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Power Distributors Owe NBET N108bn in Three Months

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electricity
  • Power Distributors Owe NBET N108bn in Three Months

Despite an increase in their collection efficiency, the remittance by electricity distribution companies to the Nigerian Bulk Electricity Trading Plc for the energy received by them dropped to 27.5 per cent in the third quarter of 2018 from 31.5 per cent in the previous quarter.

The latest quarterly report released by the Nigerian Electricity Regulatory Commission on Tuesday showed that the Discos failed to remit a total of N108.4bn to NBET in the third quarter.

The government-owned NBET buys electricity in bulk from generation companies through Power Purchase Agreements and sells to the Discos, which then supply to the consumers.

The report revealed that the collection efficiency of the Discos increased from 64.2 per cent in the second quarter to 65.5 per cent in the third quarter.

It said, “During the third quarter of 2018, the 11 Discos were issued a total invoice of N162.5bn for energy received from NBET and for service charge by the Market Operator, but only a sum of N54.1bn (33.3 per cent) was settled by the Discos, creating a significant deficit of N108.4bn in the market.”

NERC said only two of the Discos recorded an increase in remittance performance in the third quarter, adding that none of them remitted up to 50 per cent of their market invoices.

The report showed that Ikeja Disco recorded the highest remittance efficiency (43 per cent), followed by Eko Disco with 42 per cent.

It said Kaduna Disco recorded the worst remittance performance of 10 per cent, followed by Jos Disco (11 per cent).

The regulator said, “Of particular concern is the significant drop in Kaduna Disco’s remittance rate from 21 per cent in the second quarter to just 10 per cent in the third quarter. The commission is currently reviewing the viability of the Discos (Kaduna and Jos) as a going concern.”

NERC said it scheduled a meeting with Kaduna Disco to discuss, as a prelude to asking them to submit their comprehensive strategy towards addressing their operational challenges.

“A similar meeting has been held with Jos Disco to review their performances,” it added.

The regulator said while the low remittance by the Discos to NBET and the MO was partly due to tariff shortfall, the Discos must improve on their technical and commercial efficiencies for improvements on the payment obligation to the market, thereby improving sector liquidity.

“A major initiative towards improving revenue collection in the electricity industry is the provision of meters to all registered end-use consumers of electricity,” it added.

According to the report, the challenge of poor remittance has remained a serious concern to the commission as it is one of the main causes of the liquidity crisis facing the Nigerian electricity supply industry.

It said, “Low remittance adversely affects the ability of NBET to honour its obligations to Gencos while service providers (Transmission Service Provider, MO and NERC) struggle with the paucity of funds impacting their capacity to perform their statutory obligations.

“To address the poor remittance by Discos, the commission has commenced enforcement actions against Discos found to have engaged in unacceptably low remittances to NBET and the MO, factoring in all the parameters embedded in the tariff model.

“In this regard, the commission is finalising a framework which ensures transparency and equity in the disbursement of market funds for the benefit of all participants in the industry.”

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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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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