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Power System Collapses Four Times in Five Days

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  • Power System Collapses Four Times in Five Days

The frequency of system collapse in the nation’s power sector in recent times has resulted in prolonged blackout in many locations across the country.

Findings showed that between January 15 and January 19, 2017, the country recorded two cases of total system collapse and three partial ones.

Specifically, the total collapse of the power grid occurred on January 15 and 19, while on January 16 and 18, Nigeria’s electricity generation crashed to 108 megawatts and 49.2MW, respectively. The average electricity generation for Nigeria has always been around 3,500MW.

The daily industry operational report for January 19, 2017, which was obtained by our correspondent in Abuja, showed that a total system collapse occurred around 6pm that day.

It stated, “Total system collapse at approximately 1800 hours on January 19, 2017 – details pending. Alaoji NIPP is out of service due to gas constraints; condensate evacuation challenges limiting gas supply to Geregu, Sapele and Olorunsogo plants.”

Similarly, data from the industry further indicated a total collapse that occurred on January 15, after which seven power plants were restarted in order to fire up supply.

The operational report had stated, “Total system collapse occurred on 15th January, 2017; Ugwuaji/Makurdi 330kV line 1 (cct U1A) CB tripped at Ugwuaji transmission station on distance protection 3-Phases; the SOTF and trip relay operated.

“Poor generation, lack of units on spinning reserve/frequency response and lack of enough feeders on under frequency relay scheme were responsible for the collapse.”

The next day, seven plants were restarted and they included Transcorp, Sapele I and II, Afam VI, Omotosho I and II, Olorunsogo I, Geregu I, and Okpai.

Power consumers have continued to lament the sorry state of the industry as the development has led to prolonged blackout in various communities.

For instance, the Ibadan Electricity Distribution Company on Thursday explained that the blackout at Magboro/Mowe/Ibafo communities of Lagos-Ibadan Expressway in Ogun State was due to the limited supply of electricity allocated to the IBEDC.

The firm had said, “The IBEDC is a distribution company and we can only distribute the power that is delivered to us from the national grid. Any current power outage being experienced by these communities is as a result of the reduced power supply from the grid, which is not within our control.

“This is evident in the fact that the national grid has already experienced two system collapses within the first two weeks of this month. As we speak, power is still being supplied to Asese, Ibafo, Magboro, and environs on a daily basis. However, the quantum is dependent on our allocation, which has been extremely inadequate.”

Industry operators told our correspondent that aside from the issue of gas constraint to power plants, Nigeria’s electricity transmission network needed to be revamped.

They explained that many transmission infrastructural facilities were obsolete and could not take high electricity load from generation companies; neither could they transmit the power to distribution firms.

Although they noted that the government was working on the transmission network, they pointed out that gas constraint to thermal power turbines across the country was also a major limiting factor to electricity generation in Nigeria.

Late last year, the President, Nigeria Gas Association, Mr. Dada Thomas, told our correspondent that gas suppliers were owed over N100bn by power generation companies and that it was becoming difficult to supply gas to the firm’s due to their huge indebtedness.

The Executive Secretary, Association of Power Generation Companies, Dr. Joy Ogaji, had also stated that Gencos were also owed over N300bn by the electricity distribution companies.

On their part, the Association of Nigeria Electricity Distributors, an umbrella body for the Discos, also stated that its members were owed over N100bn by consumers.

ANEDs had earlier identified the military and government ministries, departments and agencies as their biggest debtors.

Operators had put the revenue shortfall in the sector at about N1tn and requested the Federal Government to intervene financially in order to avert a collapse of the entire power system.

This, however, was not heeded as the Minister of Power, Works and Housing, Mr. Babatunde Fashola, recently declared that the government would not provide any financial support to power firms.

He said the Federal Government had earlier provided N213bn as subsidy to operators in the sector and would not do that anymore.

“Subsidy appears in different forms. When I resumed in this sector, I was made to understand there was an existing CBN fund for the market. The CBN fund comes at a low interest rate; if that does not qualify as subsidy, then I don’t know what else qualifies,” Fashola had said.

Reacting to the development, a former President of the Association of National Accountants of Nigeria, Dr. Samuel Nzekwe, told our correspondent that instead of listening to repeated complaints by the power firms, the government should review the privatisation of the sector.

He said, “For how long are we going to continue like this? If the companies cannot deliver, why not review the privatisation exercise? The National Assembly highlighted this issue recently when it stated that the power firms had failed Nigerians. They come with high estimated bills even when there is no power supply and still complain that people don’t pay electricity bills.

“I understand why the government doesn’t want to revisit the issue of privatisation; it is about how investors will see Nigeria. But are we going to continue like this? I think something needs to be done to salvage the situation and improve power supply to enhance industrialisation in Nigeria.”

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.

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Economy

Ogun Records N13.3B Internally Generated Revenue Monthly in Q1 of 2021

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Revenue - Investors King

Ogun State Government has recorded an average of N13.3billion monthly as Internally Generated Revenue (IGR) in the first quarter of 2021.

The government said it is also planning to raise its yearly Gross Domestic Product (GDP) rate from the current single digit by 25 percent.

The Commissioner for Finance, Dapo Okubadejo disclosed this to newsmen in Abeokuta ahead of the state’s investment summit tagged: ‘OgunIseya21: Becoming Africa’s Model Industrial and Logistics Hub’, slated for July 13th-14th, 2021.

Okubadejo who doubles as the State’s Chief Economic Adviser noted that the state’s IGR had experienced an upward movement after last year’s shortfall due to the Covid-19 pandemic and the attendant lockdown.

“We had a significant turnaround in the first quarter of this year. In fact, as of April, we have done almost N40bn in the Internally Generated Revenue. Our target this year is to exceed all the previous records we have set in IGR. That’s why we have put in place, all these transformation initiatives, friendly policies and also facilitate this investment summit to further showcase Ogun State as the preferred industrial destination,” he said.

The Finance Commissioner was supported in highlighting the investment potentials of the summit by his counterparts from the Ministries of Industry, Trade and Investment, Mrs. Kikelomo Longe; Works and Infrastructure, Ade Adesanya; Culture and Tourism, Toyin Taiwo; Budget and Planning, Olaolu Olabimtan and the Director-General, Public-Private Partnership, Dapo Oduwole.

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Unemployment To Push More Nigerians Into Poverty – NESG

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Nigerian Economic Summit Group- Investors King

On Friday, The Nigerian Economic Summit Group said that many more Nigerians are expected to fall into the poverty trap amid rising unemployment in the country.

The NESG, a private sector-led think-tank, noted in its economic report for the first quarter of 2021 that the country’s economic growth in the period under review was relatively weak.

It said, “Nigeria’s economic growth trajectory is better described as jobless and less inclusive even in the heydays of high growth regime in the 2000s.

“While the Nigerian economy recovered from the recession in Q4 of 2020, the unemployment rate spiked to its highest level ever at 33.3 percent in the same quarter.

“With the COVID-19 crisis heightening the rate of joblessness, many Nigerians are expected to fall into the poverty trap, going forward.”

The group noted that the World Bank estimated an increase in the number of poor Nigerians to 90 million in 2020 from 83 million in 2019.

“This corresponds to a rise in headcount poverty ratio to 44.1 percent in 2020 from 40.1 percent in 2019. The rising levels of unemployment and poverty are reflected in the persistent insecurity and social vices, with attendant huge economic costs,” it said.

According to the report, huge dependence on proceeds from crude oil, leaving other revenue sources unexplored, indicates that Nigeria is not set to rein in debt accumulation in the short to medium term.

The NESG noted that public debt stock continued to trend upwards, with a jump from N7.6tn ($48.7bn) in 2012 to N32.9tn ($86.8bn) in 2020.

It said public debts grew by 20 percent between 2019 and 2020, adding, “This is partly due to the need for emergency funds to combat the global pandemic and alleviate its adverse economic impacts on households and businesses.”

According to the group, Nigeria needs more than an economic rebound, and there is a need to improve growth inclusiveness.

It said, “Nigeria has struggled to achieve inclusive growth for many decades. Since recovery from the 2016 recession, the economy has been on a fragile growth path until it slipped into another recession in 2020 due to the COVID-19 pandemic.

“This suggests that the country needs to attain high and sustainable economic growth to become strong and resilient.

“The relationship between economic growth and unemployment rate in Nigeria suggests that economic growth has not led to a reduction in the unemployment rate – jobless growth.”

The NESG said to reverse this recurring trend, there was an urgent need for collaborative efforts between the government and relevant stakeholders towards addressing the constraints to value chain development in high-growth and employment-elastic sectors, including manufacturing, construction, trade, education, health and professional services, with ICT and renewable energy sectors as growth enablers.

It noted that despite the re-opening of the land borders that the Nigerian government shut since October 2019, inflation reached a four-year high of 18.1 percent in April 2021.

“While we expect improved agricultural production in coming months to partially ease inflationary pressures, this positive impact could be suppressed by recurring key structural bottlenecks including insecurity in the food-producing regions, electricity tariff hike, fuel price increase and hike in transport and logistic costs,” it added.

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IMF Queries FG Strategies On Fuel Subsidy, Unemployment, Inflation

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IMF - Investors King

The International Monetary Fund has raised the red flag over Nigeria’s resumption of petrol subsidy payments, describing it as injurious to the economy.

It also reiterated the importance of introducing a market-based fuel pricing mechanism and deployment of well-targeted social safety nets to cushion any adverse impact on the poor.

In a report produced after a virtual meeting with Nigerian authorities from June 1 to 8, the IMF also expressed concerns over the rising unemployment and inflation rates, even as it admitted that real Gross Domestic Product was recovering.

The IMF team, led by Jesmin Rahman, further hailed the Central Bank of Nigeria for its efforts at unifying the exchange rate by embracing needed reforms.

The Fund said: “Recent exchange rate measures are encouraging, and further reforms are needed to achieve a fully unified and market-clearing exchange rate.

“The resurfacing of fuel subsidies is concerning, particularly in the context of low revenue mobilisation.

“The Nigerian economy has started to gradually recover from the negative effects of the COVID-19 global pandemic. Following sharp output contractions in the second and third quarters, GDP growth turned positive in Q4 2020 and growth reached 0.5 percent (y/y) in Q1 2021, supported by agriculture and services sectors.

“Nevertheless, the employment level continues to fall dramatically and, together with other socio-economic indicators, is far below pre-pandemic levels. Inflation slightly decelerated in May but remained elevated at 17.9 percent, owing to high food price inflation. With the recovery in oil prices and remittance flows, the strong pressures on the balance of payments have somewhat abated, although imports are rebounding faster than exports and foreign investor appetite remains subdued resulting in continued FX shortage.

“The incipient recovery in economic activity is projected to take root and broaden among sectors, with GDP growth expected to reach 2.5 percent in 2021. Inflation is expected to remain elevated in 2021, but likely to decelerate in the second half of the year to reach about 15.5 percent, following the removal of border controls and the elimination of base effects from elevated food price levels.”

The IMF also recognised that tax revenue collections were gradually recovering but noted that with fuel subsidies resurfacing, additional spending for COVID-19 vaccines and to address security challenges, the fiscal deficit of the Consolidated Government is expected to remain elevated at 5.5 percent of GDP.

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