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We’re Ready to Quit, Resell Firms at Discounts – Power Distributors

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  • We’re Ready to Quit, Resell Firms at Discounts – Power Distributors

The disagreement between the Federal Government and power distribution companies continued on Tuesday, with the Discos threatening to quit the sector and expressed willingness to resell the power assets at discounted rates.

Investors in the Discos came out this time around to speak for their companies rather than sending the spokesperson for the Association of Nigerian Electricity Distributors, Sunday Oduntan, as demanded by the Minister of Power, Works and Housing, Babatunde Fashola.

They also called on the minister to urgently convene a meeting with investors in the Discos if he truly wanted the sector to make progress, adding that they were willing to resell the power assets to the Federal Government or any interested buyer.

The successor companies of the defunct Power Holding Company of Nigeria were privatised on November 1, 2013 and sold to investors that year.

But since the sector was privatised, many electricity consumers have been complaining about poor supply by the Discos, a development that recently led to heated exchanges between Fashola and the firms.

Speaking at a press conference in Abuja on Tuesday, the investor in Jos Electricity Distribution Company Plc, Tukur Modibbo, stated that the power firms were doing their best but were willing to resell the companies at discounts to whosoever was interested in them.

He said, “You asked me whether we are willing to quit the business. Now, please listen to me and put it down clearly that we bought our distribution company cash down for $82m in 2013; we are willing to take $72m in 24 hours and leave.

“If you have $72m or Fashola can give us $72m, we are giving him $10m discount; if we get that sum, in 24 hours we are out of this business. Please, is there anybody with $72m here? If there is none, please advertise it for me because I’ve given you the price.”

Modibbo advised the minister to call for a meeting of stakeholders in order to avoid a further deterioration of the sector.

He said, “We want the minister to call us and ask us why we are not investing, and to find out why the banks are not willing to fund the distribution companies at all. This is because we are not keeping all the parameters that are supposed to make us a business. We are not there. So, I want you to use your media to tell the minister that we as investors are complaining.

“Tell him that we want to meet him for him to understand why we are not meeting up with the investment that he thinks we ought to do despite the fact that we are doing it to some extent. But we are investing and not making money. However, for us to invest, we need to make money.”

The Chief Operating Officer, Ibadan Electricity Distribution Company, John Ayodele, also stated that the Discos would quit without hesitation if they had an opportunity to do so.

He said, “On when we are going to quit the business, the fact is that if you ask all the investors, because I’ve sat with them, if you can refund them their money in five minutes, they will quit in 10 minutes. No investor wants to stay.

“So, if you are ready to refund the money right now, no investor will stay for one minute. The one (Disco) they returned in Yola (to the Federal Government) since 2015, as we speak today, no kobo has been paid to the investor. So, you can imagine the frustration. Let us look at this issue from the business angle, no investor is a Father Christmas.”

The distribution firms also stated that the reports that were presented to investors by the Bureau of Public Enterprises at the time when the power sector was privatised were inaccurate.

According to them, the wrong data presented to the Discos by the BPE during the privatisation process contributed to the difficulties currently being experienced in the performance of virtually all the firms.

The Discos also stated that the various unions in the sector stopped the investors from carrying out due diligence on the power assets prior to privatisation.

Modibbo stated that the power firms had complained to the Nigerian Electricity Regulatory Commission, adding that this remained a big challenge.

He said, “Most people, including the minister, often say that we knew what we bought and that we walked into it consciously. Yes, but the due diligence that we did was just a mere due diligence in name, because I participated in it. The labour unions were vehemently against the privatisation of the sector.

“So, we had to rely on the records given to us by the BPE. But I can tell you that all of those records were not accurate. They were faulty. There was no technical audit of the assets of the defunct PHCN. There was no financial audit, no external audit of the firms and this was what we met.

“We met what they left behind and we screamed. We complained that we didn’t carry out due diligence and the regulator agreed that we should do independent studies and confirm the actual state of affairs and come back for renegotiation.”

Ayodele also stated that labour unions barred investors from gaining entry into most power plants to ascertain the state of the facilities during the period of privatisation.

He said, “There are issues with the power sector as of the time this privatisation was going on. Those of you who are aware know that there was a big war between the government and labour unions. It was fierce and I know this because I was supervising all the power plants in Nigeria at the time.

“During that period, I dear not take a white investor to a power station. Also, before you entered anywhere, about 30 to 40 people would bully you because of the fear of what the privatisation would bring. So, for that reason, when the World Bank came, we couldn’t do what we call physical due diligence. There is no doubt about that.

“What we did was to get the alternative, which was to know the number of transformers, lines and their lengths and others. Those were the things we got in the data room and I am not sure if this was completely explained to the investors, who were actually supposed to enter the store to know the real situation.”

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

Stop Maize, Soybean Export to Reduce Scarcity – NIAL

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Stop Maize, Soybean Export to Reduce Scarcity – NIAL

The Nigerian Institute of Animal Science on Tuesday called on the Federal Government to halt the continued export of maize and soybean to reduce the scarcity of the commodities as well curb their price hike in Nigeria.

Registrar and Chief Executive Officer, NIAL, Prof. Eustance Iyayi, told journalists in Abuja that the poultry sector was currently hit by the severe scarcity of maize and soybean.

This, he said, was due to the continued export of the commodities, the COVID-19 pandemic, which had disorganised the international supply chain, lingering insecurity in the North-East, farmers/herders conflict and flooding in some parts of the country.

“Maize and soybean are being exported and this has exacerbated the situation leading to local scarcity and price escalation of the commodities in poultry production,” Iyayi stated.

He added, “The increasing prices of the essential commodities has resulted in the increase in price of finished feeds by about 75 per cent.

“This has led to the closure of small and medium sized poultry farms thereby threatening about 10 million jobs as a result of this scarcity.

“To set the poultry industry from total collapse, the institute urges the government to immediately halt the exportation of soybean and maize and grant import permit to importers at the official foreign exchange rate.”

Iyayi said there was shortage of soybean in Nigeria and other countries, stressing that the little amount being produced across the country should not be exported.

He said the current maize yield of about one to two tonnes per hectare being produced in Nigeria would not be enough to sustain the country.

The NIAL helmsman stated that the country should be producing between seven and 10 tonnes per hectare in order to meet the requirements for humans and animals.

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Economy

Petrol Landing Cost Jumps to N186, Oil Hits $64

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Petrol Landing Cost Jumps to N186, Oil Hits $64

Against the backdrop of the rising price of oil prices, the landing cost of Premium Motor Spirit (petrol) imported into Nigeria has increased to N186.33 per litre.

Investors King had exclusively reported on February 9 that the landing cost of PMS rose to about N180 per litre on February 5 from N158.53 per litre on January 7.

Crude oil price accounts for a large chunk of the final cost of petrol, and the deregulation of petrol price by the Federal Government last year means that the pump price of the product will reflect changes in the international oil market.

Going by the petrol pricing template of the Petroleum Products Pricing Regulatory Agency, the landing cost of petrol rose to N186.33 per litre on February 16, with the pump price of the product expected to be N209.33 per litre.

The international oil benchmark, Brent crude, closed at $63.96 per barrel on February 16, up from $59.34 per barrel on February 5.

The rising price of crude oil pushed the cost of petrol quoted on Platts to $560.75 per metric tonne (N163.08 per litre, using N390/$1) on February 16 from $543.25 per metric tonne (N157.99 per litre) on February 5.

Other cost elements that make up the landing cost include freight (N10.29), lightering expenses (N4.57), insurance cost (N0.25), Nigerian Ports Authority charge (N2.38), Nigerian Maritime Administration and Safety Agency charge (N0.23), jetty throughput charge (N1.61), storage charge (N2.58), and financing (N1.33).

The freight cost increased to $35.41 per MT (N10.29 per litre) last Wednesday from $30.04 per MT (N8.74 per litre) on February 5.

The pump price is the sum of the landing cost, wholesale margin and the distribution margins. The wholesale margin is N4.03 while the distribution margins comprise transporters allowance (N3.89), retailer (N6.19), bridging fund (N7.51), marine transport average (N0.15), and admin charge (N1.23).

Apart from the changes in global crude oil prices, the exchange rate of naira to the dollar also affects the cost of imported petrol.

The cost of petrol would be higher if the 410/$1 rate at which the naira closed on Monday at the Investors’ and Exporters’ Foreign Exchange Window was used. The naira closed at 480/$1 at the parallel market.

The Nigerian National Petroleum Corporation, which has been the sole importer of petrol into the country in recent years, is still being relied upon by marketers for the supply of the product despite the deregulation of the downstream petroleum sector.

Oil marketers said recently that they were ready to resume importation of petrol if the foreign exchange was made available to them at a competitive rate.

“The discussion we should be having today is how best to maximise the benefits of the removal of price controls and subsidies while minimising the adverse effects of this action on our citizens,” the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, said at a virtual press briefing.

Brent crude, against which Nigeria’s oil is priced, rose by $1.67 to $64.58 per barrel as of 6:08pm Nigerian time on Monday.

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Economy

FG to Lift 100 Million People Out of Poverty With Gas Expansion Project

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FG to Lift 100 Million People Out of Poverty With Gas Expansion Project

The Federal Government has said about 100 million Nigerians will be lifted out of poverty through the National Gas Expansion Programme (NGEP).

The Minister of State for Petroleum Resources, Chief Timipre Sylva, disclosed this on Monday during the inauguration of the NGEP in Ado Ekiti, Southwest.

Sylva said the project was “a practical demonstration of President Muhammadu Buhari’s commitment to lift 100 million Nigerians out of poverty by using gas value chain as catalyst for social and economic development in Nigeria”.

The minister said, “The programme has its main objective to reinforce and expand gas supply as well as stimulate demand in Nigeria through effective and efficient mobilisation and utilisation of all available assets, resources and infrastructure in the country.

“The programme is geared towards the implementation of Mr President June 12, 2019 promise to take hundred million Nigerians out of poverty within the current decade by ensuring that locally produced, available, accessible and affordable fuel is sufficiently supplied across the country”.

Sylva added that Nigeria was richly endowed with mineral resources, specifically, hydrocarbons, crude oil and natural gas with proven gas reserves of over 200 trillion cubic feet of natural gas, which he said had presented the country with opportunity to use gas as a catalyst for social economy renaissance.

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