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IBEDC Needs N60bn for Metering

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  • IBEDC Needs N60bn for Metering

Ibadan Electricity Distribution Company has said it needs between N30bn and N60bn to supply one million meters to its customers, decrying the non-payment for electricity supplied to government’s ministries, departments and agencies.

The IBEDC, which put the MDA debts at N8.13bn, said the Nigerian Electricity Regulatory Commission should prevail on the government to adjust the MDAs’ debts for inflation and settle promptly.

The Managing Director, IBEDC, Mr. John Donnachie, listed inherited fragile network, vandalism and energy theft, and as well as non-payment of bills/delayed payments by customers as some of the challenges facing the company.

He said the company had only been able to receive about 50 per cent of the 720 megawatts allocated to it.

“In January, we had four total blackouts. Ten per cent of what is generated is lost in transit. We lost N2.6bn in January alone for bills; and N4.7bn in total in 2016,” he said.

He described the recently introduced floating exchange rate regime and the resultant depreciation in the naira value against forex as a huge challenge “because over 80 per cent of our business is dependent on forex”.

Donnachie said, “We have not been able to pass forex losses to customers. There are 6.2 million registered users in the country; the IBEDC has about 1.5 million. We can’t get forex from the Central Bank of Nigeria at official rate.

“To purchase meters and transformers, vendors’ selling prices now reflect current forex rates as access to foreign exchange is mostly through parallel markets. Tariff is not yet cost-reflective as forex component in Multi-Year Tariff Order is still N198/dollar.”

He said the IBEDC had completed metering of all identified Maximum Demand customers, thereby delivering on NERC’s deadline of February 28, 2017.

He said, “About 189,339 meters have been installed for the MD and non-MD customers from November 2013 to January 2017. We carried out energy audit, replacement of faulty/obsolete meters and metering of premium customers for revenue generation.”

According to him, the company’s strategic initiatives include the rehabilitation and upgrade of 550 injection substations; metering of 112,210 customers in 2017; deployment of statistical meters on all distribution transformers and the installation of check meters for customers on 132kV line, and technical audit, asset mapping and customer enumeration.

Donnachie described the Federal Executive Council’s approval of N701bn power purchase guarantee as a step in the right direction.

He said, “But more needs to be done as this does not mean the debts of distribution companies and other stakeholders have been wiped off.

“We recommend that dealing with vendors/suppliers, contracts should be denominated in naira using fixed exchange rate; supply should be negotiated in bulk (six to 12 months’ requirement) using an agreed price; negotiate payment holidays upfront; ring-fence projects to ensure viability.”

He said part-delivery of contract quantity should be made as at when needed; contract payment should be structured for cash flow convenience and at a fixed rate, and forward contract options to finance capital expenditure should be explored.

Meanwhile, the company announced on Wednesday that it had attracted $400m investment from Trans Sahara Consortium that would ensure installation of smart meters, infrastructure upgrade within the distribution area of the company, tackle energy theft, which was a huge revenue drain in the sector.

The Chairman, IBEDC, Dr. Tunde Ayeni, disclosed this when he signed a Memorandum of Understanding with the Trans Sahara Consortium led by Senator Saminu Turaki, according to a statement.

Turaki stated that the investment would create over 250,000 jobs in the long run, and “it is in line with the initiative of the current administration of President Muhammadu Buhari and Vice-President Yemi Osinbajo to create two million jobs.”

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

Oil Prices Continue to Slide: Drops Over 1% Amid Surging U.S. Stockpiles

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Amidst growing concerns over surging U.S. stockpiles and indications of static output policies from major oil-producing nations, oil prices declined for a second consecutive day by 1% on Wednesday.

Brent crude oil, against which the Nigerian oil price is measured, shed 97 cents or 1.12% to $85.28 per barrel.

Similarly, U.S. West Texas Intermediate (WTI) crude slumped by 93 cents or a 1.14% fall to close at $80.69.

The recent downtrend in oil prices comes after they reached their highest level since October last week.

However, ongoing concerns regarding burgeoning U.S. crude inventories and uncertainties surrounding potential inaction by the OPEC+ group in their forthcoming technical meeting have exacerbated the downward momentum.

Market analysts attribute the decline to expectations of minimal adjustments to oil output policies by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, until a full ministerial meeting scheduled for June.

In addition to concerns about excess supply, the market’s attention is also focused on the impending release of official government data on U.S. crude inventories, scheduled for Wednesday at 10:30 a.m. EDT (1430 GMT).

Analysts are keenly observing OPEC members for any signals of deviation from their production quotas, suggesting further volatility may lie ahead in the oil market.

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Energy

Nigeria Targets $5bn Investments in Oil and Gas Sector, Says Government

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Crude Oil - Investors King

Nigeria is setting its sights on attracting $5 billion worth of investments in its oil and gas sector, according to statements made by government officials during an oil and gas sector retreat in Abuja.

During the retreat organized by the Federal Ministry of Petroleum Resources, Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, explained the importance of ramping up crude oil production and creating an environment conducive to attracting investments.

He highlighted the need to work closely with agencies like the Nigerian National Petroleum Company Limited (NNPCL) to achieve these goals.

Lokpobiri acknowledged the challenges posed by issues such as insecurity and pipeline vandalism but expressed confidence in the government’s ability to tackle them effectively.

He stressed the necessity of a globally competitive regulatory framework to encourage investment in the sector.

The minister’s remarks were echoed by Mele Kyari, the Group Chief Executive Officer of NNPCL, who spoke at the 2024 Strategic Women in Energy, Oil, and Gas Leadership Summit.

Kyari stressed the critical role of energy in driving economic growth and development and explained that Nigeria still faces challenges in providing stable electricity to its citizens.

Kyari outlined NNPCL’s vision for the future, which includes increasing crude oil production, expanding refining capacity, and growing the company’s retail network.

He highlighted the importance of leveraging Nigeria’s vast gas resources and optimizing dividend payouts to shareholders.

Overall, the government’s commitment to attracting $5 billion in investments reflects its determination to revitalize the oil and gas sector and drive economic growth in Nigeria.

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Commodities

Palm Oil Rebounds on Upbeat Malaysian Exports Amid Indonesian Supply Concerns

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Palm oil prices rebounded from a two-day decline on reports that Malaysian exports will be robust this month despite concerns over potential supply disruptions from Indonesia, the world’s largest palm oil exporter.

The market saw a significant surge as Malaysian export figures for the current month painted a promising picture.

Senior trader David Ng from IcebergX Sdn. in Kuala Lumpur attributed the morning’s gains to Malaysia’s strong export performance, with shipments climbing by a notable 14% during March 1-25 compared to the previous month.

Increased demand from key regions like Africa, India, and the Middle East contributed to this impressive growth, as reported by Intertek Testing Services.

However, amidst this positivity, investors are closely monitoring developments in Indonesia. The Indonesian government’s contemplation of revising its domestic market obligation policy, potentially linking it to production rather than exports, has stirred market concerns.

Edy Priyono, a deputy at the presidential staff office in Jakarta, indicated that this proposed shift aims to mitigate vulnerability to fluctuations in export demand.

Yet, it could potentially constrain supply availability from Indonesia in the future to stabilize domestic prices.

This uncertainty surrounding Indonesian policies has added a layer of complexity to palm oil market dynamics, prompting investors to react cautiously despite Malaysia’s promising export performance.

The prospect of Indonesian supply disruptions underscores the delicacy of global palm oil supply chains and their susceptibility to geopolitical and regulatory factors.

As the market navigates these developments, stakeholders remain attentive to both export data from Malaysia and policy shifts in Indonesia, recognizing their significant impact on palm oil prices and market stability.

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