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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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Gold

Gold Steadies After Initial Gains on Reports of Israel’s Strikes in Iran

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Gold, often viewed as a haven during times of geopolitical uncertainty, exhibited a characteristic surge in response to reports of Israel’s alleged strikes in Iran, only to stabilize later as tensions simmered.

The yellow metal’s initial rally came on the heels of escalating tensions in the Middle East, with concerns mounting over a potential wider conflict.

Spot gold soared as much as 1.6% in early trading as news circulated regarding Israel’s purported strikes on targets in Iran.

This surge, reaching a high of $2,400 a ton, reflected the nervousness pervading global markets amidst the saber-rattling between the two nations.

However, as the day progressed, media reports from both countries appeared to downplay the impact and severity of the alleged strikes, contributing to a moderation in gold’s gains.

Analysts noted that while the initial spike was fueled by fears of heightened conflict, subsequent assessments suggesting a less severe outcome helped calm investor nerves, leading to a stabilization in gold prices.

Traders had been bracing for a potential Israeli response following Iran’s missile and drone attack over the weekend, raising concerns about a retaliatory spiral between the two adversaries.

Reports of an explosion in Iran’s central city of Isfahan further added to the atmosphere of uncertainty, prompting flight suspensions and exacerbating market jitters.

In addition to geopolitical tensions, gold’s rally in recent months has been underpinned by other factors, including expectations of US interest rate cuts, sustained central bank buying, and robust consumer demand, particularly in China.

Despite the initial surge followed by stabilization, gold remains sensitive to developments in the Middle East and broader geopolitical dynamics.

Investors continue to monitor the situation closely for any signs of escalation or de-escalation, recognizing gold’s role as a traditional safe haven in times of uncertainty.

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Commodities

Global Cocoa Prices Surge to Record Levels, Processing Remains Steady

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Cocoa futures in New York have reached a historic pinnacle with the most-active contract hitting an all-time high of $11,578 a metric ton in early trading on Friday.

This surge comes amidst a backdrop of challenges in the cocoa industry, including supply chain disruptions, adverse weather conditions, and rising production costs.

Despite these hurdles, the pace of processing in chocolate factories has remained constant, providing a glimmer of hope for chocolate lovers worldwide.

Data released after market close on Thursday revealed that cocoa processing, known as “grinds,” was up in North America during the first quarter, appreciating by 4% compared to the same period last year.

Meanwhile, processing in Europe only saw a modest decline of about 2%, and Asia experienced a slight decrease.

These processing figures are particularly noteworthy given the current landscape of cocoa prices. Since the beginning of 2024, cocoa futures have more than doubled, reflecting the immense pressure on the cocoa market.

Yet, despite these soaring prices, chocolate manufacturers have managed to maintain their production levels, indicating resilience in the face of adversity.

The surge in cocoa prices can be attributed to a variety of factors, including supply shortages caused by adverse weather conditions in key cocoa-producing regions such as West Africa.

Also, rising demand for chocolate products, particularly premium and artisanal varieties, has contributed to the upward pressure on prices.

While the spike in cocoa prices presents challenges for chocolate manufacturers and consumers alike, industry experts remain cautiously optimistic about the resilience of the cocoa market.

Despite the record-breaking prices, the steady pace of cocoa processing suggests that chocolate lovers can still expect to indulge in their favorite treats, albeit at a higher cost.

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Crude Oil

Dangote Refinery Leverages Cheaper US Oil Imports to Boost Production

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The Dangote Petroleum Refinery is capitalizing on the availability of cheaper oil imports from the United States.

Recent reports indicate that the refinery with a capacity of 650,000 barrels per day has begun leveraging US-grade oil to power its operations in Nigeria.

According to insights from industry analysts, the refinery has commenced shipping various products, including jet fuel, gasoil, and naphtha, as it gradually ramps up its production capacity.

The utilization of US oil imports, particularly the WTI Midland grade, has provided Dangote Refinery with a cost-effective solution for its feedstock requirements.

Experts anticipate that the refinery’s gasoline-focused units, expected to come online in the summer months will further bolster its influence in the Atlantic Basin gasoline markets.

Alan Gelder, Vice President of Refining, Chemicals, and Oil Markets at Wood Mackenzie, noted that Dangote’s entry into the gasoline market is poised to reshape the West African gasoline supply dynamics.

Despite operating at approximately half its nameplate capacity, Dangote Refinery’s impact on regional fuel markets is already being felt. The refinery’s recent announcement of a reduction in diesel prices from N1,200/litre to N1,000/litre has generated excitement within Nigeria’s downstream oil sector.

This move is expected to positively affect various sectors of the economy and contribute to reducing the country’s high inflation rate.

Furthermore, the refinery’s utilization of US oil imports shows its commitment to exploring cost-effective solutions while striving to meet Nigeria’s domestic fuel demand. As the refinery continues to optimize its production processes, it is poised to play a pivotal role in Nigeria’s energy landscape and contribute to the country’s quest for self-sufficiency in refined petroleum products.

Moreover, the Nigerian government’s recent directive to compel oil producers to prioritize domestic refineries for crude supply aligns with Dangote Refinery’s objectives of reducing reliance on imported refined products.

With the flexibility to purchase crude using either the local currency or the US dollar, the refinery is well-positioned to capitalize on these policy reforms and further enhance its operational efficiency.

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