told The Guardian yesterday that firm has formerly expressed its reservation regarding the fine.According to him, “NERC said we did not submit our books on time and we told them we did. We are talking and looking at how to resolve the issue. We are definitely not happy about the situation.”

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.

Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

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Gold

Gold Gained Ahead of Joe Biden Inauguration 2021

Gold price rose from one and a half month low on Tuesday ahead of President-elect Joe Biden’s inauguration on Wednesday.

The precious metal, largely regarded as a haven asset by investors, edged up by 0.2 percent to $1,844.52 per ounce on Tuesday, up from $1,802.61 on Monday.

According to Michael McCarthy, the Chief Market Strategies, CMC Markets, the surged in gold price is a result of the projected drop in dollar value or uncertainty.

He said, “The key factor appears to be the (U.S.) currency.”

As expected, a change in administration comes with the change in economic policies, especially taking into consideration the peculiarities of the present situation. In fact, even though Biden, Janet Yellen and the rest of the new cabinet are expected to go all out on additional stimulus with the support of Democrats controlled Houses, economic uncertainties with rising COVID-19 cases and slow vaccine distribution remained a huge concern.

Also, the effectiveness of the vaccines can not be ascertained until wider rollout.

Still, which policy would be halted or sustained by the incoming administration remained a concern that has forced many investors to once again flee other assets for Gold ahead of tomorrow’s inauguration.

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Crude Oil

Crude Oil Holds Steady Above $55 Per Barrel on Tuesday

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Crude Oil Holds Steady Above $55 Per Barrel on Tuesday

Brent Crude oil, against which Nigerian crude oil is priced, rose from $54.46 per barrel on Monday to $55.27 per barrel as of 9:03 am Nigerian time on Tuesday.

Last week, Brent crude oil rose to 11 months high of $57.38 per barrel before pulling back on rising COVID-19 cases and lockdowns in key global economies like the United Kingdom, Euro-Area, China, etc.

While OPEC has left 2021 oil demand unchanged and President-elect Joe Biden has announced a $1.9 trillion stimulus package, experts are saying the rising number of new cases of COVID-19 amid poor vaccine distribution could drag on growth and demand for oil in 2021.

On Friday, Dan Yergin, vice-chairman at IHS Markit, said in addition to the stimulus package “There are two other things that are going with it … one is of course, vaccinations — in the sense that eventually this crisis is going to end, and maybe by the spring, lockdowns will be over.”

“The other thing is what Saudi Arabia did. This is the third time Saudi Arabia has made a sudden change in policy in less than a year, and this one was to announce (the) 1 million barrel a day cut — partly because they are worried about the impact of the surge in virus that’s occurring,” he said.

Also, the stimulus being injected into the United States economy could spur huge Shale production and disrupt OPEC and allies’ efforts at balancing the global oil market in 2021.

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Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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