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Discos’ Low Demand Hits Egbin, Nine Other Power Plants

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Power - Investors King
  • Discos’ Low Demand Hits Egbin, Nine Other Power Plants

Ten out of the nation’s 27 power plants saw their total output reduced by 1,664 megawatts on Thursday as a result of low demand by power distribution companies, data obtained from the Transmission Company of Nigeria showed.

Total power generation in the country stood at 3,627.3MW as of 6.00am on Thursday, while 2,029MW could not be generated due to low load demand by Discos and line constraints.

The nation’s three hydropower plants, namely Kainji, Jebba and Shiroro, generated 190MW, 225MW and 200MW respectively as low load demand by Discos reduced their output by 39MW, 270MW and 230MW respectively.

Other plants affected by the Discos’ low demand were Egbin (51MW), the nation’s biggest power station; Olorunsogo I (76MW), Geregu I (55MW); Azura-Edo IPP (153MW), Okpai IPP (95MW), Afam VI IPP (540MW) and Rivers IPP (45MW).

The nation generates most of its electricity from gas-fired power plants, while output from hydropower plants makes up about 30 per cent of the total.

The Nigeria Electricity System Operator, an arm of the TCN, put the nation’s installed generation capacity 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.

The nation’s power grid recorded its eighth total collapse this year on June 30, plunging consumers across the country into a blackout for some hours.

The government-owned TCN said the national grid experienced a system collapse due to high voltage following a massive drop of load by the Discos, adding that “the high voltage also caused a fire incident in the 75MX reactor in the Benin Substation, Sapele Road in Benin City, Edo State.”

But the Association of Nigerian Electricity Distributors said there was a trend of burnt transmission stations and failed transmission substation incidents in Lagos, Calabar, Abuja, Enugu and Onitsha as of May 8, 2019, due to inadequate transmission protection mechanisms and procedures.

The Discos also expressed displeasure over TCN’s practice of “arbitrary load dumping on power distributors” whenever the TCN was having challenges in managing energy on its grid, causing a myriad of commercial and technical problems.

The grid has continued to suffer system collapse over the years amid a lack of spinning reserve that is meant to forestall such occurrences. The grid suffered four total collapses in January and one each in February, April, May and June, according to the system operator.

Spinning reserve is the generation capacity that is online but unloaded and that can respond within 10 minutes to compensate for generation or transmission outages.

Out of the five power stations meant to provide spinning reserves, none has any actual reserve, with the contracted reserve put at 295MW.

The power stations are Egbin, Delta, Olorunsogo NIPP, Geregu NIPP and Omotosho NIPP.

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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Dangote Oil Refinery Set for December Listing on Nigerian Stock Exchange

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Dangote Refinery

The $20 billion Dangote Oil Refinery is poised to be listed on the Nigerian Stock Exchange (NSE) by December 2024, according to statements made by Aliko Dangote, Chairman of the Dangote Group.

Dangote, Africa’s richest man, expressed his enthusiasm for involving Nigerians, Africans, and other investors in what he described as a historic move.

Speaking to The Africa Report, he affirmed, “The listing, most likely, I won’t be surprised if we list (on the Nigerian Stock Exchange) by the end of this year. We will do that.”

This listing, expected to attract significant investor interest, could potentially add about N8 trillion to N10 trillion to the market capitalisation of the Nigerian Stock Exchange, as predicted by economy and capital market analyst Rotimi Fakayejo.

He said such a listing would not only distribute wealth but also attract foreign portfolio investment to the country, bolstering the economy with additional foreign exchange.

Fakayejo further elaborated on the potential impact of the Dangote refinery listing, stating, “It is also going to engender foreign portfolio investment. Such listing will affect individuals in the country and the stocks listed on the Nigerian exchange.”

David Adonri, Vice President of Highcap Securities Limited, echoed this sentiment, highlighting the significance of the listing for the Nigerian capital market.

He said the listing would provide Nigerians with the opportunity to share in the considerable wealth generated by the refinery.

However, uncertainties loom regarding the Dangote refinery’s crude oil supply chain. While Dangote confirmed the refinery’s decision to import crude oil from the United States due to fluctuating Nigerian oil production figures, Minister of State for Petroleum (Oil), Heineken Lokpobiri, denied knowledge of such imports.

Despite this discrepancy, Dangote defended the decision, stating, “We have tendered to buy some WTI oil from the US because the size of our refinery is very big, and we have to make sure that we secure the raw materials for our production.”

With the refinery set to attain a capacity of 500,000 barrels per day by July and reach its full capacity of 650,000 barrels per day by the end of the year, expectations are high for its transformative impact on Nigeria’s energy sector and broader economy.

The impending listing of the Dangote Oil Refinery represents a significant milestone in Nigeria’s quest for economic growth and diversification.

As stakeholders eagerly await further developments, the prospect of increased market capitalisation and enhanced investor participation holds promise for the country’s economic future.

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Retail Transactions on NGX Plummet by Nearly 55% in April

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Nigerian Exchange Group- Investors King

The retail transactions on the Nigerian Exchange Limited (NGX) declined by 54.89% in April to N100.77 billion from N223.37 billion in March.

This significant drop was revealed in the latest Domestic and Foreign Portfolio Investment Report released by the NGX.

The report highlighted that while retail transactions took a substantial hit, institutional transactions also saw a decrease, albeit less severe.

Institutional trading fell by 43.58% to N124.63 billion in April but still outperformed retail activity by a margin of 10%.

Overall, the total value of transactions executed by domestic investors continued to surpass those by foreign investors by approximately 30% in April.

However, the combined domestic transactions saw a steep decline of 49.27%, dropping from N444.28 billion in March to N225.40 billion in April.

Conversely, foreign transactions painted a more positive picture, increasing by 28.19% from N94.26 billion (approximately $70.83 million) in March to N120.83 billion (approximately $90.83 million) in April.

This surge in foreign investment activity provided a somewhat balanced view of the overall market dynamics.

Despite the month-on-month decrease, the total domestic and foreign portfolio transactions in Nigeria’s equity market amounted to N346.23 billion in April, marking a 35.71% decline compared to the N538.54 billion recorded in March.

However, the April figures still reflected a robust year-on-year growth of 81.07%, up from N191.21 billion in April of the previous year, indicating a positive trend in market activity over the longer term.

The report attributed the sharp decline in retail transactions to various market conditions and investor sentiments.

Analysts suggest that the decrease may be linked to economic uncertainties and a cautious approach adopted by retail investors in light of recent market volatilities.

Furthermore, the detailed analysis revealed that domestic investors were the primary drivers of the market, contributing N225.40 billion in April.

This trend underscores the continued dominance of local players in the Nigerian capital market.

Meanwhile, the NGX opened the new week on a slightly positive note, gaining 0.3% to reach 97,864.65 points after suffering three consecutive losses in the previous week.

The market’s year-to-date return improved marginally to 30.9% from the 30.5% recorded at the close of last week, suggesting a resilient market performance despite the recent fluctuations.

In related news, the NGX may sanction 47 companies over delayed audited reports, signaling a crackdown on non-compliance to maintain market integrity.

Also, the Federal Government listed N4.21 billion in April bonds on the NGX, contributing to the overall market activities.

While the drop in retail transactions is a cause for concern, market experts remain cautiously optimistic about the long-term prospects of the Nigerian Exchange.

They emphasize the need for strategic interventions to boost investor confidence and stabilize market activities in the coming months.

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Nigerian Brewers Post Combined Loss of N169.7 Billion

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Nigerian Breweries - Investors King

Nigerian brewers collectively faced a significant setback in the first quarter of 2024.

According to a comprehensive analysis of financial statements from leading brewing companies, including Champion Breweries Plc, Nigerian Breweries Plc, International Breweries Plc, and Guinness Nigeria Plc, the industry reported a combined loss of N169.7 billion.

This downturn is in contrast to the same period last year when three of the four major brewers recorded a total loss of N54.3 billion, while Guinness Nigeria managed to eke out a modest profit of N1.84 billion.

Experts attribute this dramatic reversal to a multitude of factors, with the foremost being the steep devaluation of the Nigerian naira coupled with soaring interest rates.

The fluctuating exchange rates have exacerbated the financial woes of brewing companies, particularly those with significant dollar exposures.

International Breweries, for instance, saw its foreign exchange loss balloon to N162.2 billion in the first quarter of 2024 from an FX gain of N1.22 billion in the same period last year.

Similarly, Nigerian Breweries and Guinness Nigeria reported substantial FX losses of N72.85 billion and N37.06 billion, respectively, compared to much lower losses or gains in the previous year.

Even Champion Breweries, which did not record any FX loss in the comparative period, reported a loss of N0.74 billion in Q1 2024.

Industry analysts emphasize that the weakened naira has intensified the costs associated with servicing foreign debt obligations, further straining profit margins.

The shift to a floating exchange rate regime has led to rapid depreciation of the naira, resulting in significant FX losses across the brewing sector.

Moreover, the decline in consumer spending has added to the sector’s woes. Inflationary pressures have eroded the purchasing power and disposable income of consumers, forcing them to prioritize spending and seek cheaper alternatives.

Femi Egbesola, the national president of the Association of Small Business Owners of Nigeria, notes that inflation has significantly reduced consumers’ purchasing power, impacting their willingness to spend on alcoholic beverages.

Furthermore, increased competition from alternative beverages and a more diverse range of beer options have intensified market competition, squeezing profit margins for brewing companies.

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