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Fashola Assures Sector Operators, Stakeholders of Improved Power, Gas Supply in 2017

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The Minister of Power, Works and Housing, Babatunde Fashola
  • Fashola Assures Sector Operators, Stakeholders of Improved Power, Gas Supply in 2017

The Minister of Power, Works and Housing, Mr. Babatunde Fashola SAN, has asked stakeholders in the Power Sector to look forward to the implementation of policies that would improve gas supply and liquidity as well as the completion of several power projects by the Federal Government in 2017.

Fashola, while making his Opening Address as Guest Speaker at the January edition of the Nextier Power Dialogue held at the Thought Pyramid Art Centre, said the Ministry of Power, Works and Housing along with other agencies of the Federal Government, like Ministry of Finance and the World Bank, had put together a policy framework that would help establish stronger and better institutional framework needed to tackle the challenges in the Power Sector.

According to the Minister, such policies would help realise a deepening of metering, sanctions for energy theft and better contract performance from Operators in the Power Sector as well as help achieve the financial strengthening of the Nigerian Bulk Energy Trading PLC (NBET).

He explained that he could not discuss the policies yet in details at the event because they were in the process of being presented for consideration and approval by the Federal Executive Council, but however, assured that when implemented, they would take the nation to more gas and assure payment to gas suppliers and generation companies which was the way forward.

He told his audience, “Clearly these policies constitute the way forward and ensures that everybody in the system gets paid. If we have that, at least, we can be sure that those who are supplying gas will not be shutting down because their creditors are pulling them. Then we go to the other side that are angry to see what we can do because gas problem is exacerbated on both sides”.

While explaining the current decreased power supply and outages across the country, he blamed the sabotage of gas pipelines by “some of our angry brothers”, adding that because of the debt owed gas companies by the DisCos, the companies also withheld supply of gas.

The Minister, who noted that there had been some outages across the country in the last 24 hours, however, assured Nigerians that himself, the Permanent Secretary and other officials of the Ministry were trying to see what they could do to address the situation.

Emphasising the need to increase liquidity in the sector, Fashola explained that as a result of the frequent power outages due to the sabotage of power assets, the operators along the power chain were being owed as distribution companies could not pay generating companies who equally could not pay gas suppliers who, in turn, could not pay their bankers.

The Minister pointed out that the debts had been accumulating since 2015 leading to gas companies currently shutting their tanks and forcing power again down to 2,000MW.

In line with increasing liquidity in the sector, Fashola also said Government intended to quickly complete the audit of its Ministries, Departments and Agencies (MDAs) to enable it pay proven debts owed the Operators in the sector adding that the payment had been delayed as a result of lack of authentic debt figures.

The Minister further explained, “You have heard that Federal Government is owing and all that; but you know, we don’t have the authentic figures and until we have that I cannot go and tell President Buhari that we want to pay ‘about…’. He will say we are not serious. So we expect to see the completion of that so that we can pay what is proven debt”.

According to him, Government also intended to see to the financial strengthening of the Nigerian Energy Bulk Trading (NBET), the bulk trader who stands as the interim partner to ensure that everybody that was doing their part in the system was paid, adding that once that was achieved Government would then insist on better contract performance and sanctions for non-compliance.

On calls for the cancellation of the Privatisation contract in the Power Sector, he reiterated his averseness to the call arguing that the country would by such action be sending negative signals to foreign investors that she had no respect for agreements.

Fashola pointed out that the action would only take the nation backward, adding that the programme was just three years old and needed time to mature, as, “We should think on what to do to make it work better instead of cancelling it”.

On what to expect in the New Year in terms of projects aimed at increasing power supply, he listed the Kudenda Transmission Project in Kaduna, which he said would be completed shortly as well as other power assets in Lagos, Sokoto and many more across the country.

According to him, “There are many power projects that will come on stream this year like the Gurara hydro power that we should begin to benefit from it by the end of this quarter because the power plant has been completed remaining just to transmit to Kudenda in Kaduna. Katsina Wind Mill will also be completed this year; the equipment for the completion have left Europe for Nigeria. Kaduna’s 215MW will also come on stream this year, and few others”.

Expected this year also in the power sector, the Minister continued, was better governance and regulation in stronger institutional frameworks as the Nigerian Energy Regulatory Commission (NERC), the regulators in the Sector, was being strengthened to do its work better and more efficiently.

Fashola declared, “They (the NERC Chairman and Commissioners) are the ones doing some of the things you have asked me to come and do; loss reduction, more sanctions for energy theft, more metering and more audit of DisCos to see what their books looked like would be expected this year as well.

“In the last one year that we have been in office, we have got to an all-time high of 5074MW. Nigeria has never reached there before. But immediately we got that, do you know what happened? They started breaking the gas pipelines one by one. We had 14 attacks in about two months.

“We need to get power from wherever we can. So, we said the first step is Incremental Power wherever we could get it; as long as it is legitimate, it is safe, it is environmentally compliant, we would put it on. But some of our brothers are angry; and I continue to tell them anger is not a strategy”, he said adding, however, “I know they will not be angry forever”.

He appealed for peace and understanding among the “angry brothers”, appealed to their relations and friends to persuade them to embrace peace adding, “While they are angry, they are punishing us, they are punishing themselves, they are punishing everybody”.

“You hear us announcing that we commissioned one transmission project or the other, you see me going round for these commissioning; that is the Grid evolving. Today, at its most frugal, it would support 6,500MW; pushed to its limit it would carry 7,200MW. So it is not true when you hear that the grid capacity is not more than 5,000MW. It is growing every day and more projects are coming up. We have completed some and more are still coming up. So that is where we are.

“Now it means that notionally, if we had those 3,000MW plus 4,000MW we were already at 7,000MW. But we would not have it because some of our family members are angry because of the problems, power came down to about 2,000MW and once the power goes below 3,000MW, the Grid would begin to react”, he said.

The Minister decried the lack of accurate demographic data in the country, which according to him, had both resulted in improper planning and hampered the delivery of electricity in the country over the years adding that it was important to know the accurate population of the country in order to know how much power to provide, and the number of consumers to be supplied electricity.

On rural electrification, Fashola revealed that the existing contracts for 2000 constituency electricity projects under the Rural Electrification Agency (REA) would soon be completed, adding that the government would be looking at expanding the generation, transmission and distribution aspects within the electricity value chain by encouraging more technical partners and other investors to come into the power sector and explore other energy resources in more secured environments across the country.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Commodities

Agric Industries Take Interest In Unlocking Nigeria’s $10bn Palm Oil Export Potential

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palm oil

Some agric-focused industries and firms have indicated interest in enhancing Nigeria’s agricultural productivity and competitiveness through the nation’s $10 billion palm oil export potential.

At the launch of a new report by a research and advisory firm, Vestance, significant untapped opportunities within Nigeria’s oil palm sector were revealed.

Discussing how the nation could regain its lost glory in palm oil production and exportation, stakeholders in the sector emphasised the need for government agencies, private sector investors, smallholder farmers, research institutions, and development partners to work together to help change the narratives in the palm oil sector.

Titled “Reclaiming Lost Glory: Nigeria’s Palm Oil Renaissance,” the report, which was unveiled in Lagos disclosed that Nigeria, despite being a major producer historically, currently exports only $1.34 million in palm oil, ranking 78th globally, while importing $372 million annually

Vestance’s Research Lead, Razaq Fatai, said the report illustrates the immense opportunities lying dormant in the country’s underutilised oil palm plantations, noting that by capitalising and rejuvenating these plantations, Nigeria could generate over $10 billion in export revenue alone.

He explained that Nigeria’s palm oil production began to decline during the country’s civil war between 1967 and 1970, saying, it is now time to begin to reverse the decline and put the sector back on track.

Speaking at a panel session on ways to revitalise the oil palm sector, experts proffered means by which challenges confronting the palm oil sector could be tackled.

In his submission, the Managing Director, SWAgCo (O’dua Investment Group), Dr. Adewale Onadeko, said Nigeria should embrace an agro-industrial cluster strategy, adding that essential infrastructure such as seeds, fertilisers, extension services, processing, and storage facilities should be prioritised if the expected gains could be realised.

Another panellist, Dr. Bayo Ogunniyi, Country Programme Analyst for International Fund for Agricultural Development, highlighted the myriad challenges facing smallholder farmers, particularly the lack of access to finance and the prevalence of old, low-yield seeds.

He underscored the urgent need for Nigeria to distribute high-quality seeds to smallholder farmers to enhance production levels.

Ogunniyi also pointed out that the oil extraction rates of smallholder palm oil processors are alarmingly low, often falling below 15 percent, compared to the 25 percent extraction rates achieved by modern processing mills. Improving these extraction rates is crucial for maximising the output from Nigeria’s palm oil sector.

In his own contribution, CEO of BulkDirect, Ramses Najem, emphasised the importance of situating processing facilities closer to the farms to reduce transportation challenges.

Other speakers at the report launch called for a nationwide adoption of high-yield seeds to boost production, investment in modern processing facilities to increase oil extraction rates, and the development of strategic transportation networks to streamline the supply chain.

 

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Crude Oil

Brent Rises to $73 Per Barrel as Oil Producer Iran Plans Another Attack on Israel

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markets energies crude oil

The international crude benchmark, Brent Crude, rose to $73 per barrel as it rose 29 cents or 0.4 percent to settle at $73.10 a barrel on Friday on expectations that Iran will attack Israel from Iraq in the coming days.

The US West Texas Intermediate (WTI) crude gained 23 cents, or 0.3 percent to settle at $69.49.

The market has seized on the news from Thursday that Iran is preparing to attack Israel from Iraq within days.

However, market analysts point out that the impact on oil prices may be muted as the attacks signify a show of strength rather than action. This is why there wasn’t a much price boost.

Iran’s backed groups are currently fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen. So, this has seen the two countries engaged in a series of retaliatory strikes within the broader Middle East warfare set off by fighting in Gaza.

In a related development, the US asked Lebanon to declare a unilateral ceasefire with Israel to revive stalled talks to end hostilities between Israel and Hezbollah.

Another factor supporting prices is the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+ which could delay plans to increase supply in December.

The group has always maintained that its planning production cuts rollback would depend on market conditions.

The US, the world’s largest oil producer has been seeing an increase in its production with Exxon Mobil saying its global output hit an all-time high while Chevron also said its US production hit a record high.

This aligns with projections that annual output was on track to hit a record 13.2 million barrels per day in 2024 and 13.5 million barrels per day in 2025.

Last month, OPEC’s production increased by 370,000 barrels per day in October after Libya’s political resolution and its resultant 500,000 barrel-per-day output boost.

Libya’s output recovery led OPEC to raise its production to nearly 30 million barrels daily, even as Iraq, Iran, and Saudi Arabia lowered their output.

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Petrol

IPMAN Pushes Back on Dangote’s Call to End Petrol Imports, Cites High Costs at Refinery

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stakeholders

The Independent Petroleum Marketers Association of Nigeria (IPMAN) has addressed concerns about its members purchasing petrol outside the country.

Investors King reported that Aliko Dangote, the owner of Dangote Refinery, urged Nigerian oil marketers to stop importing petrol and instead lift supplies from his refinery.

Dangote mentioned that the refinery currently has over 500 million liters of petrol in storage and that marketers’ reluctance to lift his product is causing financial losses.

In an interview on Friday, IPMAN’s National Assistant Secretary, Yakubu Suleiman, stated that the association cannot compel its members to buy petrol from the Dangote Refinery due to the deregulated nature of the market.

According to Suleiman, IPMAN members cannot patronize Dangote if his petrol is more expensive than other suppliers. He explained that, for profitability, marketers must seek the most affordable fuel sources.

Suleiman also accused Dangote of trying to monopolize the oil market, noting, “Prices are determined by international pricing. Dangote should ideally be communicating daily about his pricing. But he can’t enforce that we buy only from his depot without stakeholder engagement.”

Suleiman added, “IPMAN cannot simply instruct our members to purchase solely from Dangote Refinery. We operate in a deregulated system. Marketers will source products where prices are cheaper and advise members accordingly.”

He explained, “If Dangote sells at N1000 per liter, and there are other sources selling at N900, we can’t direct marketers to choose Dangote simply because it’s his product. We prioritize lower prices and profit.”

Suleiman also noted that last week, Dangote’s price was higher than other sources, explaining, “For example, last week he offered N995 per liter, with additional costs to transport the product to depots. Independent marketers can’t sell at a profit under these conditions, so we must consider Nigerians’ interests.”

This comes after IPMAN President Abubakar Garima countered Dangote’s allegation that marketers were boycotting his refinery.

He pointed out that marketers cannot load petrol from Dangote’s refinery in Lagos despite having paid ₦40 billion to the Nigerian National Petroleum Company Limited (NNPCL).

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