Nigerians have been as sured of an improved power supply, following the privatisation of the Power Holding Company of Nigeria (PHCN).
The director general of the Bureau of Public Enterprises (BPE), Mr. Benjamin Dikki, in a statement signed by the Head of Public Communication, Chigbo Anichebe, said that the introduction of sound maintenance culture when the private investors take over, would ensure that the current installed capacity of 6000 mega watts was exploited and put on the national grid. He said that, that alone would stabilise power supply in the country.
Dikki therefore appealed to Nigerians to give the investors ample time to increase capacity as “they, (the investors) would after take over, retool and bring in new machinery like turbines which are not easily bought off the shelf to put power on proper footing”.
According to the BPE director general, the investors would need time to re-tool after take over, between a period of two to three years to bring in the required machinery after which the country would witness increased and steady power supply.
He also allayed the fears of monopoly by the investors as the necessary frame work and institutional checks had been put in place to regulate their activities and ensure appropriate pricing.
This is just one amidst the numerous assurances for improved power supply given by the authority to Nigerians. But there seems to be a snag somewhere especially in the aspect of the order by the Nigerian Electricity Regulatory Commission (NERC) directing all the Electricity Distribution Companies to commence the implementation of a new metering scheme known as Credited Advance Payment for Metering Implementation (CAPMI).
According to NERC CAPMI’s objectives are reduction of the large number of un-metered customers, the elimination of the abuse of estimated billing, improvement of revenue collection and reduction of commercial losses.
NERC describing the scheme as a new accelerated scheme for electricity meter deployment, said it was necessary because of the high level of complaints from customers and dissatisfaction with the current estimated billing practices.
Under CAPMI scheme willing customers would be required to advance the cost of the meter and associated installation cost approved by the NERC. It assured that within 45 days of advanced payment by customers, the meter of which type is dependent on the amount paid by the customer, would be installed.
NERC’s order for immediate implementation of CAPMI implies that the acquisition and implementation of the CAPMI scheme is to be carried out by the present management of DISCOS. The type, design and features of the meters are to be determined by the present DISCOS. The CAPMI core message by NERC reads partly.
“Under the CAPMI scheme, customers who are willing to participate will be required to advance the cost of the meter and associated costs approved by NERC. Once the money is advanced, the customer will get a meter installed within 45 days of payment.
The amount to be paid by the customer will depend on the type of meter installed. No profit shall be made by the DISCO in the supply of the meters”. These are some of the mandates issued by NERC to be carried out by DISCOS so what happens when the actual investors take over? How can these be reconciled? What if the designs, types and features of the meters do not meet the expectation of the new investors? Who will then bear the brunt? Metering no doubt is fundamental to the collection of revenue and protection. It is to a large extent key to the anticipated stable power supply. But where this is handed over to the same managers whose ineptitude in the management of the distribution facilities leaves much to be desired what happens?
The inability to account for the energy got from the national grid and the losses in the power sector took place under the watch of the same DISCOS that have been asked to implement the CAPMI scheme. So how will the desired change in the power sector come to be?
According to a power expert, the would-be investors should be able to determine what type of technology the meter should be made of and the upgrading cost. The technology choice with existing facilities would create a room for smooth integration.
He argued that it would be in the best interest of the sector if the expected target was to be achieved, to allow the new investors to decide what type and quality of meters to be installed in their respective distribution zones pointing out that this would make them to be more responsible to it thus resulting in efficiency in its management.
He explained further that ordering for immediate implementation of the CAPMI scheme by the present DISCOS was more like making investment decisions for the new investors and this cannot allow for free market operation which privatisation was targeted at.
Allowing the new investors to make decisions as to the types of meter to be installed, the way it should be installed among others, he opined, would not only protect the new investors revenues which is paramount to them but would be favourable to electricity consumption and enhance efficiency thus resulting in improved power supply.
Nigeria Earns N2.7trn From Domestic Crude Oil Sales In 2019
The latest report by the Nigeria Extractive Industries Transparency Initiative (NEITI) has put Nigeria’s earning from domestic crude oil sales in 2019 at N2.7 trillion.
According to NEITI’s 2019 Oil and Gas Industry Audit report, the country earned N2.72 trillion from just domestic crude oil sales.
It added that of this figure, N518.07bn was deducted for Petroleum Motor Spirit, PMS, under-recovery by the Nigerian National Petroleum Corporation, NNPC.
This figure is N213.07bn above the approved sum of N305bn for under-recovery in 2019.
Similarly, the sum of N126.66bn was incurred by the corporation as costs for pipeline repairs and maintenances, which showed a difference of N96.38bn from the approved sum of N30.29bn for the purpose.
The report also pointed out that N31.84bn was deducted for crude and product losses due to theft and sabotage in 2019.
The sum of $34.22bn was recorded as revenue from the oil and gas sector in 2019.
The $34.22bn revenue represented an increase of 4.88 percent over the $32.63bn garnered from the sector in 2018.
A breakdown of the earnings showed that payments by companies accounted for $18.90bn, while flows from federation sales of crude oil and gas accounted for $15.32bn.
The report showed that 10-year (2010-2019) aggregate financial flows from the oil and gas sector to government amounted to $418.54bn, with the highest revenue flow of $68.44bn recorded in 2011, while the lowest revenue flow of $17.06bn was recorded in 2016.
According to NEITI, the total crude oil production in 2019 was 735.24 million barrels, representing an increase of 4.87 per cent over the 701.101 million barrels recorded in 2018.
Production Sharing Contracts contributed the highest volumes of 312.042 million barrels followed by Joint Venture and Sole Risk, which recorded 310,284 million barrels and 89.82 million barrels respectively.
Others include Marginal Fields and Service Contracts which accounted for 21,762 million barrels and 1,330 million barrels respectively.
The report also showed that total crude oil lifted in 2019 was 735.66 million barrels, indicating a 4.93 per cent increase to the 701.09 million barrels recorded in 2018, with companies lifting 469.01 million barrels, while 266.65 million barrels was lifted by the Nigeria National Petroleum Corporation on behalf of the federation.
Egbin Power Plant Plans 1,900MW Boost
A boost for electricity generation is on the horizon.
This indication comes on the heels of a planned additional 1,900 megawatt (MW) to the country’s power generation capacity by the Egbin Power Plant.
Its Chairman, Temitope Shonubi, made this known while unveiling expansion plans for the Egbin (Expansion) Phase 2 Investments, which is expected to add between 1,750MW and 1900MW to power generation.
Shonubi, conducting a delegation of the NNPC led by its Chief Operating Officer (COO), Gas and Power, NNPC, Yusuf Usman, an engineer, through the plant’s post-privatisation, said the plant has gone through major overhauling, which he said has helped to increase its generation from the low capacity it had before 2013.
“Egbin has 1,320 MW capacity. As at the time we took over, the plant was generating 300MW which is an abysmal 22 per cent. As at today, our generation capacity has surged and we do 89 per cent. We have reached 970 MW, the peak generation for the year and we are working hard to ensure sustainability of this feat. The 970MW we hit is the highest for the year and based on our core value of sustainability, we are working round the clock to make sure that we sustain the gains we have made,” Shonubi explained.
Listing challenges being faced by the company to include, grid limitation, gas constraints, and liquidity, Sonubi added that stakeholders, including the NNPC, Central Bank of Nigeria (CBN), and the Transmission Company of Nigeria (TCN) have been trying to solve the problems.
He called on the NNPC to keep exerting efforts towards gas development and supply of the product to keep turbines at Egbin working productively at optimal capacity.
Responding to the call and obviously satisfied with efforts put in so far in the thermal plant, Usman assured of the corporation’s commitment towards gas optimisation and supply for gas to power. He said NNPC will be joining the Egbin Power Plant to deepen gas supply for power generation.
He maintained that the NNPC was impressed with the turnaround at the thermal power station.
By: Tonye Nria-Dappa
Rising Oil Prices’ll Create Problems For Nigeria – NNPC
Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has warned that rather than being a positive development, the rising prices of crude oil in the international market could cause major challenges for resource-dependent nations like Nigeria.
He spoke just as the International Monetary Fund (IMF) expressed concern over the re-emergence of fuel subsidy in Nigeria in the face of the country’s low revenue mobilisation.
The Washington-based institution, however, welcomed recent moves by the Central Bank of Nigeria (CBN) to unify exchange rates, certifying Nigerian banks as being liquid and well-capitalised.
Kyari, at the virtual Citizens Energy Congress, tagged: “Securing a Sustainable Future Energy System through Strategy, Collaboration and Innovation,” yesterday described the rising price of crude oil as a “chicken and egg” situation.
He added that oil prices had started exiting the comfort zone set by the NNPC, and becoming a burden.
The forum was organised by DMG Events, a London-based Public Relations company, which said the occasion was to provide an opportunity for players to reset the energy agenda post- COVID-19 and connect the divergent and polarising perspectives.
Kyari put the comfort zone globally at $58-$60, saying that for the NNPC, anything above $70-$80 will create major distortions in the projections of the corporation and add more problems to the company.
Brent crude, Nigeria’s oil benchmark, is currently selling for over $74 and is likely to increase further in the coming days as the NNPC continues to battle the dilemma of shouldering the payment of petrol subsidy, which has made it unable to contribute to the Federal Account Allocation Committee (FAAC) on two occasions.
Kyari expressed the concern that as the commodity prices rise, buyers of Nigeria’s crude may be compelled to accelerate their investment in renewable sources of energy, thereby leaving the industry in a quagmire.
He said: “In a resource-dependent nation like Nigeria when it gets too high, it creates a big problem because your consumers shut down their demand. Demand will go down and obviously even as the prices go up, you will have less volume to sell.
“So, it’s a chicken and egg story and that’s why in the industry when people make estimates for the future, they always make it about $50 to $60. Nobody puts it beyond $60.
“But for us as a country, as prices go up, the burden of providing cheap fuel also increases and that’s a challenge for us but on a net basis, you know, the high prices, as long as it doesn’t exceed $70 to $80, it’s okay for us.”
According to him, Nigeria will have no problems supporting the restoration of about 5.8 million barrels a day that the Organisation of Petroleum Exporting Countries (OPEC) still has offline since the pandemic, due to the curbs in production quota imposed by the oil cartel.
He said adding that number to demand will stabilise and probably bring oil prices down to about $60 level or a little below $60, stressing that that’s a comfort zone for every producing company or country.
“I don’t see them (Nigeria) having any difficulty agreeing to add additional volume to cushion the effect of these high prices for this period,” he said.
He stated that Nigeria is already producing well below its capacity, because in early 2020, the country actually produced up to 2.4 million barrels of oil per day for both oil and condensates.
With declining investments in the oil sector, Kyari stated that in a short time, most likely the next five years, the world may experience an energy crisis if the current situation is not properly managed.
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