- Presidency Meets Power Firms Over Electricity Crisis
As the nation’s power sector remains in crisis mode, the Presidency has met with electricity distribution companies in a bid to resolve some of the issues affecting the electricity supply industry, our correspondent has learnt.
It was gathered that the Chief of Staff to the President, Mr Abba Kyari, had a meeting with the Discos last week, before the presidential inauguration, and the previous week, with representatives of the Ministry of Power, Works and Housing, the Bureau of Public Enterprises and the Nigeria Bulk Electricity Trading Plc in attendance.
Our correspondent learnt that the meetings were aimed at resolving the liquidity crisis in the sector and improving service delivery by the Discos.
The meeting examined power distribution projects that the German government could help the Discos with.
More than five years after the privatisation of the sector, the investors who took over the six generation companies and 11 Discos that emerged after the unbundling of the Power Holding Company of Nigeria are still grappling with the old problems in the sector.
The sector is plagued with problems of gas supply shortages, limited distribution networks, limited transmission line capacity, huge metering gap, electricity theft, and high technical and commercial losses, among others.
Total power generation stood at 3337.2 megawatts as of 6.00am on Wednesday, down from 3,737.4MW on Tuesday, according to data from the Nigeria Electricity System Operator, an arm of the Transmission Company of Nigeria.
“The Chief of Staff to the President has met the Discos and they (government) are developing their own blueprint to solve the problem. They have met with us and have come up with some government-to-government arrangements whereby the government of Germany can help us, as distribution companies, in terms of providing equipment and the rest of them. We are waiting for how that will pan out,” an industry official told our correspondent on Wednesday.
He added, “All I know is that the government is frustrated…I get a sense that a lot of people that did not buy these assets are stoking the fire for nationalisation but common sense is beginning to prevail, that if the government takes back the assets, it will have to return the money the investors paid for the assets.”
The official highlighted the need for a regular meeting of all the stakeholders – gas supplier, Gencos, Discos, NBET, TCN, the Nigerian Electricity Regulatory Commission and the Ministry of Power – to examine the issues in the sector.
“What we have now is a disjointed system; there is no central organ that is coordinating everybody,” he added.
According to the Nigerian Electricity Regulatory Commission, the financial viability of the Nigerian electricity supply industry remains the most significant challenge threatening the sustainability of the power sector.
“The liquidity challenge is partly attributed to the non-implementation of cost-reflective tariffs, high technical and commercial losses exacerbated by energy theft, and consumers’ apathy to payments under the widely prevailing practice of estimated billing.”
The Chief Operating Officer, Ibadan Electricity Distribution Company, Mr John Ayodele, who confirmed the meetings with the Discos, said, “They invited us and it is one of the government’s ways of helping to resolve the liquidity crisis [in the power sector]. I think the government is trying to wade in and see how they can use the government-to-government methodology to secure funding and investment by the German government. We were asked to list the projects needed to make sure we can deliver electricity and we did.
“The German chancellor was in Nigeria recently and one of the discussions with the President is what the German government can do to help. So, Siemens has been nominated, as a German company, to relate with us and see what we can do.”
He said the Discos were asked to come up with the requirements to make the sector better and improve services.
Last month, the nation’s power grid experienced what the Managing Director of TCN, Mr Usman Mohammed, described as the worst system instability since he assumed office. Power generation plunged to zero megawatt as of 6.00 am on May 9 and 10, according to data from the system operator.
The power grid has continued to suffer system collapse over the years amid a lack of spinning reserve that is meant to forestall such occurrences. It suffered 75 collapses between May 29, 2015, and June 5, 2019, the data showed.
The system operator put the installed generation capacity in the country at 12,910.40MW; available capacity at 7,652.60MW; transmission wheeling capacity at 8,100MW; and the peak generation ever attained at 5,375MW.
But the actual generation has mostly hovered around 3,000MW and 4,500MW in the past few years.
The Executive Secretary, Association of Power Generation Companies, Dr Joy Ogaji, in a telephone interview with our correspondent on Wednesday, noted that the power situation had not changed.
She said, “The players are ready to play in the sector but there is no coordination; there is no leadership, discipline and corporate governance. The more government delays in putting its act together, the more money the country is losing.
“Let all stakeholders come together in one room and discuss the problem so that we can solve it together. We, Gencos, are tired of the current situation. We don’t want any intervention because it does not help us. I cannot enter into any long-term agreement because that money, N701bn, was for two years, and nobody is ready to enter into any two-year agreement with me. Power generation contracts are long-term in nature.”
The Federal Government, in March 2017, launched the Power Sector Recovery Programme with the major highlight being a Central Bank of Nigeria-funded payment assurance guarantee for two years to the tune of N701bn. The fund, which was expected to cover the shortfalls of NBET, was targeted at Gencos and gas suppliers for power generated and future power generation.
Ogaji said the new administration of President Muhammadu Buhari should put capable people in leadership positions in the power ministry.
“If this government is really serious about the power sector, we don’t want politicians again; we want technocrats with experience in the power sector. We don’t want politicians who will come and frustrate our businesses for another four years. We have been in this doldrums for too long. We want some action from the government,” she added.
The entire value chain of the power sector, from generation to distribution and transmission, was managed by the Federal Government until November 1, 2013, when the sector was privatised.
The TCN, which manages the national grid, is still fully owned and operated by the government.
Ireland is Right to Resist US and OECD Led Calls for Global Corporation Tax Rate
Ireland is right to resist a global minimum corporation tax rate which could end up being a “masterclass in the law of unintended consequences”, affirms the CEO of one of the world’s largest independent financial advisory and fintech organisations.
The comments from Nigel Green, the chief executive and founder of deVere Group, come as Ireland’s finance minister, Paschal Donohoe, signalled the country will push back against attempts to rework the global tax system.
The Organisation for Economic Co-operation and Development (OECD) has been holding talks among 140 countries for several years and now says it hopes to reach a consensus by mid-2021.
Its plans have been given a boost by the Biden administration’s support for a minimum global corporate tax rate. “We’ve had a global race to the bottom in corporate taxation and we hope to put an end to that,” said the U.S. Treasury Secretary Janet Yellen at a hearing in Washington last month.
deVere’s Nigel Green says: “Ireland is right to resist the U.S.-backed calls for a minimum global corporation tax. The plans are misguided and could turn out to be a masterclass in the law of unintended consequences.
“The lack of flexibility would considerably hinder countries’ ability in employing tax policy to generate foreign direct investment (FDI).
“This means that countries which are not especially appealing for investment, except for a low tax regime, will be left hugely disadvantaged.
“Foreign companies and international agencies would likely move elsewhere where there are low taxes as well as other important attractive draws, taking with them direct and indirect jobs and wealth, plus all the other associated benefits of FDI.”
He continues: “America’s call for a global minimum tax is also likely to further disadvantage developing economies.
“Whilst the minimum rate is not yet stated, but once it is, a multinational’s tax rate in each jurisdiction will be set against that minimum and if a lower rate is paid in that jurisdiction, a top-up tax will be demanded. And that extra tax-take will go where the parent company is domiciled.
“Considering that the majority of the world’s major corporations are in developed countries, namely the U.S., it seems the plans are tilted towards the wants and needs of those nations, and in particular of the U.S., already the world’s largest economy.”
The lack of autonomy is another reason why a blanket global corporation tax could curb economic growth, says Mr Green.
“Each country has unique economic characteristics and challenges. Under the plans, would a country be able to support certain key sectors of their economies, such as tourism or agriculture, by offering rebates when needed for example? It seems unlikely.”
In addition, for many companies, a global minimum corporation tax will hike their costs of doing business around the world. “Is this then the right policy to pursue as the world is trying to reboot after the pandemic?” asks Mr Green who also argues that these higher costs will ultimately be passed on to consumers and suppliers.
The deVere boss also says that the plans may be flawed as each nation will maintain its unique set of complex exemptions and loopholes that could still be used by powerful corporations.
He concludes: “A global minimum corporation tax rate will do little to level the playing field, and it might make it worse.
“Keeping tax and business policies competitive will help economies recover stronger and quicker.”
Amazon To Open African Headquarters In South Africa
US retail giant, Amazon has announced that it would be opening its first African office in South Africa with a real estate investment of over R4 billion. This announcement is coming a week after Twitter choose to open its first African office in Ghana.
Authorities in Cape Town noted that Amazon would be occupying a new development in River Club, a prime section of the city. This new development will create 5,239 jobs in the construction phase alone. Along with 19,000 indirect and induced jobs.
The 15-hectare parcel of land will cost R4 billion and include two precincts. Authorities said the first precinct of 60,000sqm would occupy different layers of development, while the second section of 70,000 will hold Amazon headquarters in Africa.
“US retail giant, Amazon, will be the anchor tenant, opening a base of operations on the African continent. The development is envisaged to take place in phases, with construction set to take place over three to five years.
It is clear that this development offers many economic, social, and environmental benefits for the area. We are committed to driving investment to revitalize the economy, which is slowly recovering following the impact of Covid-19.” This was affirmed by Cape town city officials.
Earlier last week, Techcrunch had reported that Amazon announced the opening of Amazon Salon, the retailer’s first hair salon and a place where Amazon aims to test new technologies with the general public.
Amazon has had its web engineering giant AWS in South Africa for years, but its main e-commerce services have not been available anywhere on the continent.
This announcement came a week after Twitter announced the decision to set up its first African office and headquarters in Accra Ghana. Twitter claimed that Ghana’s democratic and economic strides made the West African country a highly competitive destination over Nigeria and other countries.
It was unclear whether Amazon considered Nigeria and similar parameters as Twitter while deciding its African base.
Dangote Commits $700M To Sugar Production In Support of Backward Integration Policy
The management of Dangote Sugar Refinery Plc has said it is committing over $700m to its sugar projects to support the Backward Integration Policy of the Federal Government to make Nigeria self-sufficient in sugar production.
According to a statement issued on Sunday by Dangote Industries Limited, the company disclosed this to visiting members of the Nasarawa House of Assembly on Friday.
The company noted that Nigeria was one of sub-Saharan Africa’s largest importers of sugar, second only to South Africa with an annual import of over $337m.
The Dangote Sugar management however assured the lawmakers that with the completion of its sugar projects in Nasarawa and Adamawa under the BIP, the nation would be saved more than half of the forex expended on sugar imports annually.
It added that the investment would also lift its people as other people-oriented infrastructures would come with the sugar projects.
The state lawmakers commended the Dangote Group for the choice of the state for the project and the accelerated pace with which the project was being executed, despite occasional delays arising from communal disagreements.
General Manager for the BIP, Dangote Sugar, John Beverley said when the factory was fully operational, it would have the capacity to crush 12,000 tons of cane per day, while 90MW power would be generated for both the company’s use and host communities.
He also disclosed that some 500km roads in all would be constructed to ease transportation within the vicinity. He solicited the support of the lawmakers in controlling the menace of land encroachment by settlers and itinerant farmers.
The Speaker of the Nasarawa State House of Assembly, Ibrahim Abdullah, and his team members, who were conducted around the company’s 78,000 hectares BIP in Tunga Awe Local Government Area commended the company for the project.
Abdullah noted that it would not only open up opportunities in the state but in Africa as a whole, and said the lawmakers were ready to partner and support the company towards the realisation of the sugar project through the relevant legislation.
When phase II of the project is completed, according to the company, it will make it the largest sugar refining plant in Africa.
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