Oil & Energy
Surge In Oil Prices: Rights Group Seeks Refinery Spending Probe
A Nigerian rights group said it will file a lawsuit against the government for failing to repair the country’s broken down oil refineries.
In the wake of Russian oil being shunned over Russia’s military action in Ukraine, pressure has been growing on Nigeria, Africa’s largest oil producer, to increase its production and exports.
The Socio-Economic Rights Accountability Project, SERAP, said its notice to authorities to probe allegations of mismanagement of funds approved for the rehabilitation, operation and maintenance of refineries is in the public’s interest, and that authorities must prosecute anyone liable.
The group said in a statement that Nigeria had spent nearly $400 million for maintenance of the refineries between 2015 and 2020, with little impact. Nigerian refineries have been closed for more than a year, causing the country to rely heavily on imports for its energy needs.
SERAP also threatened to sue authorities if they do not respond to its notice by March 14.
SERAP officials were not immediately available for further comment on the lawsuit, but heavy sanctions on Russia’s energy sector this month are shifting focus to other producers and exporters of crude oil.
Nigeria is Africa’s largest oil producer, but experts say it may be too soon to celebrate the jump in oil prices.
“If we are still depending on the importation of fuel in Nigeria, it means that there will be a significant issue in terms of the cost of bringing in products into Nigeria, considering the level of inflation that the sanctions that have been imposed on Russia will cause globally, the level of economic shock,” said Isaac Botti, a public finance expert.
Last week, oil prices hit $130 per barrel, the highest mark since 2008, after the United States and European allies intensified their ban on Russian oil imports following Russia’s invasion of Ukraine.
But prices fell Wednesday by more than 13 percent following a pledge by the United Arab Emirates to increase output in order to close the gap created by sanctions on Russia.
Botti said Nigeria had been struggling to stay afloat even before prices surged.
“Before even the crisis in Russia and Ukraine, Nigeria has been battling with internal crisis, particularly when it comes to the issue of supply of fuel for local consumption. Nigeria does not have functional refinery,” he said.
SERAP also wants authorities to probe the import in January of more than 170 million liters of refined fuel from Europe by four oil operators.
However, the Nigerian National Petroleum Commission head, Mele Kyari, said during an International Energy Summit in Abuja last week that authorities are working to fix refineries to make the most of the current market opportunities.
“A minor disruption in supply can cause the chaos that you’re seeing in our state. And that means that those redundancies must be settled,” Kyari said.
“As a country, we must address the issue of local production of finished petroleum products even in the short term, and this is what we’re doing; we haven’t achieved that, but you can see that the internal combustion engine challenge is a major social issue”, he said.
Russia exports about 7 million barrels of oil and gas a day, accounting for roughly 10% of global supplies.
Experts say the overall increase in oil prices is expected to boost oil revenue and increase foreign reserves for exporting countries, but they also say Nigeria first needs to resolve issues of local consumption.
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By Felicity Bradstock for Oilprice.com 16
Oil & Energy
Delta Targets 120MW Power Boost, Moves To Cut Reliance On National Grid
The State Commissioner for Works (Rural Roads) and Public Information, Charles Aniagwu, disclosed this at a press conference in Asaba, weekend, noting that the initiative was part of wider reforms aimed at opening up the power sector to private investors.
Aniagwu, who was accompanied by the Executive Assistant to the Governor on New Media, Felix Ofou, said the state was exploring alternative sources of electricity to support businesses, households and communities while reducing pressure on the national grid.
He said the government was particularly interested in exploiting Delta’s abundant natural gas resources for power generation, pointing to the Kwale Free Trade Zone, which is part of the state’s special economic zone, as a major opportunity for investors.
According to him, prospective investors were taken to the zone during the state’s recent economic summit to enable them to assess the availability of gas as a key raw material for electricity generation. ComparePower Rates
The commissioner explained that generating more electricity locally would not only increase supply in Delta but also free up power on the national grid for use by other consumers.
Aniagwu cited the 8.5MW Independent Power Plant located behind the state secretariat in Asaba as an example of what could be achieved through alternative power sources.
He said the facility had enabled the secretariat complex to operate independently of the national grid, thereby making the electricity that would otherwise have been consumed there available to other users.
He added that the planned 120MW partnership with Supply Power would further strengthen the state’s electricity supply capacity and provide a more reliable power base for small and medium-sized enterprises.
Aniagwu said the state government was also intervening in areas traditionally regarded as the responsibility of electricity distribution companies because inadequate power supply could no longer be allowed to constrain economic development. LearnQuantum Physics
He identified the extension of the electricity grid from Abraka towards the Ndokwa axis as one of the interventions being undertaken to connect more communities to electricity.
The commissioner, however, raised concerns over the burden placed on communities that are often required to provide transformers and other electricity infrastructure, only for distribution companies to take over the facilities and subsequently collect electricity bills without adequately accounting for the investments made by the communities.
He said the state would continue to support efforts aimed at energising communities, noting that improved electricity supply would stimulate businesses, create jobs and help tackle social problems associated with unemployment and idleness.
On regulation, Aniagwu said the government was working with the Ministry of Energy and a committee set up to develop an appropriate regulatory framework for the state’s emerging power sector. SwitchEnergy Plans
He said the proposed energy commission would be responsible for regulating new electricity producers, determining appropriate tariffs and overseeing distribution networks.
The commissioner stressed that liberalising the sector required effective regulation to protect consumers and investors, adding that decisions on power distribution infrastructure, including the use of overhead or underground lines, must take into account the peculiarities and safety requirements of each location.
He warned that power expansion without adequate regulation could expose residents to electrocution and other hazards, stressing the need to protect electricity infrastructure while ensuring consumers were not subjected to unfair pricing.
Aniagwu said the state government’s broader objective was to build an efficient and sustainable electricity market driven by private investment and capable of powering businesses, households and communities across Delta State.
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