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Climate Finance a “Fundamental Issue of Trust” – Commonwealth Secretary-General

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climate change - Investors King

The Commonwealth Secretary-General Patricia Scotland has called for developed countries to finally honour the decade-long pledge to make $100 billion available each year to fight climate change in developing countries.

During a high level joint event co-organised with the Climate Vulnerable Forum (CVF) on 1 November in Glasgow at the UN Climate Change Conference COP26, the Secretary-General descried the funding as “both to deliver the intended impact on the ground, but also as a fundamental issue of trust.”

She said: “Promises should be kept… Commonwealth diplomacy is about taking our collective determination – and the experiences that leaders, ministers and citizens from across the Commonwealth share with us – into the heart of global climate negotiations.”

The event featured a keynote address by the Prime Minister of Bangladesh Sheikh Hasina, as chair of the Climate Vulnerable Forum, as well as statements from a prominent line up of leaders across the Commonwealth, including the President of Guyana Irfaan Ali, the President of Maldives Ibrahim Mohamed Solih, the Prime Minister of Eswatini Cleopas Dlamini and other ministerial delegates and envoys.

Prime Minister Sheikh Hasina stated: “The 48 members of the CVF account for only 5 per cent of the total global emission. However, the adverse impacts of climate change have posed fundamental threats to our lives and livelihoods.

“Our vulnerability and necessity for adequate climate finance and technology transfer must be recognised by the international community. The major emitting countries need to fulfil their obligations to support us in our efforts to cope with the effects of climate change.”

Both CVF and the Commonwealth expressed their solidarity in support of strengthening climate financing for resilience and prosperity. The event also supported knowledge-sharing and capacity-building collaboration between the two groups of countries.

Prime Minister Sheikh Hasina added: “The Commonwealth countries have a long history of commitment and contributions in addressing the challenges of the climate change. With more than one-third of CVF member states being also the members of the Commonwealth, I firmly believe that the joint efforts of the CVF and the Commonwealth Members can act as a catalyst for implementation of the Paris Agreement.”

The CVF is a diverse partnership of 48 of the world’s most climatically-vulnerable countries from Africa, Asia, the Caribbean, Latin America and the Pacific. They represent 1.2 billion people, but contribute only 5 per cent of total global emissions. A third of the CVF countries are from the Commonwealth, including the majority of Small Island Developing States (SIDS) and low lying littoral countries such as Bangladesh.

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Power Grid Collapse Plunges Nigeria into Darkness Early Monday

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Electricity - Investors King

Nigeria was thrown into darkness once again as the nation’s power grid collapsed early Monday morning.

The collapse occurred at exactly 1:47 am, according to officials in the power sector.

The incident coincides with heightened tensions as the Nigeria Labour Congress (NLC) and Trade Union Congress (TUC) commenced an indefinite workers’ strike to demand a new national minimum wage.

The strike, which began Monday, has raised concerns about the potential for further disruptions across various sectors of the economy.

In response to the strike, Lateef Fagbemi, the Attorney-General of the Federation and Minister of Justice, criticized the labor unions’ actions.

In a letter dated June 1, 2024, Fagbemi stated that the strike violated a subsisting National Industrial Court order restraining the unions from proceeding with such actions.

He said the strike could lead to significant disruptions, including the recent power grid failure.

Despite attempts by the National Assembly leaders to mediate and prevent the strike, the meeting held on Sunday night ended without a resolution.

The meeting was chaired by Senate President Godswill Akpabio and Speaker of the House of Representatives Tajudeen Abbas and attended by NLC President Joe Ajaero and TUC President Festus Osifo. The unions remained firm on their decision to proceed with the strike.

Impact on Everyday Life

The blackout has had an immediate and significant impact on millions of Nigerians, disrupting daily life and business activities.

Hospitals, schools, and businesses are struggling to cope without electricity, exacerbating an already challenging situation for many citizens.

Minister of State for Labour Nkeiruka Onyejeocha reiterated the government’s position, stating that it could not afford to pay more than N60,000 as the new minimum wage, which she noted was a 100 percent increase from the current rate.

This offer, however, has been deemed insufficient by labor leaders.

Ulterior Motives and Unfeasible Demands

Bayo Onanuga, special adviser to President Bola Tinubu on Information and Strategy, suggested that the labor unions might have ulterior motives behind their strike, criticizing the wage demands as unrealistic for both federal and state governments.

“The minimum wage offer they presented is simply not feasible given the current economic constraints,” Onanuga stated.

He urged labor leaders to reconsider their stance for the sake of national stability.

Broader Implications

The power grid collapse is not just an isolated technical failure but a reflection of deeper systemic issues within Nigeria’s energy infrastructure.

The recurring outages highlight the urgent need for comprehensive reforms in the power sector to ensure reliable and consistent electricity supply.

As the nation grapples with this latest blackout, the government and labor unions remain at an impasse, with both sides entrenched in their positions.

The outcome of this dispute will likely have far-reaching implications for Nigeria’s economic stability and growth.

In the meantime, millions of Nigerians are left to cope with the immediate fallout of the power grid collapse, hoping for a swift resolution to both the strike and the ongoing energy crisis.

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Oil Prices Stable Amid Federal Reserve’s Talk of Interest Rate Tightening

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Crude oil - Investors King

In a landscape where global oil markets often sway with the slightest economic shifts, stability can be a rare commodity.

However, amidst discussions from the U.S. Federal Reserve regarding potential interest rate adjustments, oil prices have remained surprisingly steady.

Brent crude oil, against which Nigerian oil is priced, gained 10 cents, or 0.1% rise to $82.00 a barrel, while U.S. West Texas Intermediate (WTI) crude oil edged up 7 cents to $77.64 a barrel.

The Federal Reserve’s release of minutes from its recent policy meeting unveiled deliberations on the possibility of raising interest rates to combat persistent inflationary pressures.

The minutes stated, “Various participants mentioned a willingness to tighten policy further should risks to inflation materialize in a way that such an action became appropriate.”

Such discussions surrounding interest rates can have a profound impact on oil demand. Higher interest rates typically result in increased borrowing costs, potentially constraining funds that could otherwise stimulate economic growth and, consequently, oil consumption—particularly in the United States, the world’s largest oil-consuming nation.

Additionally, the Energy Information Administration’s report indicating a 1.8 million barrel rise in U.S. crude stocks last week, as opposed to an anticipated draw of 2.5 million barrels, added a layer of complexity to the market dynamics.

This unexpected increase in inventory weighed on market sentiment, despite ongoing efforts to balance supply and demand.

Furthermore, global physical crude markets have been grappling with subdued refinery demand and abundant supply, exacerbating the pressure on oil prices.

Analysts from Citi highlighted recent market softness, attributing it to weaker data encompassing rising oil inventories, tepid demand, and refinery margin weakness, compounded by the looming risk of production cuts.

Russia’s announcement that it surpassed its OPEC+ production quota in April due to “technical reasons” added another dimension to the market narrative.

The Russian Energy Ministry revealed plans to present a compensation strategy to the Organization of the Petroleum Exporting Countries (OPEC) Secretariat shortly.

Against this backdrop, anticipation mounts ahead of the OPEC+ meeting scheduled for June 1, where crucial decisions regarding production cut levels will be deliberated.

Despite uncertainties surrounding the meeting’s outcome, industry experts foresee challenges in significantly tightening the market in the near term, potentially leading to a rollover of existing voluntary cuts.

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Electricity Subsidy Surges to N628.61bn in 2023, Discos Earn N1.08tn

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Amidst ongoing debates regarding Nigeria’s power sector and the financial dynamics surrounding it, the latest data from the Nigerian Electricity Regulatory Commission (NERC) has revealed significant figures concerning electricity subsidy and the earnings of power distribution companies (Discos).

According to the data obtained from NERC, the Federal Government’s expenditure on electricity subsidy soared to a staggering N628.61 billion in 2023.

This substantial subsidy expenditure indicates the government’s continued financial support to ensure electricity affordability for consumers across the nation.

Simultaneously, power distribution companies amassed a total revenue of N1.08 trillion during the same period.

This substantial revenue underscores the financial capacity of the Discos despite ongoing challenges within the power sector, including issues related to infrastructure, metering, and service delivery.

Analysis of the figures provided by NERC reveals a consistent increase in electricity subsidies throughout 2023.

In the first, second, third, and fourth quarters of the year, subsidies on power amounted to N36.02 billion, N135.23 billion, N204.6 billion, and N252.76 billion, respectively.

This steady rise in subsidy expenditure reflects the government’s commitment to bridging the gap between the cost-reflective tariff and the allowed tariff.

Conversely, power distribution companies witnessed notable revenue growth over the same period.

Despite concerns raised by consumers regarding service quality and reliability, Discos reported earnings of N247.09 billion, N267.86 billion, N267.61 billion, and N294.95 billion in the first, second, third, and fourth quarters of 2023, respectively.

This substantial revenue generation highlights the financial viability of the Discos within the current regulatory framework.

The surge in revenue by Discos has prompted calls from various stakeholders for improved service delivery and accountability within the power sector.

Consumers have expressed dissatisfaction with the quality of service provided by Discos, emphasizing the need for enhanced operational efficiency and infrastructure investment to address prevailing challenges.

In the absence of cost-reflective tariffs, the Federal Government continues to bear the burden of electricity subsidies to ensure affordability for consumers.

These subsidies primarily target power generation costs payable by Discos to the Nigerian Bulk Electricity Trading company, thereby supporting electricity generation and supply across the country.

Commenting on the subsidy expenditure for the fourth quarter of 2023, NERC highlighted the government’s policy to harmonize exchange rates and maintain end-user customer tariffs at approved rates.

This policy direction contributed to the increase in subsidy obligations, reflecting the government’s efforts to stabilize electricity prices amidst economic uncertainties.

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