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DisCos Fault Govt’s Directive on Generation Below Optimal Level

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Power - Investors King
  • DisCos Fault Govt’s Directive on Generation Below Optimal Level

Electricity Distribution Companies (DisCos) have faulted the National Control Centre’s (NCC’s) directive to generation companies (GenCos) to generate electricity below optimal level.

They said it is a major hindrance to the nation’s drive towards efficient power supply. This, they argued, is because of the low transmission capacity in the country.

Association of Electricity Distributors (ANED) Research and Advocacy Executive Director, Mr. Sunday Oduntan, who spoke with reporters in Lagos at weekend, said while DisCos and its umbrella body, ANED were not interested in any controversies in the sector, ANED would continue to demand adequate power supply for Nigerians.

He said: “We want Nigerians to know that the distribution capacity of all the 11 DisCos is 6, 288megawatts (Mw). This is according to the Transmission Company of Nigeria (TCN) stress test that was conducted in 2015.

“This is not our figure, this is the figure from the TCN side. Now, what we are getting from them is far too low than what we are supposed to be getting.”

Only last week, the GenCos threatened to shut their plants over repeated directives by the NCC to generate below optimal level.

Association of Power Generation Companies (APGC) Executive Secretary, Dr Joy Ogaji, said the GenCos were facing lower capacity utilisation having to operate their plants far from the baseline settings to as low as about 50 per cent of total available power capacity.

Citing last April, Ogaji said daily, the GenCos had an average capacity of 7, 484 Mw, but that the Transmission Company of Nigeria (TCN) transmitted only an average of 3985 Mw, about 53 per cent of the available capacity.

ANED said the implication of this trend in power generation is that DisCos “are not able to supply enough power to (our) customers and we are now making Nigerians to be aware that the shortage of power supply or lack of power is due to TCN’s constraints and persistent outages from the TCN’s interface. The GENCOs have actually confirmed that”.

Oduntan urged the government to address the transmission bottlenecks, noting that the development is negative for DisCos’ business and customers.

He said: “What we are having is a suppressed tariff regime that is not cost reflective. A tariff that was calculated on the wrong assumption that by 2018, we would be generating over 7,000Mw. The absence of that level of generation means that we are having more shortfalls in the market. The situation is now far worse than when we are getting far lower than expected from TCN.”

Meanwhile, Ibadan Electricity Distribution Company (IBEDC) said it has invested over N11.5 billion in metering, network upgrade and rehabilitation, among others.

Its Managing Director/Chief Executive Officer, Mr. John Donnachie, who spoke through the firm’s Chief Operating Officer, Mr. John Ayodele, spoke when the management took business and energy reporters on facility tour of the DisCo in Ibadan at the weekend.

Some of the facilities visited include the Asset and Customer Enumeration, Raymond Zard’s 500mva transformer, Ibadan North 15mva injection substation and a warehouse with uninstalled customer meters and statistical meters for transformer including supplies from a local manufacturer – Momas Electricity Meters Manufacturing Company Limited (MEMMCOL).

Donnachie said: “As part of our unwavering commitment to our mission to distributing power, changing lives, we have in the past six months invested over N11.5 bllion in major capital projects. These span across our franchise area covering – Oyo, Ogun, Osun, Kwara; parts of Kogi, Niger and Ekiti States.

“These projects are major game changers for IBEDC as a business and for our esteemed customers, which have significantly improved our service delivery, quality and quantity of power supply”.

He said: ‘’Recently, we commenced the procurement and supply of 10,000 distribution transformer (DT) meters at a cost of N4billion. These DT Meters will greatly reduce the challenge of estimated bills and ensure customers without meters are billed more accurately through its energy audit, accounting functionalities, and above all, assist in our technical, commercial and collection (TC&C) losses.

“In line with reducing the incidence of estimated bills, we have commenced our meter roll out with a first batch of 48,470 energy meters of various ratings and capacities. This includes 35,000 single-phase, 12,000 three-phase, 1,470 whole current, C.T-Operated and Statistical Meters all at a sum of N3.1 billion, ahead of the meter asset provider (MAP) initiative being finalised by the Nigerian Electricity Regulatory Commission (NERC) and the DisCos.

“The continuous metering of maximum demand (MD) customers is also in place with the deployment of 13 high voltage energy meters and delivery of 912 low voltage maximum demand energy meters at a cost of N405 million. To further support the huge metering expenditure, we have invested extensively in the supply and installation of Advanced Metering Infrastructure (AMI) systems at over N1 billion, this investment is critical to optimally implement the functionalities of DT Meters. As we speak, we have recently received 95 per cent of credited advance payment for metering implementation (CAPMI) meters for deployment for those that paid.

“To further reduce safety related accidents and to achieve Vision Zero and Safety Culture of IBEDC, the Board has awarded a whopping sum of N1.47 billion for a major overhaul of the Health, Safety and Environment department. The project will deliver on over 60 critical need areas with major focus on procurement and deployment of PPEs, IPEs, signages, labels and symbols. Furthermore, the project is expected to map the layouts of 114 substations to develop conceptual site models, training on emergency techniques, solid waste and hazardous management programme, production of occupational health and safety environmental policies and framework for all technical and non-technical staff. In addition, it will, ultimately, aid us in attaining the certification required, thereby making us an internationally recognised health hazard compliant organisation,” Donnachie said.

The ongoing Asset and Customer Enumeration estimated at N5 billion has started across the franchise and is scheduled for completion early next year.

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

Dangote Mega Refinery in Nigeria Seeks Millions of Barrels of US Crude Amid Output Challenges

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Dangote Refinery

The Dangote Mega Refinery, situated near Lagos, Nigeria, is embarking on an ambitious plan to procure millions of barrels of US crude over the next year.

The refinery, established by Aliko Dangote, Africa’s wealthiest individual, has issued a term tender for the purchase of 2 million barrels a month of West Texas Intermediate Midland crude for a duration of 12 months, commencing in July.

This development revealed through a document obtained by Bloomberg, represents a shift in strategy for the refinery, which has opted for US oil imports due to constraints in the availability and reliability of Nigerian crude.

Elitsa Georgieva, Executive Director at Citac, an energy consultancy specializing in the African downstream sector, emphasized the allure of US crude for Dangote’s refinery.

Georgieva highlighted the challenges associated with sourcing Nigerian crude, including insufficient supply, unreliability, and sometimes unavailability.

In contrast, US WTI offers reliability, availability, and competitive pricing, making it an attractive option for Dangote.

Nigeria’s struggles to meet its OPEC+ quota and sustain its crude production capacity have been ongoing for at least a year.

Despite an estimated production capacity of 2.6 million barrels a day, the country only managed to pump about 1.45 million barrels a day of crude and liquids in April.

Factors contributing to this decline include crude theft, aging oil pipelines, low investment, and divestments by oil majors operating in Nigeria.

To address the challenge of local supply for the Dangote refinery, Nigeria’s upstream regulators have proposed new draft rules compelling oil producers to prioritize selling crude to domestic refineries.

This regulatory move aims to ensure sufficient local supply to support the operations of the 650,000 barrel-a-day Dangote refinery.

Operating at about half capacity presently, the Dangote refinery has capitalized on the opportunity to secure cheaper US oil imports to fulfill up to a third of its feedstock requirements.

Since the beginning of the year, the refinery has been receiving monthly shipments of about 2 million barrels of WTI Midland from the United States.

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Crude Oil

Oil Prices Hold Steady as U.S. Demand Signals Strengthening

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Crude Oil - Investors King

Oil prices maintained a steady stance in the global market as signals of strengthening demand in the United States provided support amidst ongoing geopolitical tensions.

Brent crude oil, against which Nigerian oil is priced, holds at $82.79 per barrel, a marginal increase of 4 cents or 0.05%.

Similarly, U.S. West Texas Intermediate (WTI) crude saw a slight uptick of 4 cents to $78.67 per barrel.

The stability in oil prices came in the wake of favorable data indicating a potential surge in demand from the U.S. market.

An analysis by MUFG analysts Ehsan Khoman and Soojin Kim pointed to a broader risk-on sentiment spurred by signs of receding inflationary pressures in the U.S., suggesting the possibility of a more accommodative monetary policy by the Federal Reserve.

This prospect could alleviate the strength of the dollar and render oil more affordable for holders of other currencies, consequently bolstering demand.

Despite a brief dip on Wednesday, when Brent crude touched an intra-day low of $81.05 per barrel, the commodity rebounded, indicating underlying market resilience.

This bounce-back was attributed to a notable decline in U.S. crude oil inventories, gasoline, and distillates.

The Energy Information Administration (EIA) reported a reduction of 2.5 million barrels in crude inventories to 457 million barrels for the week ending May 10, surpassing analysts’ consensus forecast of 543,000 barrels.

John Evans, an analyst at PVM, underscored the significance of increased refinery activity, which contributed to the decline in inventories and hinted at heightened demand.

This development sparked a turnaround in price dynamics, with earlier losses being nullified by a surge in buying activity that wiped out all declines.

Moreover, U.S. consumer price data for April revealed a less-than-expected increase, aligning with market expectations of a potential interest rate cut by the Federal Reserve in September.

The prospect of monetary easing further buoyed market sentiment, contributing to the stability of oil prices.

However, amidst these market dynamics, geopolitical tensions persisted in the Middle East, particularly between Israel and Palestinian factions. Israeli military operations in Gaza remained ongoing, with ceasefire negotiations reaching a stalemate mediated by Qatar and Egypt.

The situation underscored the potential for geopolitical flare-ups to impact oil market sentiment.

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Shell’s Bonga Field Hits Record High Production of 138,000 Barrels per Day in 2023

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oil field

Shell Nigeria Exploration and Production Company Limited (SNEPCo) has achieved a significant milestone as its Bonga field, Nigeria’s first deep-water development, hit a record high production of 138,000 barrels per day in 2023.

This represents a substantial increase when compared to 101,000 barrels per day produced in the previous year.

The improvement in production is attributed to various factors, including the drilling of new wells, reservoir optimization, enhanced facility management, and overall asset management strategies.

Elohor Aiboni, Managing Director of SNEPCo, expressed pride in Bonga’s performance, stating that the increased production underscores the commitment of the company’s staff and its continuous efforts to enhance production processes and maintenance.

Aiboni also acknowledged the support of the Nigerian National Petroleum Company Limited and SNEPCo’s co-venture partners, including TotalEnergies Nigeria Limited, Nigerian Agip Exploration, and Esso Exploration and Production Nigeria Limited.

The Bonga field, which commenced production in November 2005, operates through the Bonga Floating Production Storage and Offloading (FPSO) vessel, with a capacity of 225,000 barrels per day.

Located 120 kilometers offshore, the FPSO has been a key contributor to Nigeria’s oil production since its inception.

Last year, the Bonga FPSO reached a significant milestone by exporting its 1-billionth barrel of oil, further cementing its position as a vital asset in Nigeria’s oil and gas sector.

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