Oil & Energy
DISCOs Failed To Remit N325.54bn In 10 Months – NBET
Power distribution companies in the country failed to remit a total of N325.54bn to the Nigerian Bulk Electricity Trading Plc for the electricity sold to them from January to October, last year, data obtained from the bulk trader has shown.
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.
According to the data, the DISCOS were given invoices of N459.67bn in the 10-month period but only paid N134.13bn, which left a balance of unremitted N325.54bn,
In January, seven Discos, namely Benin, Eko, Ibadan, Ikeja, Kaduna, Kano and Port Harcourt DISCOS, did not make any remittance to NBET.
The Nigerian Electricity Regulatory Commission said in its latest quarterly report that while the low remittance by the DISCOS to NBET and the Market Operator was partly due to tariff shortfall, the DISCOS must improve on their technical and commercial efficiencies for improvements on the payment obligation to the market, thereby improving sector liquidity.
“A major initiative towards improving revenue collection in the electricity industry is the provision of meters to all registered end-use consumers of electricity,” it added.
According to the report, the challenge of poor remittance has remained a serious concern to the commission as it is one of the main causes of the liquidity crisis facing the Nigerian electricity supply industry.
It said, “Low remittance adversely affects the ability of NBET to honour its obligations to GENCOS while service providers (Transmission Service Provider, MO and NERC) struggle with the paucity of funds impacting their capacity to perform their statutory obligations.
“To address the poor remittance by DISCOS, the commission has commenced enforcement actions against DISCOS found to have engaged in unacceptably low remittances to NBET and the MO, factoring in all the parameters embedded in the tariff model.
“In this regard, the commission is finalising a framework which ensures transparency and equity in the disbursement of market funds for the benefit of all participants in the industry.”
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The recent rise in crude oil flows out of the Strait of Hormuz isn’t solving the world’s most pressing fuel problem—the diesel crunch and record diesel prices that start to feed into the wider economy.
While Middle East crude oil flows are nearing pre-war levels, global diesel supply is much lower due to refinery constraints in the Middle East and Russia that the rest of the world cannot offset.
The diesel squeeze hiked wholesale and retail prices to record highs in the middle of September as the market realized that crude oil supply does not equal refined product supply, and demand for middle distillates started rising seasonally from agriculture, road freight, and the coming winter.
There isn’t an easy fix to the crunch, neither the G7’s promised release of 100 million barrels of oil, including diesel, nor the controversial Trump-Putin deal for the U.S. to buy Russian diesel.
The global diesel squeeze will end when markets return to some kind of normality, which is months away, at best, and certainly not before the U.S. midterm elections on November 3.
The current crunch in the diesel and gasoil markets is set to extend into the middle of next year, the International Energy Agency (IEA) said in its monthly Oil Market Report published this week.
Counter-seasonally, gasoil and diesel markets tightened in the third quarter of 2026, amid prolonged disruptions in refinery operations in the Middle East and Russia, the agency noted.
“Combined with much heavier-than-normal inventory declines in 2Q26, this has deprived global gasoil markets of crucial stock cover ahead of the peak winter demand season,” the IEA said.
But the relatively price-inelastic diesel demand has remained strong, supported by government measures aimed at easing the impact of high prices on consumers, according to the agency.
“Falling inventories, soaring cracks, and steepening levels of backwardation have signalled the need for additional supplies,” the IEA said.
Even if refinery throughput recovers rapidly into the end of this year, gasoil supply will fall short of meeting demand this quarter, “suggesting that the replenishment of lost inventories, outside of typical seasonal fluctuations, is unlikely before 2H27.”
Global diesel exports fell by 700,000 barrels per day (bpd) in September from a year earlier, as a 1.3-million-bpd loss from Russia and the Middle East was only partly offset by higher supply from other sources, the IEA has estimated.
“As the Iran war manifests itself through restricted product availability, soaring fuel prices and a deteriorating economic outlook, diesel will register 25%” of the expected 2.6 million bpd decline in global oil demand this year, the agency noted.
Global diesel prices have eased from the all-time highs of more than $200 a barrel reached in September, but diesel benchmarks remain nearly double the price of crude oil and their pre-crisis levels, the IEA said.
While growing volumes of crude oil have moved out of the Persian Gulf and the Middle East in recent weeks, the barrels come at a high cost and high risk, Ole Hansen, Head of Commodity Strategy at Saxo Bank, wrote in an analysis this week.
“Depleted inventories, elevated freight costs and persistent geopolitical risks explain why crude prices have remained stubbornly high despite improving physical flows,” Hansen said.
Related: Europe’s Gas Prices Close to 2022 High as Hormuz LNG Flows Remain Limited
The diesel market, however, is a whole new ball game. Additional crude oil exports cannot ease the reduced refinery output in the Middle East, which was a major diesel and jet fuel supplier before the war.
“While crude shipments have recovered substantially, refined-product exports remain severely constrained,” Hansen said.
“The clearest evidence that the market remains far from normal is the continued strength in refined products, particularly diesel.”
Both U.S. ultra-low sulfur diesel (ULSD) and European gasoil futures moved back to trade above $200 per barrel equivalent this week, “reflecting a shortage that additional crude exports alone cannot resolve,” the strategist said.
This shortage cannot be solved with high crude oil exports. The global energy system needs normalization in all major supply chain components from production to transportation and refining for prices to ease. The oil crisis has now turned into a shipping crisis and a refining bottleneck, which add to the supply squeeze in products and to inflation pressures.
“Record diesel prices are already having broad economic consequences by raising the cost of goods and impacting real incomes, economic activity, and inflation,” the IEA warned in its report.
The diesel price shock is extending from transport through supply chains, analysts at Oxford Economics said earlier this month.
Some of the costs transferred to customers have started to emerge in the U.S. This year has seen a renewed surge in operating-cost pressures for U.S. trucking, driven overwhelmingly by diesel, while freight trucking producer prices have also begun to rise, Oxford Economics says.
“This suggests carriers are passing at least part of the fuel shock onto customers rather than absorbing it entirely through margins, shifting some of the burden toward the freight-intensive industries.”
U.S. inflation accelerated in September, with the consumer price index up by 3.7% from a year earlier and 0.6% compared to August, the last inflation numbers before the midterms showed on Wednesday.
“The index for gasoline rose 9.1 percent in September, accounting for over half of the monthly all-items increase. The energy index increased 5.2 percent over the month following a 2.1-percent increase in August,” the U.S. Bureau of Labor Statistics said.
By Tsvetana Paraskova
The Federal Government has commenced five interconnected mini-grid projects with a combined capacity of 17.7 megawatts in Oyo State.
The projects, located in Akinyele, Ido, Ibadan North, Egbeda and Lagelu Local Government Areas, comprise the Bola, Jiboye, Molade-Adelubi, Ogo Oluwa and Sooko-Elega interconnected mini-grids, and is designed to improve electricity access in the communities.
The initiative is supported by a 17.74-megawatt battery energy storage system designed to support electricity supply and improve reliability.
Minister of Power, Joseph Tegbe, who made this known at the groundbreaking ceremony of the project, said the initiative would improve electricity access, support businesses and reduce dependence on generators in beneficiary communities.
Tegbe said the projects formed part of the Federal Government’s broader efforts to expand electricity access under President Bola Tinubu’s Renewed Hope Agenda.
According to a statement issued last Thursday, the minister said the projects were expected to improve electricity supply to households and businesses, extend operating hours and create opportunities for investment and job creation.
“The Minister of Power, Joseph Tegbe, has announced the commencement of five interconnected mini-grid projects with a combined capacity of 17.7 megawatts in Oyo State, while dismissing reports of a planned increase in electricity tariffs.
“The initiative is expected to improve electricity supply to homes and businesses, reduce dependence on generators, extend working hours and create a more favourable environment for investment and job creation”, it stated.
The minister said the projects reflected the importance of collaboration among government agencies, private companies and development partners in addressing the country’s electricity challenges.
He acknowledged the contributions of the Rural Electrification Agency, Paras Energy and Natural Resources Development Limited, the World Bank and the Ibadan Electricity Distribution Company to the initiative.
Tegbe also commended the Oyo State Government, traditional rulers, community leaders and residents of the host communities for their cooperation, while specifically acknowledging the support of the Olubadan of Ibadan land, towards the realisation of the projects.
The minister said similar interventions supported by the REA had been implemented in communities across Kwara, Niger, Nasarawa, Plateau, Adamawa and Kaduna states.
Addressing concerns about a possible increase in electricity tariffs, Tegbe dismissed reports suggesting that the Federal Government planned to raise rates, urging Nigerians to disregard the reports.
He said the government’s priority was to improve electricity supply and work towards achieving round-the-clock power, rather than announce a tariff increase.
Tegbe further identified three proposed energy corridors of the Lagos – Ogun, Abuja-Kaduna-Kano and the Benin-Enugu-Port Harcourt corridors, as part of the government’s plan to improve electricity availability.
The Executive Secretary and Chief Executive Officer of the Major Energy Marketers Association of Nigeria (MEMAM), Clement Isong, says government arbitrary price caps are not solutions to the petroleum market challenges in Nigeria.
Isong stated that petroleum price capping comes with market distortions and lacks in competitiveness among operators.
Speaking at a virtual webinar organised by the Association in partnership with S&P global energy, Isong while speaking on one of the discussion points of the webinar, “Structuring Nigeria’s domestic distribution framework” said government arbitrary price caps are not solutions to the petroleum market challenges in Nigeria.
Isong noted that rather than it’s continued distortion of market prices, government should rather focus more on transparent, market driven pricing regime, efficient distribution and the adoption of measures that could help address supply bottlenecks and reduction of operating costs.
The MEMAN boss also advocated a well-structured market that would enable competition, improve supply security to support better outcomes for customers without necessarily relying on government imposed price controls or broad based fuel subsidies.
Isong in his presentation also outined other priorities for improving the efficiency and resilience of Nigeria’s domestic distribution market.
He insisted that supply coordination can be achieved only if government can prioritise domestic refinery output and using imports on the other hand to bridge supply gaps to manage disruptions.
Isong said bulk supply arrangements can also be achieved through the establishment of clearer terms of engagement to help drive product access, pricing, delivery schedules including contractual obligations amongst others.
Speaking on another discussion point of the webinar, “Developing a west african reference market”, S&P global energy acknowledged how geopolitical tensions from the middle east crisis including refining disruptions and changing global supply dynamics continues to impact on petroleum products pricing and the pressure foist on middle distillates, particularly diesel and aviation fuel.
The S&P global energy is calling for an urgent need for regional pricing benchmarks that better reflect West African market conditions noted that greater transparency, reliable market data and industry adoption will be essential to building a credible reference market.