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Nigeria’s Gas Utilisation Increases VAT

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Value added tax data published recently by the National Bureau of Statistics show gas contribution to that basket has been steady and growing in the last five years.
This means that there have been productive activities which are creating value along the gas chain and attracting VAT, which is a function of value creation in any sector of the economy.
An increasing VAT means the sector is expanding and creating taxable value.
Gas contribution’s steady growth points to growing adoption and utilisation amid a raft of challenges regarding gas pricing and infrastructure.
In 2014, gas contributed N3.32 billion to the VAT basket out of a total of N129 billion and in 2015 gas raked in N3.30 billion out of N759 billion.
Gas utilisation covers a range of projects involving marketing and distribution of natural gas for commercial purposes and includes power plant, liquefied natural gas, gas to liquid plant, fertilizer plant, gas transmission and distribution pipelines.
In 2016 gas realised N4.51 billion out of N777 billion and in 2017 it gathered N5.47 billion out of N972 billion.
In 2018, gas garnered N5.74 billion out of N1.10 trillion that comprised the VAT basket.
Nigeria’s Federal Government has in recent times sought to change the narrative of gas adoption and utilisation in the country. One of the significantly big plans before the FG is the Gas Master Plan (GMP) of 2008.
This was aimed at leapfrogging the level of gas utilisation in Nigeria and to provide stimulus for development and production of natural gas in Nigeria.
According to Nigerian Gas Flare Commercialisation Programme (NGFCP), Nigeria loses approximately $1 billion of revenue through gas flaring due to its inability to capture and sell flared gas in the country. But Nigeria will need $3.5 billion worth of inward investments into gas capture technologies to achieve its flare gas commercialisation targets by 2020.
With many gas utilisations projects at various stages of completion in the country, the sad commentary is still that existing gas infrastructure is insufficient to meet gas demand from the power sector, commercial customers, industrial and exports needs.
There is still need for investments in new pipelines and other gas gathering, processing and storage infrastructures.

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Geregu Power’s Half-Year Profit Up 148% On Back Of Increased Enegry Sales

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Geregu Power turned in 148.5 per cent more in net profit for the first half of the year compared to the same period of last year.
The company’s position was impacted by increased income from energy sales and, to some extent, capacity charge – the company’s major revenue sources.
The feat could mean the synergy struck by the firm with Siemens earlier in the year towards capacity expansion is beginning to pay off The electricity provider, backed by Femi Otedola, who chairs the board of Nigeria’s oldest lender FBN Holdings, announced an agreement with the German multinational technology conglomerate in May to more than double its current nameplate capacity to 1,200 megawatts
That entails scaling up Gereru I, one of its top power plants, to 500mw from 435mw and building a 500mw-new power plant using lower emissions turbines.
“The establishment of a combined cycle operations to generate an additional 200mw,” is also being planned, Geregu Power said in a May statement.
Revenue for the period under review climbed to N80.7 billion, up by 32.5 per cent, according to its unaudited earnings report issued Friday.
One notable downside of the generally strong performance was impairment loss on financial assets, which accelerated more than threefold to N6 billion after long-due receivables from trade debtors surged by 220.3 per cent.
Profit before income tax rose to N30.2 billion from N12.3 billion a year earlier.
The stock has returned 150 per cent since the start of the year, outperforming the Nigerian Exchange’s main stock index, which has yielded 33 per cent.
It has also outpaced NGX 30, the index that tracks the thirty most capitalised and most liquid equities on the bourse, which has improved by more than 27 per cent.
The share price of Geregu Power has not moved since 4 March, stuck at N1000 per unit.

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NUPENG, PENGASSAN Demand Dangote Refinery Sabotage Probe

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The joint unions of the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) and Petroleum and Natural Gas and Senior Staff Association (PENGASSAN) have demanded an investigation into the alleged sabotage by International Oil Companies (IOCs) to undermine and destabilise the operations of Dangote Refinery and Petrochemicals.
The two associations made the call in Lagos via a letter to President Bola Tinubu jointly signed by the General-Secretary, NUPENG, Comrade Afolabi Olawale, and his PENGASSAN counterpart, Comrade Lumumba Okungbowa, and made available to journalists.
Consequently, the unions charged the Federal Government to take decisive action to safeguard Dangote Refinery and ensure its successful operation for the benefit of the country.
The unions noted that “protecting our National assets is our collective responsibility”, insisting among others that the findings of such investigation be made public to ensure transparency and maintain public trust.
Describing Dangote refinery as not only a critical National Asset, but also a beacon of hope for energy security, economic growth, and employment opportunities, the unions said the matter must not be allowed to end without thorough investigation.
The letter, written through the office of the Chief of Staff to the President, Femi Gbajabiamila, reads, “The leadership and members of our great Union and Association profoundly appreciate your commitment and dedication to restoring the economic growth and prosperity of our dear Nation, and we are also fully mobilised and committed to supporting all your laudable thoughts and hard decisions towards these lofty goals.
“Unfortunately, we are deeply concerned and shocked by the recent unusual allegations by the Dangote Refinery and Petrochemicals Company of a deliberate plot by some International Oil Companies (IOCs) to frustrate their business efforts and continued existence.
“These sabotaging actions reportedly include denying the Refinery crude oil supply and artificially inflating market prices of the crude oil to the Company, thereby forcing Dangote Refinery and Petrochemicals Company to source crude oil from other countries, even as far as the United States of America with attendant high operating costs and logistics.

By: Lady Godknows Ogbulu

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Oil & Energy

FG, Oil Producers Agree On Crude Supply To Local Refineries

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The Federal Govern
ment and Crude Oil Producers in Nigeria have agreed to work toward a sustainable supply of crude oil to local refineries under a market-determined pricing system.
The aim is to ensure that while the operators do business optimally, the refineries are not starved of feedstock.
The agreement, reached at a Virtual Meeting held with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and all the international oil companies (IOCs), was on the status review of the Framework for Seamless Operationalisation of Domestic Crude Oil Supply Obligation Template.
The producers, under the umbrella of the Oil Producers Trade Section (OPTS), agreed to concede to a framework that would be mutually beneficial, ensuring that local refineries are not strangulated due to off-the-curve prices.
Speaking with newsmen, Komolafe explained that contrary to a report that the decision was to placate certain interests, it was indeed targeted at ensuring energy security for the country.
“It is the job of the regulator to interface between the producers and the refiners; it is a delicate balance because we do not want one to overrun the other because that will lead to problem.
“If we don’t have product, then there will be energy gap in supplying the industry and this will not be a palatable situation for all, and if we have robust supply, but they shut down the upstream and we can’t get crude production, then there is also a problem. So, we, as regulator, are simply trying to maintain the delicate balance”, he said.

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