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Fed Govt Saves N41b From DisCos Debt Claims

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  • Fed Govt Saves N41b From DisCos Debt Claims

The verification of the N67billion Ministries, Departments and Agencies (MDAs) debt claims, which the 11 electricity distribution companies (DisCos) submitted to the Advisory Power Team (ART) of the Office of the Vice President has saved the Federal Government N41,415,488,965.

In its report dated June 2017, the team recommended that N25,994,511,035 be paid to the DisCos.

Following the report, the N25,994,511 035 that is recommended for payment is to be disbursed among the 11 DisCos in the following order: Abuja-N9,097,417,554; Benin-N882,529,548; Eko-N4,586,160,565; Enugu-N1,954,128,336; Ibadan-N1,812,660,960; Ikeja-N1,271,816,300; Jos-N1,506,588,078; Kaduna-N1,228,151,006; Kano-N1,207735,452; Port-Harcourt-N1,697,887,485; and Yola-N649,435,751.

Consequent upon the conclusion of the verification, the Minister of Power Works and Housing, Babatunde Fashola at the 18 Monthly Power Stakeholder meeting in Kumboso, Kano State, said the sector is awaiting the approval of payment to the beneficiaries.

The document showed that the Ministry of Defence topped the debtors’ list owing 53 per cent of the outstanding claims. The Ministry of Transportation owes nine per cent of the amount, Ministry of Interior seven per cent and the Ministry of Education seven per cent.

The Ministries with the highest numbers of invoices claimed are the Ministry of Interior, which has 37 per cent of the invoices but only seven per cent of the debt claimed value and the Ministry of Finance submitted 14 per cent of the invoices but only owes two per cent of the debt claim, according to the report.

It would be recalled that the demand for the payment of the claims had sparked fire in the sector as the DisCos under the aegis of Association of Nigeria Electricity Distributors (ANED) regularly placed newspapers adverts of how the debts have crippled their investments.

On the other hand, Fashola insisted on the verification of the debt before payment could be made to the companies even as the power firms were reluctant to submit their claims to the ministry for verification.

Meanwhile, the Power Sector Recovery Programme (PSRP) policy action of the Federal Government, insisted on clearing the MDAs debts from 2015 to 2016.

Working with the McKinsey for the detailed desktop analysis and Monotech engineering for Physical Verification analysis, the ART conducted the verification exercise.

The report said that the review began with a claim of N67.41billion from the DisCos but N19.768billion was deducted out of scope, N7.168billion was deducted from “flagged in reports,” N5.781billion was deducted from other adjustments, the team also deducted N6.428billion as addition post response from DisCos, secured N14.408billion from DisCos attestation, and the amount verified post desktop verification was N26.717billion.

It deducted N152million in Abuja from special adjustments which covers streetlights and traffic lights, where the claim was more than the energy consumption.

Upon a physical verification, the report noted that the team achieved a reduction of N56 million across the 11 DisCos.

At the end, the team authenticated a N25,994,511,035 debt claim for the 11 DisCos.

The report also recommended that adequate budgetary allocation must be put for electricity bill payments (estimated at N40billion per year, based on current tariff.

It urged that army barracks nationwide should consider establishing solar hybrid independent power plants

The report suggested that a central platform to view all MDAs customers be created.

The objectives of the verification exercise were to “clarify the debt claims from each of Nigeria’s 11 DisCos) against the FGN MDAs for 2015 and 2016.

“Validate these debt claims using both an analytical Desktop Verification and a field Physical Verification.

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.

Economy

Manufacturing Firms Borrowed N570bn from Banks in 2020 – CBN

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Steel Manufacture At Evraz Plc West-Siberian Metallurgical Plant

Manufacturing firms borrowed a total of N570bn from Nigerian banks last year amid the economic fallout of the COVID-19 pandemic.

Banks’ credit to the manufacturing sector rose to N3.19tn as of December 2020 from N2.62tn at the end of 2019, according to the sectoral analysis of banks’ credit by the Central Bank of Nigeria.

The sector received the second biggest share of the credit from the banks after the oil and gas sector, which got N5.18tn as of December.

“The manufacturing sector, which is the engine of sustainable growth, is still struggling with the debilitating impact of the pandemic and is yet to recuperate,” the Director-General, Manufacturers Association of Nigeria, Mr Segun Ajayi-Kadir, said in January.

MAN, in a January report, revealed that most manufacturers said commercial banks’ lending rates were discouraging productivity in the sector.

The report said 71 per cent of Chief Executive Officers interviewed “disagreed that the rate at which commercial banks lend to manufacturers encourages productivity in the sector.”

It said the cost of borrowing in the country remained at double digits even amidst the reforms meant to culminate in lower rates to engender the country’s economic recovery process.

The report said, “Special single digit loans offered by development banks are still hard to leverage as conditionalities to assess the loans through commercial banks are often overwhelming and laden with additional charges that will eventually make the interest rate double digit.

“Seven per cent of respondents were, however, of the opinion that the rate at which commercial banks lend to manufacturers encourages productivity in the sector while the remaining 22 per cent were not sure of the impact of the rate of lending on productivity in the manufacturing sector.”

The report showed that 64 per cent of respondent disagreed that the size of commercial bank loan to manufacturing sector had encouraged manufacturing productivity.

It said the very high presence of the government in the money market, particularly through the sale of treasury bills, had been crowding out the private sector from the market.

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Economy

Nigeria Earns Extra N318.4 Billion as Crude Oil Hits $67/Barrel

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Buhari

FG Generates Additional Income of N318.4 Billion as Crude Oil Hits $67/Barrel

The Federal Government earned an additional N318.36 billion in February following the surge in crude oil price above $60 per barrel.

Brent crude oil, against which Nigerian oil is priced, average $60 throughout the month of February.

In March, it rose to $67 per barrel.

According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, Nigeria’s crude oil price was retained at $40 per barrel for 2021.

However, she said the nation is presently producing below its 2.5 million barrel per day capacity at 1.7mbpd. This, she said includes 300,000bpd condensates.

“Although Nigeria’s total production capacity is 2.5mbpd, current crude production is about 1.7mbpd, including about 300,000bpd of condensates, which indicates compliance with OPEC quota,” the finance minister stated.

Going by the number, Nigeria is producing 1.4mbpd of crude oil without condensates, but with an additional $20 revenue when compared to the $40 per barrel benchmark for the year. It means the Federal Government realised an additional income of N318.360 billion or $20 X 1.4mbpd X 30days in the month of February.

Crude oil jumped to $68.54 per barrel on Friday following OPEC+’s decision to role-over production cuts.

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Economy

Nigeria, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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