- Cutting Manufacturing Costs With Renewable Energy Solutions
With the impact of energy costs on the productive sector becoming unbearable, exploring clean, sustainable alternative energy source has become attractive to operators in the value-chain industry, especially if they hope to remain competitive in the global market.
Indeed, estimates from the Manufacturers Association of Nigeria (MAN) showed that operators spent about N63 billion on providing alternative power to their production plants in the first half of 2016, with collated data for the second half showing a triple-fold rise in the figure due to higher energy costs within the period.
According to operators, such huge costs are not sustainable for businesses considering the operating environment where locally produced goods have to compete with imported and smuggled products.
Making a case for renewable energy in industrialisation plan, former Director General, United Nations Industrial Development Organisation (UNIDO), and former United Nations Under-Secretary General and the Special Representative of the Secretary General on Sustainable Energy for All, Dr Kandeh Yumkella, stated that Nigeria had in time past missed several revolutions that could enhance economic prosperity.
According to him, having missed the industrial, agric and information Technology revolution, Nigeria cannot afford to miss the green energy revolution considering the gaps unmet in terms of energy demand.
He explained that many countries are already developing products and machinery that can work efficiently using direct current (DC) unlike the alternate current (AC) devices presently depending on the national grid or other alternative sources like gas and fossil energy.
While the cost of energy for manufacturers had risen from N25 billion in 2014 to N58.82 billion in 2015 and further in 2016, operators explained that power takes up between 30 and 40 per cent of total expenditure, especially now that there are other challenges like the foreign exchange.
The MAN report showed that manufacturers are now resorting to the use of energy purifiers and boosters such as UPS and Inverters to boost the poor quality of electricity supply by the electricity distribution companies.
Similarly, power outages on daily average of electricity supply from DISCOs remained stagnant at six times per day across MAN industrial zones just as was recorded in 2016.
Manufacturers use mostly gas and Low-Pour Fuel Oil (LPFO) to power their operations, but gas is cheaper, though its supply has been irregular.
Also, the operators spend $8 each per square metre of gas, which is now expensive on the back of dollar scarcity, while small and medium manufacturers use diesel and fuel to power their generators.
To address these challenges and further increase access to clean, cheap and reliable electricity to customers on and off the national grid, the Bank of Industry (BoI) has unveiled its N1 billion Solar Energy Fund for Micro Small and Medium Enterprises in the country.
The Acting Managing Director/ Chief Executive Officer, BoI, Waheed Olagunju, who made the announcement in Lagos, said it was important to support the provision of sustainable and reliable energy for the MSMEs.
Indeed, the bank had in 2015, commenced with the provision of long-term financing for the installation of off-grid solar home systems in six communities in a pilot phase, as part of its Renewable Energy Partnership with the United Nations Development Programme.
This, he explained, was why the BoI decided to provide the Solar Energy Fund to the MSMEs.According to him, the BoI is already playing an active role in lighting up and powering Nigeria through the provision of solar energy solutions for rural communities, having successfully deployed solar solutions worth N240 million in six off-grid communities in Niger, Osun, Gombe, Anambra, Edo and Kaduna states, under its pilot scheme.
He said: “These communities with an average of 200 homes each previously had no access to electricity, but since the provision of clean, reliable and sustainable solar electricity, the lives of the indigenes of these communities have changed significantly.”
Olagunju explained that the provision of solar electricity in the communities had reduced energy costs, created more micro businesses, improved healthcare and quality of education, and generally provided a new lease of life for indigenes of the otherwise unserved communities.
He said: “This initiative is being replicated in other rural communities in collaboration with our development partners, United Nations Development Programme and relevant state governments, and it is now being scaled up to provide energy for the MSMEs across the country, commencing with the N1 billion Solar Energy Fund.”
He said the BoI, being a Development Finance Institution, was able to come up with highly concessional funding solutions with interest rate as low as seven per cent and equally flexible terms and conditions.
“This also explains why the BoI is able to partner with the UNDP under which we are able to access increased level of financial support that peaked at $1.2 million last year. Blending the grant with the BoI’s debt financing enables us to charge low interest rate,” Olagunju added.
He explained that the projects would be implemented in collaboration with eight solar energy project developers, who had been carefully selected through a competitive and transparent process.
“They will be responsible for implementing the solar projects by providing the MSMEs with solar solutions using appropriate business models,” he added.
Across the globe, manufacturers are increasingly developing new ways of using renewable energy to strengthen clean energy competitiveness in various industries.
Stakeholders believe the manufacturing industry must increase its energy efficiency and reduce the energy utilization of its processes in order to be competitive, while reducing fossil fuel use and greenhouse gas emissions.
COVID-19 Plunges Nigeria’s Oil Revenue by 41% in the First Nine Months of 2020
Nigeria’s oil revenue declined by 41.44 percent in the first nine months of 2020 to $2.033 billion, according to the latest data from the Nigerian National Petroleum Corporation, NNPC.
This represents a decline of 41.44 percent from $3.47 billion filed in the same period of 2019 when there was no COVID-19.
In the September 2020 edition of NNPC’s Monthly Financial and Operations Report (MFOR), revenue from oil and gas rose by 16 percent to $120.49 million in the month of September, a 66 percent or $234.81 million drop from $355.3 million posted in the same month of 2019.
The global lockdowns caused by the COVID-19 pandemic plunged Nigeria’s crude oil sales and global demand for the commodity. This was further compounded by Nigeria’s high cost of production compared to Saudi Arabia, Russia and others that were offering discounts to boost sales during one of the most challenging periods in human history.
Experts like Prof. Yinka Omorogbe, President of Nigeria Association of Energy Economics, NAEE, were not surprised with the drop in earnings given the effect of COVID-19 on the world’s economy.
She, however, called for the revamp of the nation’s petroleum sector laws and diversification of the economy away from oil revenue dependence. She said “Covid-19 made 2020 a very hot year and it battered the oil industry internationally and we are not an exception; so we could not have been unaffected”.
She also said the effect of the fall “is definitely a wake-up call; we have to diversify, strengthen our other resources and capabilities”.
Omorogbe, a former NNPC Board Secretary, urged the government and the operators in the sector to look inward and think strategically, stating: “think medium term, think of where they want to be and the government, above all, must think of how best we can utilize our resources, so that we can achieve our objectives once we know and define them.
“It is a clear wake-up call, if not we will just sit here and find that we have become one of the poorest nations in the world”, she noted.
Crude Oil, Other Commodities Closing Price for Monday
Brent crude oil, Nigeria’s crude oil benchmark, gained 47 cents to $55.88 per barrel on Monday, while the US crude oil expanded by 50 cents to $52.77 per barrel.
Gold for February delivery fell $1 to $1,855.20 an ounce. Silver for March delivery fell 7 cents to $25.48 an ounce and March copper was little changed at $3.63 a pound.
The dollar fell to 103.80 Japanese yen from 103.83 yen. The euro fell to $1.2139 from $1.2167.
Wholesale gasoline for February delivery rose 1 cent to $1.56 a gallon. February heating oil rose 2 cents to $1.59 a gallon. February natural gas rose 16 cents to $2.60 per 1,000 cubic feet.
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.
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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