Connect with us

Economy

$5.8b Mambila Power Project Scales Financial Hurdle

Published

on

water projects - Investors King

The Senate Committee on Local Content has said the $5.792 billion Mambila Hydro-Electric Power Project is set for take-off following the successful resolution of financial and legal hurdles that delayed the project.

Its Chairman, Senator Teslim Folarin, gave this indication yesterday in Abuja while receiving the report of the finance sub-committee of the project.

He said the contractors handling the project are expected to commence work at the site before the end of 2021.

According to Folarin, the subcommittee was an off-shoot of the Technical Working Group on Mambila Hydro-Electric Power Local Content inaugurated in June, last yaer.

“The Federal Executive Council on 30th August, 2017, approved the contract on the Mambila Hydro Electric Power Project in the sum of $5.792billion for the construction of 3050MW.

“The project was awarded to Chinese contractors JV (CGGC-SHC-CGCC), with the site in Gembu, Taraba State,” Folarin said.

He noted that the challenges that arose in the course of the execution of the project, made the Presidential Committee on Northeast Development now the Northeast Development Commission (NEDC) to review the initial plan of the Technical Working Group.

He said the NEDC came up with a working document, wherein the work of the TWG was reshaped and streamlined for effective and seamless implementation of the project.

Folarin added: “Thereafter, the reviewed report was forwarded to the National Assembly for further legislative action.”

“Consequently, the National Assembly along with the Technical Working Group, constituted the Finance Sub-Committee under the Chairmanship of the Executive Director, NEXIM (Nigerian Export and Import) Bank.

“The Sub-Committee was inaugurated earlier this year by the Senate Committee on Local Content and it was mandated to report back to the Committee within six weeks.”

The Senator said the subcommittee was mandated to work out modalities that would facilitate the financial requirement of the local content aspect of the project, which was estimated at N1.7billion representing 30 per cent of the approved contract of $5.7billion.

He said, “The Nigerian Export and Import Bank was mandated to play the lead role in the sub-committee, while the Nigeria Sovereign Investment Authority was to serve as the secretariat of the panel.

“I have no doubt in my mind that all these issues, among others, are succinctly addressed in the report and I believe that at the end, we shall have a document that will provide a way forward on the project.”

Folarin told reporters after the session that the major legal encumbrance which had made it almost impossible for the legacy project to take off, had been resolved.

He said, “We have made some progress and breakthroughs, but we are yet to forward the report to the leadership of the Senate.

“The Federal Government was mandated to pay to the contractors – Sunrise – the sum of $200million and if we don’t pay within a stipulated time, then we have accrued interest.

“As far as the contractors are concerned, they said their money is now $400million because of the accumulated interests.

“The project was officially awarded by the Federal Executive Council on August 30, 2017, and it has been signed as a contract between the Nigerian Government, Ministry of Power and the Chinese Joint Venture of CGGC.”

On her part, the liaison officer and administrator for Hypertech, the consultant to Federal Government and Chinese Government on the Mambila project, Mrs Maimuna Muhammed, said all litigations have been effectively resolved.

Mrs Muhammed said, “We have a breakthrough concerning all the litigations about the project. All the delays we had before everything has been sorted out.

“Now we are ready to kick start the project. The next programmes we are going to have is the Business Roundtable, after that we will move to site, in Taraba State.”

The Consultant to the Senate President on Mambilla HEPP Local Content, Muhammad Mustapha, said membership of the committee also consists of the technical committee which was chaired by ministry of power and co-chaired by ministry of water resources.

He said the human capital development committee that was chaired by the Petroleum Technology Development Fund co-chaired by the energy council, was also involved.”

Muhammad added that part of the challenges that had caused significant delay over time had been the legal encumbrance.

He said, “We will like to mention that in qualifying the efforts of this committee as local content, we have been able to identify the legal aspect of the project to be a local content concern.

“The pre-commencement activity has already been approved two years before now.

“Part of the effort of the finance sub-committee is to articulate the local content aspect of the project as a whole and the pre- commencement activity in specifics.

“This activity stands at four major areas: the security of the site, access road to open up the site, the resettlement plan of over 140,000 people and air field for logistic base.

“We call on the implementation committee to work assiduously to meet the six week timeline as the project is building a new political momentum toward implementation.”

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.

Continue Reading
Comments

Economy

Nigeria’s Inflation Rises to 34.19% in June Amid Rising Costs

Published

on

Food Inflation - Investors King

Nigeria’s headline inflation rate surged to 34.19% in June 2024, a significant increase from the 33.95% recorded in May.

This rise highlights the continuing pressures on the nation’s economy as the cost of living continues to climb.

On a year-on-year basis, the June 2024 inflation rate was 11.40 percentage points higher than the 22.79% recorded in June 2023.

This substantial increase shows the persistent challenges faced by consumers and businesses alike in coping with escalating prices.

The month-on-month inflation rate for June 2024 was 2.31%, slightly up from 2.14% in May 2024. This indicates that the pace at which prices are rising continues to accelerate, compounding the economic strain on households and enterprises.

A closer examination of the divisional contributions to the inflation index reveals that food and non-alcoholic beverages were the primary drivers, contributing 17.71% to the year-on-year increase.

Housing, water, electricity, gas, and other fuels followed, adding 5.72% to the inflationary pressures.

Other significant contributors included clothing and footwear (2.62%), transport (2.23%), and furnishings, household equipment, and maintenance (1.72%).

Sectors such as education, health, and miscellaneous goods and services also played notable roles, contributing 1.35%, 1.03%, and 0.57% respectively.

The rural and urban inflation rates also exhibited marked increases. Urban inflation reached 36.55% in June 2024, a rise of 12.23 percentage points from the 24.33% recorded in June 2023.

On a month-on-month basis, urban inflation was 2.46% in June, slightly higher than the 2.35% in May 2024. The twelve-month average for urban inflation stood at 32.08%, up 9.70 percentage points from June 2023’s 22.38%.

Rural inflation was similarly impacted, with a year-on-year rate of 32.09% in June 2024, an increase of 10.71 percentage points from June 2023’s 21.37%.

The month-on-month rural inflation rate rose to 2.17% in June, up from 1.94% in May 2024. The twelve-month average for rural inflation reached 28.15%, compared to 20.76% in June 2023.

The rising inflation rates pose significant challenges for the Central Bank of Nigeria (CBN) as it grapples with balancing monetary policy to rein in inflation while supporting economic growth.

The ongoing pressures from high food prices and energy costs necessitate urgent policy interventions to stabilize the economy and protect the purchasing power of Nigerians.

Continue Reading

Economy

Inflation to Climb Again in June, but at a Reduced Pace, Predicts Meristem

Published

on

Nigeria's Inflation Rate - Investors King

As Nigeria awaits the release of the National Bureau of Statistics’ report on June 2024 inflation, economic analysts project that while inflation will continue its upward trajectory, the pace of increase will moderate.

This comes after inflation rose to a 28-year high of 33.95% in May, up from 33.69% in April.

Meristem, a leading financial services company, has forecasted that June’s headline inflation will rise to 34.01%, a slight increase from May’s figure.

The firm attributes this persistent inflationary pressure to ongoing structural challenges in agriculture, high transportation costs, and the continuous depreciation of the naira.

Experts have highlighted several factors contributing to the inflationary trend. Insecurity in food-producing regions and high transportation costs have disrupted supply chains, while the depreciation of the naira has increased importation costs.

In May, food inflation grew at a slower pace, reaching 40.66%, but challenges in the agricultural sector, such as the infestation of tomato leaves, have led to higher prices for staples like tomatoes and yams.

Meristem predicts that food inflation will persist in June, driven by these lingering challenges. Increased demand during the Eid-el-Kabir celebration and rising importation costs are also expected to keep food prices elevated.

Core inflation, which excludes volatile items like food and energy, was at 27.04% in May. Meristem projects it to rise to 27.30% in June.

The firm notes that higher transportation costs and the depreciation of the naira will continue to push core inflation up.

However, they also anticipate a month-on-month moderation in the core index due to a relatively stable naira exchange rate during June, compared to a more significant depreciation in May.

Cowry Assets Management Limited has projected an even higher headline inflation figure of 34.25% for June, citing similar concerns.

The firm notes that over the past year, food prices in Nigeria have soared due to supply chain disruptions, currency depreciation, and climate change impacts on agriculture.

This has made basic staples increasingly unaffordable for many Nigerians, stretching household budgets.

As inflation continues to rise, analysts believe the Central Bank of Nigeria (CBN) will likely hike the benchmark lending rate again.

The CBN’s Monetary Policy Committee (MPC) has raised the Monetary Policy Rate (MPR) by 650 basis points this year, bringing it to 26.25% as of May 2024.

At a recent BusinessDay CEO Forum, CBN Governor Dr. Olayemi Cardoso emphasized the MPC’s commitment to tackling inflation, stating that while the country needs growth, controlling inflation is paramount.

“The MPC is not oblivious to the fact that the country does need growth. If these hikes hadn’t been done at the time, the naira would have almost tipped over, so it helped to stabilize the naira. Interest rates are not set by the CBN governor but by the MPC committee composed of independent-minded people. These are people not given to emotion but to data. The MPC clarified that the major issue is taming inflation, and they would do what is necessary to tame it,” Cardoso said.

Continue Reading

Economy

Nigeria Faces Fuel Crisis with Petrol Costs Surging to N978/Litre

Published

on

Petrol - Investors King

Nigeria is grappling with a severe fuel crisis as the landing cost of Premium Motor Spirit (PMS), commonly known as petrol, has skyrocketed to N978 per litre.

This surge, driven by a depreciating naira and rising international costs, has led to widespread fuel shortages and long queues at filling stations across the country.

The latest figures reveal that the landing cost—which includes the international price, shipping, insurance, and other charges—has increased from N720 per litre in October 2023.

This escalation is attributed to the naira’s depreciation, which hit a three-month low of N1,530 per dollar on the parallel market this week, exacerbating the already dire economic situation.

“The rising landing cost of petrol is a result of the escalating foreign exchange (FX) crisis. There are market interventions through subsidies, as most Nigerians cannot afford the market price for petrol,” a senior executive in the downstream sector explained.

Despite the federal government’s denial of an ongoing subsidy, a report from the finance minister, Wale Edun, projected that fuel subsidies could cost about N5.4 trillion in 2024, up from N3.6 trillion in 2023.

The fuel scarcity has led to black market prices soaring between N1,000 and N1,100 per litre, while some retail outlets in Abuja, Nasarawa, and Niger have hiked pump prices to N900 per litre.

Motorists have been forced to spend hours in queues, further straining their daily lives.

NNPC Limited attributed the current fuel queues to recent thunderstorms and logistical challenges disrupting activities at fuel-loading jetties.

The company assured stakeholders that it is working to resolve the situation and clear the queues.

“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act,” said Mele Kyari, the group’s general manager.

He also mentioned that NNPC is considering securing a $2 billion loan using crude oil pre-payments as collateral to support its business activities.

Aisha Mohammed, an energy analyst at the Lagos-based Centre for Development Studies, noted, “The government is partially subsidizing the commodity for political, social, and economic reasons. While economically sound, the social and political costs are significant.”

Market analysts have called for a review of dollar-based fee collections to reduce petrol costs. “We must resist the dollarization of the Nigerian economy. There are some fee collections in dollars that are also pushing up the landing cost of petrol,” a source said.

The Petroleum Products Retail Outlets Owners Association of Nigeria (PETROAN) confirmed that NNPC is addressing the supply issues, but warned that the queues might persist for days, especially in locations far from major depots.

“Once they start loading, it takes some days to clear the queues. And don’t forget that filling stations in Abuja get products from Lagos, Oghara, Warri, Port Harcourt, or Calabar, and that takes more than three days turn-around time to accomplish,” said PETROAN president Billy Gillis-Harry.

He said there is a need for collaboration between the government, NNPC, and downstream operators to find a lasting solution to the fuel scarcity.

“We need a clearly defined council with grassroots knowledge of the business to project and address problems based on empirical evidence,” he stated.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending