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Discos’ Debt to Transmission Company Hits N231bn

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power project
  • Discos’ Debt to Transmission Company Hits N231bn

The indebtedness of power distribution companies to the Transmission Company of Nigeria has risen to N231bn as of March 2019.

Nigeria has 11 Discos. The electricity generated by power generation companies is transmitted by the TCN to power distributors, who then distribute the product to final consumers.

Discos collect funds from power consumers on behalf of other operators in the sector, but it was learnt on Sunday in Abuja that the indebtedness of the power distributors to TCN alone had risen to N231bn.

The Managing Director, TCN, Usman Mohammed, stated that this was why it had become vital to correct the mistake that was made during the privatisation process of the power sector.

“It is important we reset those distribution companies on the path of sustainability so that we don’t continue to put money in a company that doesn’t deliver as expected,” he stated.

Mohammed also explained that the N701bn, which the Federal Government provided to support generation companies for the payment of gas, was due to the fact that Discos were not remitting the required funds to the sector to pay power generators.

He said, “If the Discos are performing we would not have to put in all that money. So it is because the money from the Discos is not coming in to pay the Gencos that was why we had to put this kind of structure. For transmission, they (Discos) owe us N231bn as of March. The sum of N231bn is what the Discos owe us.”

On ways to reset the fortunes of the Discos, the TCN boss stated that there had been a push for the recapitalisation of the Discos, adding that this was also one of the ways to correct the mistake that was made when the sector was privatised.

The distribution and generation arms of the power sector were officially privatised in November 2013 when they were handed over to private investors to manage.

Mohammed said, “We are pushing for the recapitalisation of the Discos because we believe that we made a mistake in the process of privatisation and we believe that the mistake can only be corrected by the process of recapitalisation.

“Privatisation is the right thing because the government cannot sustainably invest in the power sector, but the point is that we implemented the right thing wrongly and so we need to correct that mistake. That is what we need to do as people.”

The TCN boss further noted that the over $1bn investments in transmission had not been adequately felt by power users because of the poor networks in the country’s electricity distribution arm.

He said, “The Nigerian people are not connected to our network. They are connected to the distribution network. So the Nigerian people in a way do not feel what we are doing. But the fact is that even our equipment is not guaranteed because there is no investment in the distribution network.

“You may ask how? We have 737 interfaces between us and the distribution companies. Out of these 737 interfaces, only 421 are protected on the distribution side. The remaining 316 are not protected or not fully protected. So you will see a 33kV breaker that will trip for about 30 times in a month.”

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.

Economy

Federal Government Set to Seal $3.8bn Brass Methanol Project Deal in May 2024

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Gas-Pipeline

The Federal Government of Nigeria is on the brink of achieving a significant milestone as it prepares to finalize the Gas Supply and Purchase Agreement (GSPA) for the $3.8 billion Brass Methanol Project.

The agreement to be signed in May 2024 marks a pivotal step in the country’s journey toward industrialization and self-sufficiency in methanol production.

The Brass Methanol Project, located in Bayelsa State, is a flagship industrial endeavor aimed at harnessing Nigeria’s abundant natural gas resources to produce methanol, a vital chemical used in various industrial processes.

With Nigeria currently reliant on imported methanol, this project holds immense promise for reducing dependency on foreign supplies and stimulating economic growth.

Upon completion, the Brass Methanol Project is expected to have a daily production capacity of 10,000 tonnes of methanol, positioning Nigeria as a major player in the global methanol market.

Furthermore, the project is projected to create up to 15,000 jobs during its construction phase, providing a significant boost to employment opportunities in the country.

The successful execution of the GSPA is essential to ensuring uninterrupted gas supply to the Brass Methanol Project.

Key stakeholders, including the Nigerian National Petroleum Company Limited and the Nigerian Content Development & Monitoring Board, are working closely to finalize the agreement and pave the way for the project’s advancement.

Speaking on the significance of the project, Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, emphasized President Bola Tinubu’s keen interest in expediting the Brass Methanol Project.

Ekpo reaffirmed the government’s commitment to facilitating the project’s success and harnessing its potential to attract foreign direct investment and drive economic development.

The Brass Methanol Project represents a major stride toward achieving Nigeria’s industrialization goals and unlocking the full potential of its natural resources.

As the country prepares to seal the deal in May 2024, anticipation grows for the transformative impact that this landmark project will have on Nigeria’s economy and industrial landscape.

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Economy

IMF Report: Nigeria’s Inflation to Dip to 26.3% in 2024, Growth Expected at 3.3%

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IMF global - Investors King

Nigeria’s economic outlook for 2024 appears cautiously optimistic with projections indicating a potential decrease in the country’s inflation rate alongside moderate economic growth.

The IMF’s revised Global Economic Outlook for 2024 highlights key forecasts for Nigeria’s economic landscape and gave insights into both inflationary trends and GDP expansion.

According to the IMF report, Nigeria’s inflation rate is projected to decline to 26.3% by the end of 2024.

This projection aligns with expectations of a gradual easing of inflationary pressures within the country, although challenges such as fuel subsidy removal and exchange rate fluctuations continue to pose significant hurdles to price stability.

In tandem with the inflation forecast, the IMF also predicts a modest economic growth rate of 3.3% for Nigeria in 2024.

This growth projection reflects a cautious optimism regarding the country’s economic recovery and resilience in the face of various internal and external challenges.

Despite the ongoing efforts to stabilize the foreign exchange market and address macroeconomic imbalances, the IMF underscores the need for continued policy reforms and prudent fiscal management to sustain growth momentum.

The IMF report provides valuable insights into Nigeria’s economic trajectory, offering policymakers, investors, and stakeholders a comprehensive understanding of the country’s macroeconomic dynamics.

While the projected decline in inflation and modest growth outlook offer reasons for cautious optimism, it remains essential for Nigerian authorities to remain vigilant and proactive in addressing underlying structural vulnerabilities and promoting inclusive economic development.

As the country navigates through a challenging economic landscape, concerted efforts towards policy coordination, investment promotion, and structural reforms will be crucial in unlocking Nigeria’s full growth potential and fostering long-term prosperity.

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Economy

South Africa’s March Inflation Hits Two-Month Low Amid Economic Uncertainty

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South Africa's economy - Investors King

South Africa’s inflation rate declined to a two-month low, according to data released by Statistics South Africa.

Consumer prices rose by 5.3% year-on-year, down from 5.6% in February. While this decline may initially suggest a positive trend, analysts caution against premature optimism due to various economic factors at play.

The weakening of the South African rand against the dollar, coupled with drought conditions affecting staple crops like white corn and geopolitical tensions in the Middle East leading to rising oil prices, poses significant challenges.

These factors are expected to keep inflation relatively high and stubborn in the coming months, making policymakers hesitant to adjust borrowing costs.

Lesetja Kganyago, Governor of the South African Reserve Bank, reiterated the bank’s cautious stance on inflation pressures.

Despite the recent easing, inflation has consistently remained above the midpoint of the central bank’s target range of 3-6% since May 2021. Consequently, the bank has maintained the benchmark interest rate at 8.25% for nearly a year, aiming to anchor inflation expectations.

While some traders speculate on potential interest rate hikes, forward-rate agreements indicate a low likelihood of such a move at the upcoming monetary policy committee meeting.

The yield on 10-year bonds also saw a marginal decline following the release of the inflation data.

March’s inflation decline was mainly attributed to lower prices in miscellaneous goods and services, education, health, and housing and utilities.

However, core inflation, which excludes volatile food and energy costs, remained relatively steady at 4.9%.

Overall, South Africa’s inflation trajectory underscores the delicate balance between economic recovery and inflation containment amid ongoing global uncertainties.

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