Author: The Nation

The Manufacturers Association of Nigeria (MAN) has expressed deep concern over the impending displacement of local meter manufacturers and assemblers in the downstream segment of the power sector in the implementation of the National Mass Metering Programme (NMMP) Phase II.

MAN said it was worried over what it termed as “skewed implementation of the NMMP Phase 11 World Bank-funded supply and installation of 1.250 million smart energy meters to eleven Electricity Distribution Companies in bid: Drep-PPI, Credit no: 9206-NG, Project ID no: P172891.”

The association pointed out that the advertised financial requirements and the technical specifications by the Transmission Company of Nigeria (TCN) appears to be skewed against local manufacturers, as they are stringent and negate the Central Bank of Nigeria (CBN) guidelines for the implementation of NMMP.

“This (NMMP) is a Federal Government’s intervention in the power sector to accelerate energy meter supply to bridge the metering gap and ought to be in sync with our overall national economic development objectives,” MAN said, warning: “This portends grave danger for the power sector.”

Handing down the warning, over the weekend, MAN Director-General Segun Ajayi-Kadir, said:  “We may be witnessing a repeat of the ugly scenario in 2012 when local manufacturers were sidelined in the meter supply and the nation was greeted with supply of substandard meters by the foreign companies that were awarded the contract that were later removed from the network.”

The MAN DG, in a statement stated that the position of the TCN that installation will provide employment opportunities to Nigerians will pale into insignificance when compared with a ratio of one to 10 jobs that would be created if local local manufacturers were included in the scheme.

Ajayi-Kadir drew attention to the fact that in keeping with the Federal Government’s backward integration policy and the advent of the NMMP intervention, manufacturers have made huge investments in expansion of manufacturing capacities, trained and promoted highly skilled workforce to meet the demands of the power sector as envisaged in the Nigerian Electricity Supply Industry (NESI).

He, therefore, said the intentional denial of the local manufacturers does not take into cognizance their sterling performance in the nascent local manufacturing, vis, deployment and installation of a total of 611,231 energy meters across the country between January 2019 and 31st January, 2021.

Read Also: ‘Lower bid requirements for local meter manufacturers’

The MAN boss said this is corroborated by the report of the Regulatory Agency, the Nigeria Electricity Regulatory Commission (NERC), under the Meter Assets Provider (MAP) initiative of the Federal Government.

He also referenced the deployment and installation of one million energy meters across the country under the phase zero of the NMMP. This, he said, is under the Federal Government intervention aimed at increasing the metering rate to eliminate the inglorious and arbitrary estimated billing and strengthening the local meter value chain, as well as creating jobs.

 “Of course, this has also helped in reducing collection losses and increasing financial flows to achieve 100% market remittance obligations of the DisCos and improving network monitoring capability and availability of data for market administration and investment decision making,” Ajayi-Kadir stated.

He further said it should be recall that local meter manufacturers have been denied the opportunity to fully execute the contract for the supply and installation of four million energy meters under the Phase 1 of the NMMP scheme.

According to him, this was due to the unrealistic terms that arbitrarily fixed the contract prices extremely and far below the approved regulatory prices of energy meters in the country.

 “Additionally, the contractual term of payment after the supply and installation of the meters have not been adhered to, thereby jeopardizing the financial capabilities of our members that participated in the scheme, Ajayi-Kadir said

MAN opined that the subsisting Executive Order 003 on patronage of made in Nigeria products and the avowed policy of government to give priority and first consideration to local businesses should have made the government to interrogate the World Bank documents and actively consulted/engaged Nigerian stakeholders in the sector with a view to mainstreaming their inputs.

MAN said this is clearly the cardinal aspirations of the NMMP scheme, which is to strengthen the local meter value chain by increasing local meter manufacturing, assembly and deployment capacity as well as to support Nigeria’s economic recovery by creating jobs in the local meter value chain.

 “As a nation that aspires to make progress and improve the wellbeing of its people, it is unconscionable that we continuously make the same mistakes. The overbearing government control over the energy meter procurement and pricing has continued to limit meter availability and almost treacherously hindered the factualization of the forces of demand and supply in the determination of the prices of meters.

“It has stifled the emergence of healthy competition in the meter manufacturing and pricing ecosystem, which should have created more job, up-scaled technology, innovation and skills, as well as an expansive value chain across the country,” MAN stated.

The Association, therefore, counseled that “the excellent constitutional amendment that enlisted power generation and transmission in the concurrent list should be complemented with the liberalization of the distribution end of the value chain.

 “To this end, the energy meter procurement and pricing should be liberalized. There is no doubt that Nigerians are in dire need of and are desirous of procuring meters, they have only been limited by the unwarranted and stringent processes of applying for energy meters by the DisCos, as well as the indiscretion of some of their operatives.” 

MAN said it was convinced that the liberalization of the distribution end of the value chain will eradicate these bottlenecks and give fillip to the efforts of government to bridge the metering gap and ensure just electricity billing regime.

To scale up their operations, Chairman, Crude Oil Refineries Owner’s Association of Nigeria (CORAN), Mr. Momoh Oyarekhua, has called for the assistance of the Federal Government.

He believes it makes no sense to have modular refineries pay in dollar to access crude in Nigeria. It is going to drive the foreign exchange up, he said.

To Oyarekhua, the intervention will alleviate hardships being faced by Nigerians due to the removal of  fuel subsidy.

The CORAN chairman said there was an urgent need for the government to support and enhance the efficiency of the modular refineries, to enable them to effectively refine crude oil in the country in line with their installed capacity.

Oyarekhua reiterated an increased crude oil supply to the modular refineries while insisting that the provision of a special intervention fund is necessary to support and encourage modular refineries to perform to meet their installed capacities.

He explained the critical role of modular refineries in Nigeria and how they could help the economy by reducing the high price of the Premium Motor Spirit (PMS).

To him, refining crude oil in the modular refineries is more cost-effective than exporting the crude abroad for refining and then shipping the same back for sale as a finished refined petroleum products, with the increased cost of foreign and local shipping, terminal, ports, customs, inspectors and traders’ charges and margins, etc. being calculated as part of the landing cost which will then be passed on the consumers.

He said: “The cost of exporting, refining, and shipping back can be eliminated if the modular refineries become efficient in crude refining in Nigeria because we are mostly situated near to the well-head of crude production which will require little cost

 “More so, the issue of oil theft can be minimized by the modular refineries which are strategically positioned to tackle that challenge because there will be no need to transport crude using the pipeline because we are situated very close to production areas.”

Making  a case for the sale of crude in naira instead of dollars, Oyarekhua said it makes no sense to have modular refineries pay in dollars to access crude in Nigeria.

Read Also: ‘Stolen crude oil refined in Ghana, Ivory Coast’

He said: “Let’s assume, just like I have just mentioned, if you have 40 modular refineries of 10,000 capacity for example, and you have to go into the market to look for an equivalent USD to pay for the crude

“Imagine, for a 10,000 barrel capacity refinery for example that we have, if the average price of crude is $100 just to make it very simple, we are going to require a minimum of $30,000,000 on a monthly basis to procure crude, so what you are going to have is that in a year, we are going to require about $360,000,000. So imagine you have 10 refineries of 10,000 barrels each, that’s going to be $ 3.6 billion that you will require to pay for crude.

“For me, I think it is going to mount pressure on the foreign exchange and it is going to drive the foreign exchange up. Hence, the sense in it is to sell crude in local currency to modular refineries and ensure the product goes into the market. If for any reason, any modular refinery actually exports any aspect of their crude, then, they should pay for that aspect of their crude in U.S dollars”.

With regards to existing government-owned refineries and whether it was still expedient for the government to continue with its turnaround maintenance with the associated cost, Oyarekhua explained that there was a need to give the private sector a chance to run not just the modular refineries but the conventional refineries,  noting that the private sector involvement can revitalize the Nigerian refining industry while ensuring massive productivity.

Oyarekhua, who spoke on The Morning Show, a programme on the Arise Television, insisted that the government had no business being in the petroleum refining business which is better managed by private sector interests.

He said the government should only focus on regulation, saying privatizing crude refining is the best way to go.

 “Allowing more private individuals to operate refineries in the country is imperative if the sector is to succeed because the bureaucratic decision-making process of the government significantly differs from the agile decision-making prevalent in the private sector. Harnessing the expertise, innovation, and efficiency of private enterprises, therefore, holds the key to addressing the challenges faced by the Nigerian refining industry.”

Oyarekhua called on the government to supply an adequate amount of crude oil to these modular refineries, which would facilitate their operations and increase their refining capacity.

He urged the government to take a second look at the extra burden of levies placed on modular refineries, which according to him increases the cost of local production or refining of petroleum products, stating that for every litre of product refined, there is a N5. 80k levied on the refinery for products evacuated.

He said: “Some of the cost that the regulators are putting on us, for example, for every litre of product that we produce today we have to pay about five naira eighty kobo N5..80k,  like a toll from the refinery before these products are evacuated

 “We have one naira (NGN1) evacuation charge to Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), we have off-takers charge one Naira (NGN1), we have zero point five (0.5%) percent of our wholesale price that has to be paid, there is a recent one that has just been introduced – midstream, downstream, gas infrastructure charge of 0.5% of our wholesale cost, all of this comes to 5.80k. We are talking about bringing the cost of refined products down, why should we pay 5.80k”  

He stressed that the intervention and advocacy were not just for modular refinery owners but for conventional refineries also.

Oyarekhua said:”Even Dangote, although I know he is in a free trade zone, I don’t know if this charge is applicable to him but he has to pay this charge, if Dangote produces PMS today he has to pay NGN5.80k on each litre of fuel that comes into the market which will now make petroleum products more expensive, including petrol”

Additionally, he stressed the need for intervention funds to attract skilled professionals and modern technologies, to the sector,  enhancing the efficiency and output of the modular refineries. “Modular refineries have immense potential to contribute to Nigeria’s economy by reducing our dependence on imported petroleum products and creating employment opportunities

“However, without the necessary support from the government and the active involvement of the private sector, we will continue to face significant challenges in realizing this potential. Operating modular refineries in Nigeria would solve several issues bordering around middlemen cost, crude theft, cost of shipping, refining abroad, cost of transportation, and the general cost of petrol,” he added.

Funder, Aggital Works, Oghoghozino Otefia  has lamented the impact of rising costs of operation on their businesses. 

He said the company specialises on software engineering, mobile apps and web applications development, websites designs and development, portals as well as e-commerce development.

Speaking on the business environment and its challenges, he said issues around poor power supply, high cost of electricity and  internet services were affecting its operations.

He explained that Aggital Works provides digital products and has over the years delivered tech-related projects for various businesses, organisations and individuals in Nigeria, Canada, Australia, Germany, India, Europe and the United Kingdom.

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“We have been in business since 2017 as Age Digital Works, but we relaunched as Aggital Works in 2022. We are also into corporate branding and identity designs, brand communications designs, among others.

“Digital Marketing including search engine marketing, search engine optimisation, social media marketing, among others. Public Relations including brand management, crisis communication, brand positioning, eventplanning, and social media strategy,” he added.

“Having imprinted its mark in the creative and digital industry, the agency has won the 2018 Business Excellence Award for the category of the best web development company of the year and also 2019 Nigerian Role Model Awards for Excellence and Innovation in ICT services,” he said.

• •President started well

The investment community at the weekend tabled its demand to the President Bola Tinubu administration with an assurance that the private sector would work with the new government to reposition the economy for global relevance.

Chairman, Nigerian Exchange Group (NGX Group) Plc, Alhaji Umaru Kwairanga said the new administration has started well with its policy direction, calling on the government to continue on an investor-friendly trajectory in order to boost the economy.

He outlined that the investment market expects more market-friendly policies, including amenable tax regimes to boost savings and investments, fiscal and monetary policies that will attract investments into the country, continuation of the Ease of Doing Business initiatives, and consistent and faithful implementation of announced policies.

“We think the privatisation programme of government needs to be rejuvenated as there are many government enterprises that would benefit from the efficiency of the private sector while at the same time open Nigerians’ eyes to the benefits of investments. Let me mention in particular the planned initial public offering (IPO) of the Nigerian National Petroleum Company (NNPC) Limited. We hope that it will be fast-tracked by the Tinubu administration,” Kwairanga said. 

According to him, faithful implementation of the policies would enhance the ability of businesses and individuals to plan and prosper.

“The capital market community is excited by the new government and the steps it has so far taken with respect to the economy.  While we agree that measures such as the removal of the fuel subsidy and harmonisation of multiple exchange rates will have a short-term harsh impact on Nigerians, we accept that they are the only feasible options if we are to realise our potential as a nation in the medium and long term. It is like deciding to stop managing a bad sore with painkillers and instead opting for surgery that will bring long lasting healing.

Read Also: OPC to Tinubu: stop electricity tariff hike plan by DisCos

“You can see the enthusiasm with which the market welcomed the new government and its early decisions as reflected in the kind of growth in our market indices that we have not seen in many years. The All Share Index gained, market capitalisation and turnover rose tremendously. So, as an Exchange and as capital market stakeholders, we wish to welcome the new administration and pledge our support in its efforts to take Nigeria to the next level,” Kwairanga said.

Speaking on the sidelines of the Annual General Meeting (AGM) of NGX at the weekend in Lagos, Kwairanga said the impressive performance of the stock market since the advent of the Tinubu administration was because the new President “understands the economy and financial markets very well and this has been borne out by the policies that have been introduced in the early days”.

“We expect the capital market to remain a key anchor of the economy under this administration. Secondly, we are expecting a larger pool of participants in the capital market as a result of the removal of the parallel exchange rate regime,’’ he said.

 You may be aware that over the last five years, foreign participation in the Nigerian capital market was at a low as a result of difficulties in accessing foreign exchange when repatriating funds. That reduced our market’s turnover by almost 50 per cent over the last few years despite the very attractive valuations of Nigerian securities. With the removal of such obstacles we expect a very vibrant and sustainable capital market,” Kwairanga said.

He said the market is ready to work with the government and other stakeholders to improve the country’s credit profile and create a favourable environment for both domestic and foreign.

“As a group, we are committed to working with the government to stimulate further growth in the economy, address higher capital costs, as this will go a long way to enhance Nigeria’s credit profile, and create a favourable environment for both domestic and foreign investors,” Kwairanga said.

Merchant payments in Africa have risen by 94 per cent to $66 billion. The transaction rise is attributed to e-payment users change cash to e-money in show of confidence in the payment system.The Central Bank of Nigeria (CBN) and other financial sector regulators across Africa are focused on getting more people embrace e-payment to deepen financial inclusion and make transactions seamless. Assistant Business Editor, COLLINS NWEZE writes.

E-paymentS  are at the centre of Africa’s payment system. The payment mode is replacing use of cash, which for centuries, dominated the continent’s transaction partner.

In Nigeria, the CBN rolled out an e-payment plan that includes achieving 100 per cent cashless economy in the nearest future.

Already, many e-payment users are changing cash to electronic money (e-money), further raising the volume of e-payment transactions in the continent.

e-money is defined as an electronic store of monetary value on a technical device that may be  used for making payments to entities other than the e-money issuer.

The device acts as a prepaid bearer instrument which does not necessarily involve bank accounts in transactions.

The CBN’s e-naira is also meant to reduce cash use in the countrys payment system and promote access to finance across all segments of the economy.

In East Africa and Kenya, over 18 per cent of new merchants have self-boarded since MPESA began allowing companies to register on their platforms to deepen usage.

In 2021, mobile money’s value  expanded beyond P2P transfers and cash-in/cash-out transactions. It is  an essential part of many people’s and enterprise’s lives, particularly in Nigeria and low- and middle-income nations.

Mobile money has fuelled financial inclusion for the world’s most disadvantaged, mainly women in developing countries.These are using mobile money to gain more economic independence. According to MoneyTransfers.com’s analysis of Adoption Survey data, 44 per cent of providers offer credit, savings, or insurance products, allowing marginalised people to invest in their livelihoods and futures.

Payment merchants have eased the acquisition of such credits besides insurance premiums. In Kenya, Nigeria, Ghana and Egypt, for instance, one would only need a mobile phone and a pay bill number to remit such a payment. The sector is likely to maintain its growth in 2022 due to its goodwill from users.

Mobile money accounts process about $1 trillion transactions yearly on various fronts, of which merchant payments are one form.

Read Also: Digital Payments Transformed: Apecoin’s Possible Impact

Merchant payment stood at $66 billion in 2021, a 94 per cent rise from their 2020 figures, report from MoneyTranfers.com showed.

MoneyTransfers’ Chief Executive Officer Jonathan Merry attributes this growth to increased adoption of mobile money services.

He said: “A definite trend is emerging towards a more digitised mobile money market.

“Many users are changing cash into e-money and either circulating it as such or using it virtually.”

Again, merchant payments have doubled in value, hitting $5.5 billion in monthly transactions. Providers say substantial incentives, such as remote on-boarding processes, entice enterprises to their platform.

Several reasons are given for the merchant payment option for mobile money snowballing. First, the fundamentals of merchant processing are straightforward. You register with a merchant payment provider to accept mobile payments from your consumers (and receive payment yourself for all of those payments.

Second, the payment processor collects fees from your transactions and deposits the remainder into your business account. Selecting the appropriate choice enables your firm to spend less, get more helpful information, and find solutions specific to your business.You can enjoy that courtesy of interactions with the payment processor.

The COVID-19 outbreak has helped in deploying merchant payment systems. Most people used virtual, no-contact means to purchase items, pay bills, and raise money for various courses. The value of merchant payments reached $66 billion in 2021 due to this sustained rise. Besides, the providers charge reasonable transaction fees.