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Power Ministry Gives Conditions for Electricity Tariff Hike

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Electricity Pole
  • Power Ministry Gives Conditions for Electricity Tariff Hike

The Ministry of Power, Works and Housing has said an increase in electricity tariff can only be justified by widespread provision of meters and improved service delivery to customers.

The ministry said this in a new document called ‘Power Sector Policy Directives and Timelines,’ which was obtained by our correspondent on Tuesday.

It directed the Nigerian Electricity Regulatory Commission to clearly convey the need for tariff review consistent with provisions of Section 76 of the Electric Power Sector Reform Act 2005, and abide by the requirement for periodic major and minor reviews and processing of valid claims for deficits in tariff as provided for in the rules for tariff regulation.

The document, which was dated June 2019, said, “Government policy recognises that the current consumer tariff must rise to cover all costs of gas, transmission and distribution. This is necessary for distribution companies to raise capital, and for the industry to be self-sustaining without government financial support.

“But this can only be justified after meters are more widely installed and services improve so that consumers pay for what they consume and not for the inefficiencies of operators. In the meantime, NERC (Nigerian Electricity Regulatory Commission) should enforce regulatory processes already in place for operators to make claims for verified deficits in their tariff.”

According to the ministry, there is substantial circumstantial evidence that higher electricity tariffs may result in reduced collection by distribution companies because of low meter penetration and poor service.

It, therefore, directed NERC to set and enforce targets for Discos and meter asset providers to roll out meters.

Another immediate task for the commission is to encourage and facilitate willing-buyer willing-seller transactions with Competition Transition Charge compensation, where applicable, to the distribution company for a defined period.

The commission was asked to withdraw existing orders against willing-buyer willing-seller transactions like the recent Cummins and Viathan (PIPP LVI Disco) orders but compel compliance with a clearly defined and easy-to-apply CTC Regulation.

The ministry directed NERC to issue an order, within four weeks, to explicitly permit all customers supplied at 132kV and 330kV to contract as an ‘eligible customer’ for their power, directly with a generation company, and for their transmission requirements directly with the Transmission Company of Nigeria.

It said the commission should “license mini-grid applicants expeditiously, according to the timelines stated in the regulation, especially where consumers and developers have agreed terms; and license eligible customer applicants expeditiously, starting within two weeks, with the four that applied in July 2018 and were still operating without permits.

NERC was asked to set and enforce targets for Discos to apply the Franchising Regulation to contract capable investors, agents and partners of the Discos to expand and operate, as franchisees, 33kV and 11kV feeders and areas “that consumer petitions confirm are underserved or for which collection losses do not meet set licence targets.”

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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