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Nigeria Facing Energy Dilemma, Says Kachikwu

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  • Nigeria Facing Energy Dilemma, Says Kachikwu

The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has said that the country is facing an energy dilemma that needs to be addressed to boost economic development.

Kachikwu stated this on Tuesday at the on-going annual conference and exhibition of the Nigerian Association of Petroleum Explorationists in Lagos.

“The imperative for our (oil and gas) industry is really not to remain extractive. We have in the last 60 years extracted hydrocarbons and sent it offshore. Part of the fiscal policies stance and the petroleum policy, gas policy, etc, is to ensure that that changes significantly,” said the minister, who was represented his Special Adviser on Fiscal Strategy, Dr Tim Okon.

He noted that the ministry’s Seven Big Wins initiative was aimed at focusing on economic development, and not the collection and division of rents.

He said, “Our task is not only to extract but also to process and to create activities that lead to economic development. The essential reforms in the oil and gas industry must be anchored on getting our people back to work.

“Our economy lacks the essential engine for growth. We are in an energy trilemma: We export energy in a primary form, we import petroleum products, and we have a power crisis. That is called the energy trilemma. So, we must deal with this. We are working so that we get results.”

Kachikwu said the government was committed to doing a lot to transform the economy for the benefit of Nigerians, noting that “natural resources take hundreds of years to form and usually require very little years to extract and dispose of.”

The Chief Executive Officer, Seplat Petroleum Development Company Plc, Mr Austin Avuru, in his keynote speech, noted that the country fell into a recession in 2016 on the back of oil price crash and production decline.

He warned that the economy would slip back into a recession if oil price and production drop again.

Avuru said, “With prices going back up, confidence is rising and more projects are being sanctioned. We are now seeing a paradigm shift and attempting, as a country, to then use of our gas resources not as just a rental revenue agent but as an enabler for business and for bigger economic growth.

“The truth is that an economy is as large as how much energy it consumes. So, when we produce 8.9 billion standard cubic feet of gas a day, and only nine per cent of it is consumed domestically, it says a lot about what our economy looks like.”

According to him, the countries with the highest Gross Domestic Product per capital are also the largest energy consumer per capital, and that is what it should be.

Avuru said, “So, as a country, our aspiration, beyond just increasing our oil and gas production, should actually be to maximise our domestic energy consumption; that is what will expand the economy, not just receiving $25bn-$30bn every year from oil revenue from abroad. That is not what will grow our economy.”

Meanwhile, the West African crude differentials were steady on Tuesday as Angolan state oil company, Sonangol, finalised its term allocations and traders awaited Nigerian loading programmes.

About 20 to 24 cargoes of Nigerian crude were still available, traders said, slightly more than thought on Monday, according to Reuters.

Qua Iboe, Nigeria’s largest crude oil grade, was last being offered at around dated Brent plus $1.70 a barrel, a trader said, in line with indications reported on Friday. Total was heard to be holding some Qua cargoes.

There was still no sign of Nigerian schedules or official selling prices. One trader said a public holiday in Nigeria on Tuesday might have delayed their emergence.

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

Electricity Consumers Get 611,231 Meters Under MAP Scheme

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

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