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As Jonathan Demystifies Power Sector

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When nine months ago President Goodluck Jonathan assumed office and assigned to himself the position of Minister of Power, not many Nigerians were excited. Their skeptism hinged on the obvious reason that in the past, both General Sani Abacha and Chief Olusegun Obasanjo took similar steps during their respective regimes by appropriating to themselves the position of Petroleum Minister, yet no concrete results were achieved in the petroleum sector.

Pundits were of the view that Jonathan’s appropriating the Minister of Power Portfolio to himself would not revive the ailing power sector as they regarded the step as mere government rhetorics.

The power sector was already characterized by very low generation capacity, poor distribution network and a fragile limited transmission network. The multinational oil companies responsible for gas supply to the nation’s power station in joint venture with the Nigerian National Petroleum Corporation (NNPC) were unable to supply gas as the militancy that ravaged oil activities in the oil-rich Niger Delta region led to blowing up of strategic oil and gas pipelines. The situation resulted in the power plants either being shut down while few functional ones were producing far below capacity. The resultant effect was that most Nigerians groped in darkness and scores of companies whose operations were frustrated as a result of high cost of alternative power supply left the country for other West African countries.

Added to the situation was the fact that efforts by Chief Olusegun Obasanjo and Alhaji Musa Yar’Adua to revive the ailing power sector suffered failure inspite of huge funds invested. The much touted 6,000 megawatts targeted by Yar’Adua in 2010 also failed. The question that was in the lips of must Nigerians then was what magic approach would President Jonathan adopt to revive the dying power sector?

However, not deterred by the challenge, Jonathan took some proactive and far-reaching measures to give a breathe of life to the nation’s powerless power sector. He sort for and appointed high brow professionals with enviable record to confront the challenges in the sector. He appointed Prof Bart Nnaji as his Special Adviser on Power and also created some committees on power.

To address the gas supply challenge, the Presidency summoned the management of the multinational oil companies and NNPC and they reached an accord on the strategies to supply adequate gas needed to energise the power stations.

After casting a wide look at the sector, according to Prof. Nnaji, Federal Government came to the realization that Nigeria’s   electricity infrastructure needs are enormous such that government alone cannot meet these needs, hence the urgency to involve the private sector.

In his paper, “The Role of the Private Sector and Structured Financing in Solving Nigeria’s Power Supply Problems”, delivered at an International Power Roundtable organized by the Rivers State House of Assembly Committee on Power last year, the Special Adviser to the President on Power said only about 40% Nigerians have access to electricity supply and that to meet the electricity demand of the nation’ by 2020, distribution network has to grow at the rate of at least 6% each year against the current average growth rate per annum estimated below 1%.

On the large funding required, Prof Nnaji said about $50 billion was required over the next ten years. “Government capital outlays for all capital budget is $5 billion annually meaning that annual funding requirement has outstripped the capacity of government funding”, he regretted.

The Federal Government has no option than to let go its monopoly on electric supply and opened its door widely  for both local and foreign private investors. The government has offered prospective investors in the power sector a five-year tax holiday to serve as an incentive to woo them.

To achieve same goal, Bureau of Public Enterprises (BPE) has commenced road shows in Lagos to enlighten investors on opportunities in the sector. BPE said apart from the five-year tax holiday, another incentive for investors in the sector is the World Bank’s instruments to insure their investment against political risks in the country and assured investors of a cost-reflective tariff system.

Aside the Lagos event, meetings are scheduled to be held with investors in Dubai, United Arab Emirates’ on January 24; London, United Kingdom on January 27; New York, United States on February 1 and Johannesburg, South Africa, on February 11. This came ahead of a February 18 deadline for the expression of interest in the eleven distribution companies, four thermal generating firms and two hydro power stations in Nigeria.

The eleven distribution companies which investors are expected to express their interest in include Port Harcourt Distribution Company Plc, Abuja Electricity Distribution Company Plc, Benin Electricity Distribution Company Plc, Enugu Electricity Distribution Company Plc, Eko Electricity Distribution Company Plc and Ibadan Electricity Distribution Company Plc.

Others are Ikeja Electricity Distribution Company Plc, Jos Electricity Distribution Company Plc, Kaduna Electricity Distribution Company Plc, Kaduna Electricity Distribution Company Plc, Kano Electricity Distribution Company Plc and Yola Electricity Distribution Company Plc.

The four thermal generating stations which investors are expected to show interest are Afam Power Plc, Sapele Power Plc, Ughelli Power Plc and Geregu Power Plc while the two hydro power stations are Kainji Power Plc, including Jebba Power station and Shiroro Power Plc which government intends to give out to private investors under a concession arrangement.

According to Minister of State for Power, Mr Nuhu Wya, the forum in Lagos was organized to showcase numerous opportunities available in Nigeria’s Power sector.

Inspite of the fact that most government efforts are at early stages, the administration of Goodluck Jonathan has already recorded some humble achievements. The meeting between Federal Government and oil multinationals over gas supply has yielded fruits as Nigeria National Petroleum Corporation said it has already surpassed its gas supply obligation to power stations across the country, in line with Federal Government’s aspiration.

The group managing director, Engr Austen Oniwon disclosed this  to newsmen in Abuja and added that NNPC has also taken proactive measures to ensure sufficient gas supply to the new ones under construction upon completion.

At present power generation in the country has risen to 3,800 megawatts. Analysts view this as very impressive considering the fact that generation was below 2,700 mega watts when President Jonathan assumed office. Minister of States for Power, Mr Nuhu Way promised that by the end of this quarter, generation will get to 4,000 megawatts.

It is obvious that when the action plans come to full swing, the nation will hopefully actualize its dream of stable power supply which has eluded it for decades.

Nigerians have attested to the fact that power supply has improved in all parts of the country compared.

However, the agitation by staff of Power Holding Company of Nigeria (PHCN) over their 135% salary areas, casual status of alleged 10,000 workers and other welfare issues need to be addressed considering the fact that they are stakeholders in the reform agenda. Unfortunately, the electricity workers have dragged the government to Abuja High Court over the issue.

Sabotage by electricity workers who connive with criminals to remove power facilities may affect the new effort of the government. Similarly the issue of estimated metering adopted by PHCN workers do not guarantee transparency. Experts are of the view that credit card system be adopted as is the case in Telecommunication sub sector.

Another area that also needs to be addressed is the award of rural electrification projects to portfolio carrying politicians who either abandon such projects or execute them at substandard level.

There is need for the Federal Government to fast track investigations on allegations of fraud which runs into billion over past power projects.

Be it as it may, Goodluck Jonathan has shown that the power challenges which affect socio-economic lives in Nigeria can be tackled as his efforts has renewed hope of Nigerians.

Chris Oluoh

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Reactions Trail Protest At NLNG Facility In Bonny

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Reactions are now trailing the protest by Finima community against the Nigerian Liquefied Natural Gas Limited in Bonny, Rivers State and the counter protest, which led to destruction of properties and bodily injuries on the protesters.
The lawmaker representing Bonny/Degema Federal Constituency in the House of Representatives, Hon. Farah Dagogo, said the protest and the unfortunate violence would not have happened, if oil and gas multinationals operating in the Niger Delta, were doing things the right way.
Dagogo who described the violence as unfortunate, said it was a sad reflection of the sour relationship that now exist between companies and their host communities, as brothers were being pitched against brothers.
He urged the aggrieved people of Finima Community and all others in Bonny LGA to sheath their swords, adding that other means of getting a workable solution that would be beneficial to all, are being explored.
“The violence that was witnessed in Bonny Local Government Area of Rivers State between Finima community youths and other alleged youths of the LGA was unfortunate, and a sad reflection of the sour and acrimonious relationship that now exist between companies and their host communities.
“The peaceful protest against the NLNG, over the propriety or otherwise of a General Memorandum of Understanding, which was intercepted and later turned violent that has now left many injured and properties razed, would not have been necessary in the first place if things were done the right way.
“While apportioning blames now may not get the desired outcome , it is nevertheless instructive to note that the people of Finima Community and the various impacted communities in the Niger Delta and beyond, where the NLNG gas pipeline passed through, are within their rights to legitimately demand for what is theirs,” Farah said.
Meanwhile, the management of the Nigerian Liquefied Natural Gas Limited, has confirmed that there was a protest and counter protest, which led to blockade of the major routes to its facility in Bonny Island on Thursday.
NLNG General Manager, External Relations and Sustainable Development, Eyono Fatayi-Williams, in a statement said as a good corporate citizen, the company applies the principle of fairness and inclusiveness in engaging with its esteemed stakeholders.
“The Company has always considered all stakeholders in the community trusted partners, and it continues to maintain this position.
“NLNG remains fully committed to sustainable development in the kingdom, hinged on active community participation to drive initiatives and projects that positively impact the lives of the community.”

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This Tiny Country Could Become Europe’s Newest Oil Producer

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It is rather rare to see enthusiasm for completely new exploration projects in Europe. The overwhelming majority of OECD countries are either in terminal decline or are looking into ways how to ban exploration altogether. The less-appraised parts of Eastern Europe might still have some potential yet in the absence of oil majors such endeavors risk remaining a lifelong pipe dream. Still, the appearance of a new European frontier can rekindle upstream hopes (even if for a short period of time). Europe’s latest addition to the list of nations willing to tap into their prospective hydrocarbon resources is located in the southeast of the Old Continent, in Montenegro. The small ex-Yugoslav republic with just slightly more than 600 000 inhabitants has witnessed its first offshore well spudded on March 25, 2021. The 4118-5-1 wildcat was drilled in 100 meters of water to a total depth of 6525 meters, some 25km from the Montenegrin shore.
The first offshore Montenegrin well was spudded by the ENI-NOVATEK tandem, with the Italian major taking on the reins of operatorship. Given the geographic proximity, ENI’s interest in offshore Montenegro is quite understandable and was to be expected. In case of any discovery, ENI has the convenient option of accommodating prospective production within its system, the Italian shore is only 500km from the wildcat’s location. The first well is targeting an oil reservoir at depths of 6.5km, implying that the Italian major’s 120kbpd Taranto Refinery might be a safe backstop for any potential crude produced. Along with Total, ENI has been one of the most active drillers in the Mediterranean, marking suchsupergiant discoveries as the Egyptian Zohr or the Cypriot Calypso. Across the Adriatic from Montenegro, ENI has been developing the Aquila field offshore Brindisi,producing medium density crude of some 36° API.
The case for NOVATEK’s participation in an offshore project is much more peculiar, considering that the Russian gas producer has no assets in the Adriatic.Moreover, NOVATEK is on the US’ Sectoral Sanctions Identifications (SSI) List, meaning that equity investments and financing matters are substantially encumbered. Luckily for the Russian firm, offshore Montenegro does not fall under any of the three sanctioned areas, Russian deepwater, Arctic offshore, and shale. Domestically, NOVATEK is heavily focused on gas production on the Gydan peninsula and in the surrounding area, compelling it to seek new niches it can fill, new frontiers that could serve as bases for future growth. In a sense, NOVATEK needs to overgrow its LNG specialization and gain market-relevant competence in other segments, too.
NOVATEK’s first step into the foreign offshore segment took place in Lebanon where it landed two offshore blocks in a consortium with Total and ENI in 2018. In both cases NOVATEK did not lay claims to operatorship, focusing on building up key relationships with Europe’s leading drillers. It seems very likely that it is from the Lebanese joint experience that the Montenegrin drilling ambition branched out into a separate work track. Concurrently, although Montenegro is one of the hottest candidates for EU accession, Podgorica remains beyond the bounds of the European Union. For NOVATEK this is a great boon, as sanctions risk can be negotiated directly with the relevant national authorities, i.e. no involvement of Brussels is required.
Technically,the Montenegrin offshore area has already seen exploration drilling, though that was back in the SFRY (Socialist Federal Republic of Yugoslavia) times, in 1980. Although Yugoslavia was a socialist country with all its peculiarities, it was the US major Chevron that was the operator of drilling operations. The Jadran Juzni (Southern Adria) prospect turned out to wield signs of oil and gas systems which, however, were deemed non-commercial,effectively closing Chevron’s offshore endeavors in Yugoslavia. It needs to be pointed out that the current wildcat is farther off the Montenegrin coast the Jadran Juzni well was only 3km from shore. To carry out the drilling, the ENI-NOVATEK tandem contracted the Topaz Driller, a Panama-flagged jack-up drilling rig. The contract was clinched in July 2020, for drilling operations starting in Q1 2021 and taking up to 180 days.
Up to now the work progress of ENI-NOVATEK seems fairly solid. In late 2018 their contractor has carried out a comprehensive 3D seismic survey on the 4118-5 Block, then the summer of 2019 witnessed a string of hydrophysical and geophysical surveys on the prospects. Having completed this, it was assumed that the spudding of the first well would take place in 2020, however, the coronavirus-triggered chaos upended all plans and effectively delayed the wildcat into 2021. Most probably the Italo-Russian joint venture will drill 2 wildcats. Even if the first well turns out to be completely dry or non-commercial, the second well (expected to be spudded in May-June 2021) is targeting gas plays at lower depths, i.e. the first well’s fiasco does not automatically foreshadow the failure of the second well.
According to media reports, it will take ENI 4-5 months to finalize the drilling of the wildcat and assess the results. Nevertheless, Montenegro’s offshore zone might more activity coming up in the upcoming months. The Greek Energean holds 2 license blocks (4219-26 and 4218-30) and is expected to take a decision on whether it intends to proceed with drilling exploratory wells in its acreage. The data to assess the blocks’ resource bounty is already there, Energean carried out 3D seismic surveying on both blocks in 2019 already. The spark of interest towards its off shore zone might compel the Montenegrin authorities to expedite a 2nd offshore bidding round which would presumably cover the 7 remaining unallotted blocks. There is very little probability that Podgorica will be trying to auction off onshore blocks,especially considering their history of dry wells.
Katona is a contributor.

 

By: Viktor Katona

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‘NCDMB’ll Not Invest In Businesses With Competitive Private Players’

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The Nigerian Content Development and Monitoring Board (NCDMB), has said that it only partners with strategic policies and projects that are promoted by the Federal Government and would not invest in oil and gas businesses that have competitive private players.
The Executive Secretary of NCDMB, Engr. Simbi Kesiye Wabote, made the clarification recently when he hosted members of the Women in Energy Oil and Gas (WEOG) Nigeria, led by their President, Dr. Oladunni Owo at the Board’s liaison office in Abuja.
He clarified that the Board would not invest in competitive business areas because such investments would compromise its morale position as a regulatory agency.
“Our role is to act as a catalyst of strategic government policies and programmes and we exit once those businesses become successful,” he added.
He also stated that NCDMB is a regulatory agency and not an interventionist organisation and would not get involved in programmes outside its mandate.
According to him, in line with the Board’s vision to serve as a catalyst for the industrialisation of the Nigerian oil and gas industry and its linkage sectors, the NCDMB has partnered with investors in modular refineries, manufacturing of LPG cylinders, LPG Depots, gas processing facilities, lube oil production plant, and a methanol plant using gas as feed stock.
Speaking further, Wabote listed some policies introduced by the Board to support women in the oil and gas industry to include the inauguration of the Diversity Sectorial Working Group in the Nigerian Content Consultative Forum (NCCF) and the creation of the Women in Oil and Gas Product in the Nigerian Content Intervention Fund (NCI Fund).
He explained that the Bank of Industry (BoI) is responsible for managing the NCI Fund, assessing applications and disbursing loans to approved companies.
He said “the NCI Fund is one of the most successful loan schemes. About 98 percent of the borrowers are paying back because we go through a very rigorous process”.
Dwelling on the Project 100 Initiative of the Board, the Executive Secretary stated that it was designed to nurture 100 wholly owned oil and gas service providers in a competitive and sustainable way through targeted interventions, into larger scale players that create high impact.

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