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FG Incurs N194.98bn Electricity Subsidy In Six Months

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The Nigerian Electricity Regulatory Commission (NERC) says the Federal Government spent N194.98 billion on electricity subsidy in the first half of this year.
Data collated from the NERC’s quarterly reports also revealed that electricity distribution companies failed to remit a total of N59.76bn to the Nigerian Bulk Electricity Trading Plc (NBET) and the Market Operator (MO) in the six month period despite tariff shortfall adjustment.
The government-owned NBET buys electricity in bulk from generation companies through power purchase agreements and sells, through vesting contracts, to the Discos, which then supply it to the consumers.
The breakdown of the reports shows that the Federal Government incurred N111.13bn subsidy cost in the second quarter of the year as the 11 Discos in the country were expected to remit 57.21 per cent (N148.57bn) of the total invoice of N259.70bn issued to them for energy received from NBET and for service charge by MO.
But the Discos remitted N130.11bn (50.11 per cent) in the period under review, according to the regulator.
The government spent N83.85bn on electricity subsidy in the first three months of this year as the Discos were expected to make a market remittance of 67.76 per cent (N176.22bn) out of the total invoice of N260.07bn issued to them for energy received from NBET and for service charge by MO.
But the power distributors remitted a total of N134.92bn (51.88 per cent) as none of them met the expected minimum remittance thresholds to NBET, according to NERC.
The regulator noted in its Q1 2021 report that it had through the applicable orders set a minimum remittance threshold for each Disco having adjusted for their tariff shortfall.
It said, “It is noteworthy that tariff shortfall (represented by the difference between the cost-reflective rates approved by NERC and actual end-user tariffs payable by consumers) has a causal relationship to market shortfall (the difference between the total amount of NBET and MO invoices to the Discos and what Discos are able to settle.
“While the wholesale cost of power has increased, the tariffs charged by Discos to end-users have remained unchanged, due to government policy directive on subsidy during the quarter. That means the gap between industry revenue requirement and what Discos are allowed to collect based on tariff continue to increase as well as the subsidy burden to cover the gap”.
NERC said tariff shortfall had partly contributed to liquidity challenges experienced in the Nigerian electricity supply industry.
It, however, said, “It is obvious that Discos need to improve on their performance. Necessary mechanism must be used to nudge the Disco into compliance with the MRT order to avoid a relapse to days of zero remittance from some Discos.
“All Discos are being steered continually to rapidly improve on their services being rendered and on their revenue collection from customers in order to fulfil their market obligations and mitigate financial distress in NESI”.
The commission said to enforce market discipline and compliance with the MRTs, it had ordered NBET to exercise its contractual right on the payment security cover provided by Discos in accordance with the terms of its vesting contract with them.

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TCN Assures Energy Delivery To Nigerian Homes 

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Nigerians have been assured of adequate and efficient supply of electricity to their homes.
The General Manager, Transmission Company of Nigeria (TCN), Maiwada Sarki Bello Paiko, gave the assurance during a media chat with newsmen at the dam site in Shiroro Hydro Electric Power station, Shiroro Local Government Area, Niger State, recently.
Paiko stated that since TCN took over the affairs of transmission, the company had done well in procuring power for onward delivery to consumers.
According to him, as a private organization, TCN would not compromise on standard, noting that the company was working 24 hours to ensure steady and adequate energy.
He said, “TCN has been working round the clock to fix the aging equipment in order to avoid disruption in the daily transmission of energy.
“The company in collaboration with the World Bank had constructed a new 132 KV from Zungeru power station switch yard to Tegina, new control rooms at Shiroro, replaced over aged equipment at Jebba transmission station, and upgraded Minna sub- station with additional 132/33 KV 100MVA transformer”.
He further disclosed that during the period under review, TCN has made landmark achievements by decommissioning, installing and commissioning new six 330KV current transformer on bus coupler at Jebba T/S in January, 2023, as well as new 330KV circuit breaker on Jebba-Kainji.
While noting that there is no business without challenges, Paiko enumerated some of the challenges confronting the organization to include insecurity along Shiroro-Kaduna 330KV Lines, Shiroro-Kamtapa 330KV line, Gwagwalada 330KV line, Shiroro-Tegina 132KV line, redial nature of Shiroro-Tegina-Kontagora-Yauri line, among others.
He hinted that plans were at advance stage for the construction of additional 330KV line from Shiroro-Kaduna and PLAN Turn -IN-TURN-OUT at Tegina T/S.
Paiko attributed the successes recorded during the period under review to the unflinching support of the President Bola Tinubu led federal government and the management of TCN in the provision of an enabling environment for officers to operate.

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Crude Oil Theft: Illegal Connections Hit 4,800 – Kyari

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Group Chief Executive Officer, Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, has said there are over 4,800 illegal connections on crude oil pipelines in the Niger Delta region.
Kyari, who described oil theft and vandalism in the region as a calamity, warned that this could frustrate the projections of the Federal Government.
Speaking when he appeared before the Senate Committee on Appropriation on the proposed budget for 2024, in Abuja, Friday, Kyari said the daily oil production would depend greatly on the security situation in the oil rich region.
He said, “the situation we have in Niger Delta in terms of security is a calamity. We don’t have that anywhere in the world. To engage non-state actors as last resort as solution is abnormal. But we have to respond abnormally.
“You have over 4,800 illegal connections on our pipelines. That means, within every kilometer, you have an insertion. Even if you seal all the insertions, you can’t get what you want in terms of production.
“In the Niger Delta, people are coming from all parts of the country to do illegal refining. That’s why we engage locals to deal with it.  We will contain this challenge. We are doing everything possible to restore sanity. What is happening is a colossal damage to the environment and the host communities”.
Kyari welcomed  the projection of daily crude oil production of 1.78 million barrels at $77 per barrel of crude, explaining that OPEC restriction to a daily production of 1.5 million barrel does not affect condensates, which he said fetches Nigeria plenty of money.
According to him, Port Harcourt refineries would come on stream in December while  Warri Refinery would resume production in first quarter of 2024, giving December 2024 as production target of the Kaduna Refinery.
Kyari disclosed that the entity would have liquidated as the company’s cash flow could no longer sustain the burden of the subsidy regime, but for the quick and bold intervention of President Bola Tinubu to terminate the fuel subsidy regime saying, “i will advise that we stick to the submission of Mr. President on the quota
“There is no way we will get crude oil less than $70. Once economies  are growing, there will be sustained demands  for crude oil in our country and other countries. The estimates supplied  by Mr. President is realistic.
“When we say production, we mean total production of crude  oil and condensates. So we combine condensates and crude oil as total marginal production. So we know our estimates is realistic. There is no curtailment on condensates from OPEC”.
Kyari further gave an update on the Turn Around Maintenance of the nation’s four refineries.

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Hydrogen In The Limelight At COP28

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The UN’s COP28 climate talks, a mega-conference running for two weeks, are organized around daily themes. The fifth day on Tuesday, last week, focused on energy and brought out much high-level discussion of hydrogen.
The high hopes for green hydrogen were apparent at last year’s COP27 summit in Egypt with a flurry of big project announcements. Those have faded from the news as few major projects have reached financial commitment.
Yet the seriousness of discussions in Dubai this week, pursued by top ministry officials and high-level executives, showed that the momentum toward green hydrogen continues to quietly build.
This year’s conference lacks the flashy announcements, but it is moving forward with putting the basic structures in place to support a future hydrogen economy.
COP28 is showing that, while a viable market for ‘green’ hydrogen still appears far from a ‘tipping point’, the ongoing activities of companies and governments is a growing force.
A ‘High-Level Ministerial-CEO Roundtable on Hydrogen’ convened on Tuesday, sponsored by the COP28 President’s Office, with two hours of talks that cumulatively felt like a hydrogen wave.
Ministers from numerous countries described their governments’ initiatives and financial support. An official from the US DOE spoke about $7bn for seven selected ‘hydrogen hubs’, also money for electrolysis development, and a hydrogen tax credit that can extend for up to 10 years at $3 per kilogram.
Then, top executives of some 15 companies, members of the Hydrogen Council, spoke of their already significant investments in the emerging sector.
Executives from Air Liquide, Air Products, Hy24, Masdar, Next Era Energy, OCI Global, Port of Rotterdam, Topsoe, Thyssenkrupp, and others, called for incentives and clear regulation to enable global trade in the energy-rich element.
These progress reports notwithstanding, the President’s roundtable made its most important statement with the announcement of two rather obscure initiatives: It featured the launch of a “Declaration of Intent on Mutual Recognition of Certification Schemes for Hydrogen and Derivatives”; it also introduced a new ISO methodology for GHG emissions assessment of hydrogen.
Thirty-nine countries have endorsed the Hydrogen Declaration of Intent to pursue mutual recognition of hydrogen certification schemes, according to COP28.
Later in the day, another roundtable focused on the basic tasks of putting the hydrogen structure together.
Part of the so-called Breakthrough Agenda that began with COP26 two years ago, it gathered representatives of World Bank, IEA, IRENA, the UN Industrial Development Organization (UNIDO), the International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE), other major non-profits and some governments.
They considered needs in key areas, including standards and certification, demand creation, research and innovation, finance and investment. The bright spot, after the morning’s announcements, was standards and certifications.
“We’ve seen standards and certification really rise in the agenda, almost in a surprising way”, said Paul Durant, who is Head of Climate Innovation for the UK government. Mr. Durant chaired the roundtable meeting.
The subsequent discussion of demand creation indicated less certainty, where a huge gap between hydrogen and fossil fuel cost was considered.
“When it comes to demand creation, we are in the very beginning”, said Oleksiy Tatarenko, Senior Principal, Hydrogen Initiatives at Rocky Mountain Institute (RMI), whose large team is working specifically on demand creation.
He spoke of the need for combined policy interventions and market-based mechanisms to grow demand for hydrogen.
“We still have a massive challenge, even in the developed countries. Making an economic case, sector by sector, you have a gap in hydrogen competitiveness versus carbon fuels or other solutions.
“Today saw a big outcome for hydrogen… We are now putting into place concrete elements to ensure it will happen”, said Laurent Antoni, Executive Director, IPHE, who spoke at both roundtables.
His organization has advocated for years for the ISO methodology and helped to shepherd the declaration on certification schemes to agreement.
“We need to rely on robust regulations, which themselves have to rely on certification, the labelling of hydrogen.
“And within the certification schemes what matters, the main point, is carbon footprint”,  he said.
He also stressed the importance of the new ISO method to ensure everyone uses precisely the same methodology to quantify the carbon footprint, to allow comparison across markets and borders.
It’s a key common piece needed in all countries’ regulations to facilitate a future hydrogen market. That’s a big breakthrough, he thinks.
Antoni, an electrochemist, won’t talk colours in regard to hydrogen.
“When speaking about a kind of hydrogen, what you’re really speaking about is the carbon footprint”, he said.
“And the carbon footprint of the hydrogen is regardless you of the primary energy and technology used to produce it.
“What matters for hydrogen is to use decarbonized hydrogen”, he said, adding that “It’s not a ‘silver bullet’, but without low-emission hydrogen, we won’t achieve our climate targets”.

By: Alan Mammoser

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