Markets

‘Nigeria, Others Need $250 Billion Investment to Resolve Power Deficit’

Published

5 years ago

December 19, 2018

‘Nigeria, Others Need $250 Billion Investment to Resolve Power Deficit’

To resolve the power deficit situation in Africa and reach the United Nations’ (UN) target of Universal Access by 2030, the continent will need to add around 250GW capacity, which will require about 7GW yearly from now to 2030.

This, the Executive Chairman, Nigerian Electricity Regulatory Commission (NERC), Prof. James Momoh said would require an investment of about $250 billion, which according to him cannot be mobilised by national governments alone, but Public-Private Partnership to achieve this objective. Momoh stated this in his paper titled: “The Nigerian Power Supply Question: Challenges and Solution”, made available to The Guardian.

The NERC Chairman pointed that countries of Sub-Saharan Africa, due to their inability to provide the energy needs of their people, cannot adequately provide health services, schools, clean water, food security and industries to their people.

This, Momoh said prompted the Secretary General of the UN to establish the advisory group on Energy and Climate Change, with key recommendation of the document titled : “Energy for a Sustainable Future”, suggesting that countries like Nigeria should strive to provide universal access to electricity to all its citizens by 2030.

The report further recommends that for countries to attain the above targets, they must come up with national strategies and a long term policy of a road map that will attract investments, define the required human capital resources as well as institutional and regulatory framework that will reduce excessive red-tape in implementing a proactive roadmap that will transform the power sector to achieve the targets.

Momoh argued that the paper focused on the 48 countries that make up Sub-Saharan Africa, where about 800 million people do not have access to modern electricity, while nearly 730 million are dependent on traditional biomass cooking.

According to him, the total generation capacity of Africa stands at about 147GW, which he said is shared as South Africa, despite the political crisis in the region, consumes about 45GW, North Africa consumes 50GW, with their citizens having 99 per cent access to electricity, while the remaining balance of about 50GW is shared among the 49 countries that make up Sub Saharan Africa.

He explained further that “in Angola 15 million people have no access to electricity, with its national electricity rate at 30 per cent, Republic of Benin seven million without access to electricity, with national electricity rate of 29 per cent, Burkina Faso has 14 million people without electricity with the country’s level of electrification at 17 per cent.”

He maintained the Botswana with a population of one million people has an electrification rate of 66 per cent, while Ghana has demonstrated high level of success in its electrification, which Momoh said can be attributed to the implementation of a National Electricity Policy from 1989 to date, which is about 72 per cent, the highest in West, East and Southern Africa.

He said in the case of Nigeria, that is touted to be the giant of Africa, 96 million people are without access to electricity and national electrification rate of only 45 per cent, with a majority of the populace without any hope to get electricity in this decade if “We do not come up with a dynamic strategy to bridge the energy gap in the country.”

He added that due to above, electricity brown-outs are the order of the day as people have to rely on expensive diesel power generation to meet their power needs, which is estimated that African countries spend about one to five per cent of their GDP yearly to achieve that.

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Samed Olukoya

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

Published

3 days ago

May 16, 2024

Samed Olukoya

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.

Crude Oil

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

Published

3 days ago

May 16, 2024

Samed Olukoya

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.

Crude Oil

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

Published

3 days ago

May 16, 2024

Samed Olukoya

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.