The Nation Newspaper

Category: Energy

  • DisCos battle to recover unpaid fixed charge

    Electricity Distribution Companies (DisCos) are battling to recover huge unpaid fixed charge from defaulting customers.

    The Nation learnt that the DisCos are insisting on payment of the charge before customers recharge their meters.

    The customers were said to have  defaulted in fixed charge payment before its abolition last February 1.

    The DisCos’ managements have warned their officials not to recharge debtor-customers’meters  until they have paid.

    Most of the business units in Ikeja Electric (IK) visited by The Nation, showed that such customers have been barred from recharging their meters.

    A manager in Ponle Business  Unit of Ikeja Electric at Egbeda, Lagos, said power firms would ensure that the debts are paid before customers are allowed to recharge their meters.

    He said: “From the available information at our disposal, it is clear that a lot of customers were indebted to the power distribution companies. Of note is debt arising from non-payment of fixed charges.  There are two approaches of recovering fixed charges owed by customers. First, DisCos have factored the fixed charges into monthly bills they are issuing to customers every month. Secondly, firms are compelling customers to clear arrears of fixed charges they owe before they are allowed to recharge their meters.”

    He said power firms have ruled out the issue of concessions for customers that owe fixed charges, stressing that customers are under obligations to pay their debts.

    “Many customers have approached us for concessions on the issue of payment of fixed charges they owe before it was abolished by the government. However, we told them point blank that we cannot give them concessions. Energy business is different from trading in pepper and onion, in which you can go to the market and pile up your debts. The only way for the DisCos to grow is to collect all their debts,” he added.

  • Marketers sell kerosene at N120

    •IPMAN ‘not aware’

    Marketers are selling Household Kerosene (HHK) above the  approved price of N84.17 per litre, investigation has revealed.

    They sell the product for between N115 and N120 per litre.

    According to the Petroleum Products Pricing Regulatory Agency’s (PPPRA’s) pricing template of March 17, the expected open market price (OMP) of kerosene is N84.17 per litre.

    However, marketers, mainly independents, sell the product above N84.17 per litre. In many retail outlets in Lagos, The Nation discovered that consumers buy the product at N120 per litre.

    At some retail outlets in Ikotun, Egbeda, Idimu, Iyana-Ipaja, and Agege in Lagos, consumers stood in long queues to buy the product, described as “poor man specific”. Those who went to the Nigerian National Petroleum Corporation (NNPC) outlets to buy at cheaper price, were disappointed – the product was not available.

    Contacted, Independent Petroleum Marketers Association of Nigeria (IPMAN) National President  Mr. Chinedu Okoronkwo said  he was not aware that his members were selling kerosene above the official price.

    He said the association would deal with any ofits members who sells the product above the official price.

  • Schneider Electric rewards partners

    Schneider Electric, an  energy services provider has rewarded its business partners in Port Harcourt, the Rivers State capital.

    The event was designed to reward partners with outstanding sales performance and to build business relationships with new and existing partners.

    It is hinged on five critical factors – channel profiling, alignment with business opportunities, empowerment, enablement and profit.

    Kerryman Computers based in Port Harcourt was recognised for its outstanding sales performance in 2015.

    Its Chief Executive Officer, Mr. Emmanuel Obiukwu, said he was very happy with the award.

    “The quality of the APC products is a distinguishing factor. I have never regretted being an APC channel partner. You are trained in every aspect and this is real value for your business,” he said.

    Schneider Electric’s Vice President, Retail, Mr. Oluwaseun Oloyede, highlighted the benefits of being an APC by Schneider Electric channel partner.

    He said financial differentiation, including upfront preferred pricing, an opportunity registration programme, back-end incentives and other opportunities to ensure that the partner relationship is profitable to the vendors. These are some of the things vendors stand to gain for being partners, he said.

    “Our channel partners are significant part of our business. They figure prominently in our planning and strategy process. This is the basis for our desire to reward those who identify with the programme to enable them increase their profitability and create demand for products and services from APC by Schneider Electric,” he added.

  • Kachikwu, PPPRA leadership crisis and fuel scarcity

    In the last 45 days, the Petroleum Products Pricing Regulatory Agency (PPPRA) has been bogged down by a leadership crisis. The tussle is believed to be fuelling the biting petrol scarcity. Stakeholders are worried that if not resolved, it may hamper PPPRA’s role in ensuring smooth operation of the downstream sector. EMEKA UGWUANYI reports. 

    All is not well at the Petroleum Products Pricing Regulatory Agency (PPPRA). A leadership crisis, which is threatening to tear the agency apart, is believed to be partly responsible for the biting fuel scarcity.

    Since February 15, when the Federal Government sacked the heads of parastatals and directed the most senior officers to take charge, all of them complied, except PPPRA which then had two acting Executive Secretaries.

    This made many to question the  government’s sincerity to enforce reforms, PPPRA sources told The Nation.

    The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) wondered why the staff of operating/marketing companies should be drafted as Executive Secretaries of PPPRA, a regulatory agency, when there are competent hands.

    A meeting between PENGASSAN and the Minister of State for Petroleum Resources Dr. Ibe Kachikwu, to resolve the issue ended in what the Union described as “mere promise”.

    The union also approached the National Assembly to protect the PPPRA. It insisted that it was wrong to  appoint staff of operating/marketing companies as Executive Secretaries.

    Earlier, the House of Representatives Committee on Petroleum (Downstream) invited the Secretary to Government of the Federation (SGF), the Acting Executive Secretary and PPPRA Management to appear before it last February 25 and March 22.

    The acting Executive Secretary, Mrs. Sotonye Iyoyo reportedly made efforts to douse the tension over what is hindering the agency’s performance, it was learnt.

    According to PPPRA sources, though Mrs.  Iyoyo is well known in the industry, Kachikwu is reportedly shopping for another acting Executive Secretary within the PPPRA management. This, it was learnt, is an attempt to pre-empt the union against the appointment of marketing companies’ officials.

    What is disturbing is the desperation in naming a Manager on level 14 over about eight level 16 officers without first redeploying or retiring them. This, a source said is in bad taste.

    The source alleged: “The new acting Executive Secretary is a novice in PPPRA’s operations. The aim is deliberate – to allow some faceless external forces to call the shots.The acting Executive Secretary runs a referral style of administration where she consults big wigs in operating companies before taking decisions. It’s unfortunate indeed.

    “Her appointment as the acting Executive Secretary has nailed the PPPRA and made it a lame duck and an appendage of marketing companies. PPPRA is a shadow of itself, from a robust, independent regulatory agency on its creation in 2003 to a rubber stamp organisation.”

    In a March 11 letter, Senate President Bukola Saraki referred the union’s agitation to the Senate Committee on Downstream.The union is hopeful that the National Assembly will end the impunity at PPPRA, which began after the removal of its pioneer Executive Secretary, Dr. Oluwole Oluleye, the sources said. According to the source, the fuel crisis, the lopsided allocation and unlevel operating environment are the antithesis of what the agency was set up to do.

    “The leadership of the PPPRA is a huge joke. The disturbing aspect is that Dr. Kachikwu was hoodwinked into believing that the choice of Mrs. Iyoyo was genuine. It is so glaring that the choice of another acting Executive Secretary buttresses the union’s allegation that there must be something cynical and curious about the manner of her appointment,” the sources added.

    The PENGASSAN-PPPRA branch Chairman and Secretary, Comrades Victor Ononokpono and Ghide Muhammad said the union would reveal the reasons for the haste in the appoinment.

    The union had advised President Muhammadu Buhari on how to appoint an Executive Secretary from a long list of those who understand the industry. The union alleged that there is a clique of  influential officials in the public service that determines who becomes what under Kachikwu’s leadership. They misguide the minister, who may not be in league with their grand plan, it added.

    The source said: “The greatest minus for Moses Mbaba, the most senior official when the presidential directive for CEOs to hand over to the most senior officers in their organisations came is his forthrightness. He is a disciplinarian and an honest public servant. There was the fear of his not willing to be part of a cover-up of so many untoward activities. So, to discredit him, a purported waiver was said to have been obtained to appoint another acting Executive Secretary under the pretext that he was not technical enough.

    “PPPRA is characterised by poor leadership and the lack of operational independence vindicates the Union’s agitation for independence. The PPPRA Board should be immediately constituted. It is unimaginable that petroleum marketers are not able to get foreign exchange (forex) from the Central Bank of Nigeria when the apex bank is on the board of PPPRA.

    ‘’How could distribution of import allocation be lopsided if all the stakeholders represented on the board participate in the process? Who protects the consumer against predatory tendencies of operators?”

  • Expert seeks bank for power sector

    The Group Managing Director of CFL Group of Companies, Mr. Lai Omotola, has canvassed the establishment of a finance development bank for the power sector to address the frequent changes in electricity tariff.

    He said the recently approved 45 percent increase in tariff by the Federal Government was not the answer to the crisis in the power sector.

    Omotola attributed the increase to the failure of indigenous companies that bought the nation’s power assets to source for the technical partners that could bring in some equities.

    During an interaction with reporters in Lagos, he said Nigerian banks provided over 80 per cent of the $2.6 billion that was used to purchase the power assets in 2013 on short tenor loans.

    He said: “It would have been the other way round and the sector would have been virile, had the investors been mandated to bring in foreign investors who would bring in their equities in terms of the capital mix, about 60 percent equity.”

    He explained that most of the funds were sourced from the banks. It is debt, which is now creating a little bit of pressure on our financial system.We find a situation whereby the Nigerian banks are the major, if not the sole financiers of the acquisition of the power assets.

    “There are two factors with the Nigerian banks. One is high interest rate. Two is the tenure of their funds. These factors mean that commercial banks by their very nature cannot finance the electricity industry. They can only serve to raise working capital incentive. What we find is that the Nigerian banks are financed in dollar-dominated terms.

    “Already, the interest rate has gone on the high side. Even, the value of dollar to naira had doubled over the space of two years. The resultant effect is that the accounts of our indigenous companies are not doing well with our banks.

    “If their accounts are not doing well with the banks, the ability of the companies will be stalled. Also, the ability of the indigenous companies to pay loans will be stalled. Finally, the ability of the indigenous companies to generate additional funding will be stalled,” Omotola said.

    He said the Nigerian banks could only finance projects for about two or three years after which the banks would want to see their funds coming back, so our banks are not suited to fund the power sector. He faulted a statement credited to the Minister of Power, Works and Housing, Mr. Babatunde Fashola that no bank would want to fund the power industry because of the low tariff, which makes it not bankable before the current controversial increase.

    Omotola challenged Fashola to name the bank he was referring to, noting that if Fashola was referring “to Nigerian banks, the business model of the indigenous companies will not work. The interest rate and fund tenure will not make it work.”

    He urged the Federal Government to set up a finance development bank that is strictly meant for development projects such as power projects. If our indigenous banks will play any role, it will be in the area of providing working capital. For these indigenous companies in power sector to survive, they need very low interest rate with very long-term loan, he said.

  • ‘2016’ll be tough for oil markets’

    Vitol, the world’s biggest independent oil trader, expects the year to be challenging for oil markets as stocks of crude and products continue to weigh on the market, prompting it to manage the business conservatively in these uncertain time.

    Despite these testing conditions, Vitol saw its total traded volumes of crude and oil products last year amount to 303 million metric tonnes (mt) – or an average of some 5.9 million barrels  per day (bpd) – up 13 per cent from 2014 when it traded 268 million mt.

    According to Platts, an oil and gas agency, the increase in trading was reflected in Vitol chartering 6,629 voyages last year compared to 6,053 the previous year.

    Vitol President/Chief Executive Officer, Ian Taylor, however, said despite the favourable market structure for physical trading, “the absolute price levels and market volatility are causes for caution”.

    “Revenues, which are dictated by absolute prices fell markedly despite an increase in oil and product trading activity,” he added.

    Vitol saw its 2015 revenue slump by 38 per cent to $168 billion compared to $270 billion in 2014. “We expect this coming year to be challenging for the oil sector. Demand growth will be in line with long-term averages, but below the high levels seen in 2015.

    “Stocks of crude and products continue to build and these will weigh upon the market. In this context, we shall focus on adding value to our customers and seek interesting opportunities, whilst remaining mindful of increased risks,” he added.

  • Marketers sell kerosene at N120

    Marketers sell kerosene at N120

    •IPMAN chief: we’re not aware

    Marketers are selling Household Kerosene (HHK) above the  approved price of N84.17 per litre, investigation has revealed.

    They sell the product for between N115 and N120 per litre.

    According to the Petroleum Products Pricing Regulatory Agency’s (PPPRA) pricing template of March 17, the expected open market price (OMP) of kerosene is N84.17 per litre.

    However, marketers, mainly independents, sell the product well above the approved price of N84.17 per litre. In many retail outlets in Lagos, The Nation discovered that consumers buy kerosene at N120 per litre.

    At some retail outlets in Ikotun, Egbeda, Idimu, Iyana-Ipaja, and Agege in Lagos, consumers stood in long queues to buy the product, described as “poor man specific”. Those who went to the Nigerian National Petroleum Corporation (NNPC) outlets to buy at cheaper price, were disappointed as the product was not available.

    Contacted, Independent Petroleum Marketers Association of Nigeria (IPMAN) National President  Mr. Chinedu Okoronkwo said  he was not aware that his members were selling kerosene above the official price.

    He said the association would deal with any of his members who sells the product above the official price of N83 per litre, adding that the association is yet to arrest anybody in that regard.

    Activities in the market, he said,  were determined by the forces of demand and supply, adding that market forces may influence selling the products above the official price by their members.

    Okoronkwo said: “IPMAN as a body was not aware that his members are selling kerosene above the official pump price of N85 per litre. In case members of the public get hold of a marketer that sells kerosene above the official price, report the marketer to us. We at IPMAN would not hesitate to deal with such a marketer. However, we cannot rule out the role of market forces in the issue, because marketers who sell petroleum products at above the regulated prices may be operating in accordance with market forces.’’

  • DisCos battle to recover unpaid fixed charge

    Electricity Distribution Companies (DisCos) are battling to recover huge unpaid fixed charge, increasing customers’ financial burden.

    The Nation learnt that the Discos are insisting on payments of the fixed charges before customers recharge their meters. Customers using either analogue or pre-paid meters before did not pay fixed charges.

    Customers were said to have defaulted in fixed charge payment fore it was abolished and tariff increaesed by 45 per cent last February 1.

    Managements of the DisCos have warned their officials not to recharge the meters of customers who owe fixed charges until such debts are fully paid.

    Most of the business units in Ikeja Electric (IK) visited by The Nation, showed that customers who owe arrears of fixed charges were barred from recharging their meters.

    According to officials of Ikeja Electric at Ponle Business Unit in Egbeda, Lagos, the decision was made by the management to make customers pay fixed charges they owe before the government cancelled it in February this year.

    A manager in the Unit, who spoke under condition of anonymity, said customers were owing DisCos arrears of fixed charges, stressing that power firms are not leaving any stone unturned to recover fixed charges owed them by customers.

    He said: “From the available information at our disposal, it is clear that a lot of customers were indebted to the power distribution companies. Of note is debt arising from non-payment of fixed charges.  There are two approaches of recovering fixed charges owed by customers. First, DisCos have factored the fixed charges into monthly bills they are issuing to customers every month. Secondly, firms are compelling customers to clear arrears of fixed charges they owe before they are allowed to recharge their meters.”

    He said power firms have ruled out the issue of concessions for customers that owe fixed charges; stressing customers are under obligation to pay their debts.

    “Many customers have approached us for concessions on the issue of payment of fixed charges they owe before it was abolished by the government.  However, we told them point blank that we cannot give them concessions. Energy business is different from trading in pepper and onion, in which you can go to the market and pile up your debts. The only way for the DisCos to grow is to collect all their debts,” he added.

  • NLNG workers donate N30m materials to IDPs

    NLNG workers donate N30m materials to IDPs

    Staff of Nigeria LNG Limited (NLNG), through the company’s ‘Let’s Care Initiative’, have donated relief materials worth over N30million to Internally Displaced Persons (IDPs).

    This is in addition to the award of scholarships worth N10million per year for 10 pupils each in Borno, Yobe and Adamawa states for five years.

    The initiative, established last July, is aimed at providing comfort and succour to the IDPs, as the Federal Government records success in addressing the insurgency and resettling displaced persons.

    The General Manager, External Relations Division, Kudo Eresia-Eke said over 100 NLNG staff volunteered to raise funds for the project.

    Distribution of relief materials was carried out in two phases last October and this month with the National Emergency Management Agency (NEMA), the States’ Emergency Management Agency (SEMA), and Non-Governmental Agencies (NGOs), such as MUNA and Heeba Foundations.

    The camps they visited include ICCM Benin Camp, Edo State; Kabusa and Kuchingoro Camps in Abuja; Konduga, Mafa Road Muna Park and Gubio Road Housing Estate IDP camps in Bornu State; Damare, St Theresa and Malkoni camps in Adamawa State; and Bukar El-kanemi and Pampomari IDP camps in Yobe State.

    The sponsor of the initiative, Mr. Isa Inuwa, said:  “Let’s Care IDP initiative’ is about awareness and reaching out. It is underpinned by the concepts of gratitude and humanity in all of us.”

    He added: “What you see as the end results of the efforts, sacrifice and generosity of so many, are the truck-load of relief materials our staff take to the camps themselves to distribute. In addition to material contributions, the effort has created awareness about the plight of the IDPs who have been displaced for no fault of theirs.

    “We have witnessed an unprecedented demonstration of empathy and a deep sense of compassion towards humanity by many staff. Along with other well-meaning Nigerians, we must continue to give the IDPs hope that tomorrow is going to be better and get them back a normal and decent life.’’

  • Expert seeks bank for power sector

    Expert seeks bank for power sector

    The Group Managing Director of CFL Group of Companies, Mr. Lai Omotola, has canvassed the establishment of a finance development bank for the power sector to address the frequent changes in electricity tariff.

    He said the recently approved 45 percent increase in electricity tariff by the Federal Government not  not the answer to the crisis in the power sector.

    Omotola attributed the increase to the failure of indigenous companies that bought the nation’s power assets to source for the technical partners that could bring in some equities.

    In an interaction with reporters in Lagos, he said Nigerian banks provided over 80 per cent of the $2.6 billion that was used to purchase the power assets in 2013 on short tenor loans.

    He said: “It would have been the other way round and the sector would have been virile, had the investors been mandated to bring in foreign investors who would bring in their equities in terms of the capital mix, about 60 percent equity.”

    He explained that most of the funds were sourced from the banks. It is debt, which is now creating a little bit of pressure on our financial system.We find a situation whereby the Nigerian banks are the major, if not the sole financiers of the acquisition of the power assets.

    “There are two factors with the Nigerian banks. One is high interest rate. Two is the tenure of their funds. These factors mean that commercial banks by their very nature cannot finance the electricity industry. They can only serve to raise working capital incentive. What we find today is that the Nigerian banks are financed in dollar-dominated terms.

    “Already, the interest rate has gone on the high side. Even, the value of dollar to naira had doubled over the space of two years. The resultant effect is that the accounts of our indigenous companies are not doing well with our banks.

    “If their accounts are not doing well with the banks, the ability of the companies will be stalled. Also, the ability of the indigenous companies to pay loans will be stalled. Finally, the ability of the indigenous companies to generate additional funding will be stalled,” Omotola said.

    He said the Nigerian banks could only finance projects for about two or three years after which the banks would want to see their funds coming back, so our banks are not suited to fund the power sector. He faulted a statement credited to the Minister of Power, Works and Housing, Mr. Babatunde Fashola that no bank would want to fund the power industry because of the low tariff, which makes it not bankable before the current controversial increase.

    Omotola challenged Fashola to name the bank he was referring to, noting that if Fashola was referring “to Nigerian banks, the business model of the indigenous companies will not work. The interest rate and fund tenure will not make it work.”

    He urged the Federal Government to set up a finance development bank that is strictly meant for development projects such as power projects. If our indigenous banks will play any role, it will be in the area of providing working capital. For these indigenous companies in power sector to survive, they need very low interest rate with very long-term loan, he said.