The Nation Newspaper

Category: Energy

  • Why power contribution to GDP is low

    Infrastructural bottlenecks, such as obsolete gas pipelines, vandalism, inability of the turbines to access gas for production, dismal state of hydro power equipment, and irregular power supply, have hindered job creation in the electricity and other sectors.This is also affecting the industry’s contribution to the nation’s Gross Domestic Product (GDP), the Head, Oil and Gas Department, Ecobank Nigeria Plc, Mrs. Olufunke Jones has said.

    She mentioned other issues to include poor funding of the sector occasioned by the reluctance of banks to lend to the power firms, and faulty distribution equipment, adding that the output of the sector has remained low, despite its privitisation a few years ago.

    Speaking during a stakeholders’ forum in Lagos,  Jones said unlike the petroleum industry, which  provides 70 per cent of the Federal Government’s earnings  and further contributes over seven  per cent to nation’s Gross Domestic Product,  the power sector has not.

    She said: “The Federal Government, the Ministry of Power, the Nigerian Electricity Regulatory Commission (NERC), the Transmission Company of Nigeria (TCN), the power firms, and other relevant stakeholders need to develop a template that is robust, adaptable and good enough to facilitate improved power supply.  When this happens, the potentials of the sector would be galvanised to create employment. Anything short of this means the sector would not be able to contribute greatly to the GDP.’’

    She said  renewable energy would provide more than 40 per cent of electricity requirement in the West African region by 2040, urging the Federal Government to maximise the opportunities in the renewable energy.

    “By 2040, the region is expected to generate 40 per cent of its electricity from renewable energy.  Nigeria needs to localise power, by using available natural resources. Where there is sunlight, coal, wind and other renewable energy sources, the country should make use of them. The combination of  both the off-grid and on-grid  means of  generating power would help in improving power supply, as well as contribution to the economy.’’ she added.

    According to her, improvement in the operation of the West African Gas Pipeline project, and others initiated to develop power and petrochemical industries is key to the growth of the region.

    The Nigerian Electricity Regulatory Commission had in December 2014, inaugurated an 11-man advisory board that would manage deployment and use of the regulation in every facet of the power sector.  NERC’s former Chief, Dr Sam Amadi said the development was aimed at creating opportunities for Nigerians to participate actively  in the sector and further improve contribution to the nation’s GDP.

  • Nigerdock, HHI complete Chevron’s $30m oil platform

    Nigerdock, HHI complete Chevron’s $30m oil platform

    •Set for installation offshore 

    The 2,700 ton Sonam Non-Associated Gas Wellhead Platform (Sonam NWP) built by Hyundai Heavy Industries in partnership with Nigerdock in Lagos for the Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited (CNL) Joint Venture, has been completed and ready for load out and sail to Sonam field for installation.

    Speaking at its inauguration at Nigerdock’s fabrication yard on Snake Island, Apapa, Lagos, the Chairman/Managing Director, Chevron Nigeria Limited, Clay Neff, represented by the company’s Director for Business Services, Emmanuel Imafidon, said the project accomplished in over 2.8 million man-hours, was done without injury or incident.

    Neff said the Sonam non-associated gas (NAG) platform will enable the delivery of up to 300 million standard cubic feet per day (mmscf/d) of gas from Sonam to Escravos gas plant. This project will enable delivery of additional gas supply to the domestic market, which will help to significantly boost the Nigerian economy, he added.

    “In addition to the impressive safety record of over 2.8 million cumulative man-hours without an injury or incident, the Sonam NAG Well Platform project, as one of CNL’s Domestic Supply Gas Obligation (DSO) projects, has and is still contributing immensely to the development and sustenance of Nigerian content,” he added.

    The Chairman of Nigerdock and Jagal Group, Mr. Anwar Jamarkani said the platform has a height of 28 metres, width of 40 metres and a length of 50 metres, making it the largest topside module ever built in Nigeria. Because of the volume of gas the platform will produce, he said the project is a major milestone as it will provide feedstock for the much needed power generation.

    He said: “The project will boost power generation ability and provide the much needed power for Nigeria’s domestic and industrial needs. It will significantly eliminate gas flaring from the project in fulfillment of government’s gas flaring policy, and attract gas investment opportunities thereby boosting this administration’s effort to diversify the economy from dependence on crude oil proceeds.

    “The DSO project is a major milestone in government and industry’s quest towards achieving increased local content in the nation’s oil and gas sector. In the course of the project, Nigerdock recorded several remarkable achievements leveraging Nigerian human and material resources, and maintaining its commitment to investment in equipment, infrastructure and technology.

    “We are truly humbled to play a part in such landmark achievements which will no doubt have a transformative effect on our country. However, we believe we can do much more and raise the bar.”

    The Minister of State for Petroleum Resources and Group Managing Director of NNPC, Dr. Ibe Kachickwu represented by General Manager, JV Oil Operations, National Petroleum Investment Management Services, Mrs. Kate Iheme said the project created not only jobs but also skills for Nigerians. “Manpower is a crucial aspect of oil and gas projects, and we in NAPIMS are committed to capacity building in Nigeria. Investments in projects such as Sonam will address the issue of skilled capacity deficit,” she added.

    The representative of Director, Department of Petroleum Resources, Antiga Ikhalo and the Executive Secretary, Nigerian Content Development and Monitoring Board, Denzil Kentebe, lauded the project and urged other multinational oil companies to do their projects in-country.

    Kentebe said achievement recorded in Sonam topside was no surprise as in the past few years, the Board had been to Nigerdock to celebrate many outstanding projects such as Usan and Ofon for Total, Abang and Itut topsides for Exxonmobil and Meren and Sonam topsides for Chevron just to mention a few.

  • Eko DisCo promises meters

    Eko DisCo promises meters

    The Eko Electricity Distribution Company (EKEDC) is committed to providing meters to its customers, irrespective of the challenges in the sector, its Chief Operating officer, Sam Nwaire, has said.

    He said the Federal Government gave the power distribution companies (DisCos)  a five-year term  (2013-2018)  to supply meters to their customers, adding that the problems in the industry  have prevented many firms from meeting the date.

    He said: “The Federal Government gave a five-year term for the supply of meters to the DisCos. The agreement was signed in November 2013, but the date was brought back to November 2014 due to some problems in the industry.’’

    Speaking during a stakeholders’ forum in Lagos, he said EKEDC is customer-centric, adding that the firm is doing its best to solve the metering problems and provide electricity to its customers. “We operate an open-door policy, as evident in the ways and manners we listen to our customers and attend to their needs after we have investigated their claims.  We have introduced a number of measures in order to satisfy our customers. They include providing meters, transformers and other equipment to them,” he added.

  • MAN, LCCI express concern over new electricity tariff

    MAN, LCCI express concern over new electricity tariff

    The Organised Private Sector (OPS), including the Manufacturers Association of Nigeria (MAN) and the Lagos Chamber of Commerce and Industry (LCCI), has expressed concerns over the new electricity tariff planned to begin on February 1 as supply has not improved and the pending court order.

    The President, Manufacturers Association of Nigeria (MAN), Dr Frank Jacobs, said the body is waiting to see whether the Nigerian Electricity Regulatory Commission (NERC) would disregard court order by going ahead to implement the new tariff in February. He said any attempt to implement the tariff would force some manufacturers out of business.

    He said: “It is not all the manufacturers that can set up a power plant. Many are using power from the grid for production together with generators. Do you know how much the 45 per cent increase in tariff translates to in naira in a week, month, quarterly, and yearly? It is a lot of money, and I do not think the sector can cope with this,” he added

    Jacobs said the situation is appalling, as many operators have been forced out of business in the last 10 years, due to inadequate power supply.

    Director-General, Lagos LCCI, Mr. Muda Yusuf, said the new tariff would worsen the condition of the operators of the OPS in the country, if urgent measures are not taken to address problems bedevilling the power sector.

    He said despite the removal of fixed charges in December, last year, by the commission, consumers are still groaning under huge cost of accessing electricity for production activities.

    Also some corporate and individual consumers are not oblivious of the fact that they will face difficulties meeting their energy obligations as from February this year. Already, consumers are groaning over what they described as ‘making frivolous payment’ in form of bills to the power distribution companies (DISCOs) since they are unable to access power regularly.

    Some consumers, who spoke to The Nation, expressed concerns over the new tariff, that have been increased by 45 per cent, by the commission, to reflect the cost of producing electricity in the country.

    A lawyer,  Mrs. Ponle Oluwarotimi, said consumers are heading for a more challenging period, going by the  decision of NERC to implement the new tariff, albeit, disregarding the order of the House of Representatives stopping NERC from introducing and implementing its tariff.

    She said the country is experiencing poor power supply, coupled with the fact that the economy is bad. “For the Commission to justify the 45 per cent increase in tariff, there must be an improved power supply in Nigeria. Given the fact that the sector is in a dire strait, with no hope of improving soon, consumers must be ready to pay huge bills, while at the same time, experience poor power supply,’’ she said.

    She said the situation is unhealthy for the economy that is struggling to grow.

  • Total refuses to cut jobs, despite oil price crash

    Total refuses to cut jobs, despite oil price crash

    French energy company, Total expects a drop in last year’s results but does not plan to cut jobs as peer British Petroleum has done to weather low oil prices, its Chief Executive, Patrick Pouyanne, said this during an interview with reporters.

    According to Reuters, he said  the group had the financial capacity to weather low oil prices, adding that Total like its peers was being hit by the fall in crude prices and that the company expected its results to drop by 20 per cent.

    A Total spokesman said Pouyanne was referring to the company’s full-year 2015 results, which will be presented on February 11.

    “We are resisting, but we are taking a hit,” he said.

    “We have the financial capacity to withstand the price volatility in crude. We know that in commodities, there are cycles. Yes, this cycle is very violent, down 20 per cent in less than a month, 60 per cent in a year.”

    Asked if Total would cut jobs, Pouyanne said: “No. We are used to these cycles, and jobs cannot be the adjustable variable because I’ll need these workers when the price goes back up, and it will go back up someday. I don’t know when.”

    British energy company BP said last week that it planned to slash five per cent of its global workforce, about 4,000 jobs.

    Pouyanne said Total had decided instead  not  to replace all retiring staff and to hire fewer people.

    Total shares were up 2.1 per cent, boosting France’s blue-chip CAC 40 index and tracking the sector index, which was also up by more than per cent.

  • Ibadan DisCo records N3.2b revenue shortfall, says MD

    Ibadan DisCo records N3.2b revenue shortfall, says MD

    The Ibadan Electricity Distribution Company (IBEDC) recorded a shortfall of N3.2 billion in revenue collection last year even as the company is owed N5.9 billion by customers, especially the military and government’s ministries, departments and agencies (MDAs).

    The Managing Director, IBEDC, John Donnachie, told reporters at a briefing in Ibadan that they are operating in a tough economic environment but still try to be open and transparent in their operation and customer service.

    He said since inception in November 2013, the company has not been able to collect bills enough to pay for the energy it bought. In other words, the company has been recording shortfalls in expected revenue since it started, adding that even with the new tariff planned for take-off next month, the company will not break even until 2017.

    Donnachie noted that the cause of the shortfall in revenue is caused by the industry’s woes such as energy theft. According to him, 50 per cent of bills generated are not collected owing to energy theft including bypassing of meters.

    He stated that the company will continue to ensure customer satisfaction, adding that 100,000 new meters have been installed apart from the ones used to replace obsolete and dysfunctional meters. He said the company plans to install 200,000 new meters this year, out of which 90,000 have been received. He said about 65 per cent of the company’s customers are still unmetered.

    “We require N7.5 billion annually for metering and N3 billion annually for network expansion, but we need fund to do that and we are pleading with the government MDAs and the military to help us settle their debt for us to serve them better,” he added.

    He appealed to all the customers to pay for the electricity they consumed pledging that the new tariff has been spread over 10 years so that it wouldn’t be burdensome to them.

    On the debt profile, Donnachie stated that the company is owed N5.9 billion. This is verified debt, he added. He said 97 per cent of the debt is owed by government ministries, departments and agencies (MDAS). Out the debt owed by the government debtors, the military alone owes N4 billion as at end of July last year. This huge debt is affecting our operations, he added.

    He noted that the distribution companies are collecting agents for the entire value chain, adding that out of the entire collections, only 25 per cent is due to them, while the remaining 75 per cent go to other stakeholders including the generating companies (Gencos), Transmission Company of Nigeria (TCN), the regulators and the gas suppliers.

    He said: “We need to invest fund in the sector to improve our distribution networks and provide for adequate metering system. The liquidity issues make it difficult to resolve the problems of inadequate generation and transmission constraints. More importantly is the fact that distribution companies are unable to meet the operational costs of distributing power to their numerous customers, payment to generating and transmission companies, let alone their capital investments,” he said.

    The Deputy Managing Director, IBEDC, John Ayodele said the capital expenditure allowed for IBEDC is inadequate for its operations, especially given the size of its metering and network improvements and upgrade requirement as well as reduction of Aggregate Technical, Commercial and Collection (ATC&C) losses.

    “The reviewed tariff will assist us to quickly address the problem of estimated billing which today represents over 70 per cent of customers’ complaints and has been one of the reasons for various protests experienced since we took over two years ago.

    “In view of the above, we have to provide funds upfront to pay for investment made each year and expects to recover the same plus any interest over the life of the assets,” he said.

  • We are not for strike, says IPMAN

    The Independent Petroleum Marketers Association of Ni-geria (IPMAN) has refuted reports that the association will embark on strike. Some IPMAN members had  threatened that  the association would embark on a nationwide strike over perceived imbalance in the sharing and distribution of petroleum products to marketers.

    IPMAN National Operations Controller, Comrade Mike Osatuyi, in a statement debunked the strike threat. He said IPMAN has not given any ultimatum on nationwide strike.

    Osatuyi said the association learnt that some marketers who are not members of IPMAN are spreading the misleading information among the public. He said: “Our attention has been drawn to a media briefing by some marketers parading themselves as IPMAN members, calling for a nationwide strike over petroleum product sharing formula.

    “The national body did not plan any strike. We, the national body of the union is not planning to embark on any strike, because we don’t have any issues with the government whatsoever. I appeal to Nigerians and all independent marketers to go ahead with their normal businesses and avoid creating panic buying in the market.”

    He lauded the leadership of the Nigerian National Petroleum Corporation (NNPC) over the petroleum distribution formula, adding that IPMAN has not been in  anyway slighted in the present sharing and distribution formula. “Independent marketers were given the opportunity to buy products at government approved ex-depot price which enabled us sell at government’s approved pump price of N86.50 per litre.”

    Osatuyi praised NNPC over petrol intervention scheme given to marketers to augment distribution, urging government to make the product available to marketers.

    He commended the steps taken by President Muhammadu Buhari to reposition the NNPC for greater efficiency. He said the measures inspire hope and confidence in the future of the nation.

    He noted that the Minister of State for Petroleum Resources and Group Managing Director, Dr Ibe Kachikwu, is a renowned oil industry expert with the requisite global exposure, competence and integrity.

    He said it was important for all IPMAN members to showcase what government was doing about special intervention fuel supply to marketers, which came to their stations at no extra cost. The Federal Government, through NNPC/PPMC, should be lauded for these special schemes.

    “The only way to ensure total eradication of queues in the country is when this intervention of petrol supply is sustainable,” he said.

    Osatuyi urged NNPC/PPMC to ensure sustainability of supply so their members could sell at approved price of N86.50 per litre.

    A group that identified themselves as IPMAN members had issued a 14-day ultimatum to the NNPC to regularise the present formula or risk stoppage of operations.

  • ‘How to mitigate pressure of US gas market control’

    Developing Olokola multi-billion dollar liquefied natural gas project to attract foreign direct investment (FDI),  increasing investment in the liquefied and petroleum gas (LPG) sub-sector, and fertiliser plants, among others, are some of the ways the Federal Government can galvanise the potential in the domestic gas market and further reduce impact of the  impending dominance of the United States in the global gas market, experts have said.

    The experts, including Dr Adebayo Ayoade of the University of Lagos (UNILAG) and Prof Adeola Akinnisiju, the former President, International Association of Energy Economics ( IAEE), said the launch of the first cargo exporting liquefied natural gas (LNG) into the international market, last week by the US, and the country’s resolve to produce 84.3 million tons of gas yearly would not have much impact on Nigeria’s LNG market, if the Federal Government can grow  the nation’s domestic gas industry well.

    Ayoade urged the government to focus more on developing the gas potential locally in order to generate more revenues, instead of seeing export of gas, and other initiatives implemented by the US as a threat to Nigeria’s foreign earnings. He said Olokola gas project holds huge potentials, adding that it would earn more revenues for the government when it is well developed.

    Ayoade, a Senior Lecturer in Energy Law, said Nigeria would be under pressure to reduce the price of its gas in the event that more countries buy gas from US. He said: “To avert pressure from the impending US dominance of the oil and gas market, Nigeria has to look for more buyers, while at the same time, develop its domestic gas market. One way of doing this is to develop Olokola oil and gas project to a level that it would attract foreign direct investments into Nigeria.”

    Also, Akinnisiju said US gas supply in the market would outstrip demands in the nearest future, urging the Federal Government to fashion out plans of increasing gas exports for growth. Currently, Nigeria exports 22milliion tons of gas, far below the 84.3 million tons, which US is planning to produce annually.

    He said: “Anywhere there is an increase in supply of a product and the demand is not increasing at the same time, there is going to be a problem. Now that US is planning to increase its gas supply to the market.”

    Akinnisiju said the larger percentage of gas produced by Nigeria is associated in nature, stressing that the country would not find it easy to produce huge quantity of natural gas.

    The Nigeria Liquefied Natural Gas (NLNG) is a major contributor to national earnings, and has generated $85 billion (about N17 trillion) from exports since its inception 15 years ago. Therefore, efforts by the Federal Government to develop gas market locally would bring in more money, which is good for the country.

  • NLNG faults ActionAid’s claim on tax incentives

    NLNG faults ActionAid’s claim on tax incentives

    The attention of Nigeria LNG Limited (NLNG) has been drawn to a report by ActionAid, an NGO, which focused on the alleged impact of tax breaks on social services in Nigeria.

    The report made several references to Nigeria LNG Limited and purported tax losses to the government totalling $3.9 billion as a result of tax break granted to the company.

    According to the General Manager, External Relations Division Kudo Eresia-Eke, NLNG the claim is false and misleading. It is most instructive to note also, that ActionAid itself admits in its report that its figure is a ‘hypothetical’ one, he said.

    “Contrary to ActionAid’s claim, the reality is that the Federal Government’s initial investment of $2.5 billion, bolstered by the associated tax incentives, has so far yielded over $33 billion in the form of dividends, taxes and feedgas purchases for the country over the past 16 years, with an additional $5 billion accruing through corporate spending on local goods and services during the same period. The company paid $3.6 billion in Company Income Tax and Education Tax between 2014 and 2015. This is in line with NLNG’s corporate vision to help build a better Nigeria.

    “Nigeria LNG Limited was established at a period when the LNG technology was still very new in Africa. Indeed, the establishment of NLNG made Nigeria the first country in Sub-Saharan Africa to possess such new technology and the second such country in all of Africa. Considering the pioneering nature of such a company in Nigeria, as well as the huge  investments required, running to several billions of dollars in foreign investments, NLNG was granted a 10-year tax holiday by the government of the Federal Republic of Nigeria under the provisions of the Nigeria LNG (Fiscal Incentives, Guarantees and Assurances) Act, CAP. N87, Laws of the Federation of Nigeria, 2004 (“NLNG Act”).

    “The concept of tax holidays are not unusual practice in the global business community. Indeed, Angola has notably offered as much as 12 years tax holidays to encourage investments in their LNG industry, while other countries like Oman, Malaysia, Qatar and Trinidad have offered up to 10 year tax holidays to attract LNG investments.

    “Additionally, more generous tax incentive schemes currently exist in free trade zones in Nigeria where participants are granted absolute exemption from all forms of taxes and levies chargeable by any level of government, in perpetuity. Several well-known corporations in the country have and are currently investing in these zones (in logistics, infrastructure and refineries, to name a few of such ventures) on the basis of such perpetual and overarching tax incentives.”

    He noted that NLNG’s tax holiday period was from 1999 to 2009 and, contrary to the observations in the report, is expressly provided for under Section 2 of the NLNG Act, an Act of Parliament. During that period, NLNG grew from an initial investment of two trains to six train facility, as the construction of the additional trains was funded, mainly, by approximately $3 billion of returns generated from the project during the tax break period. The current total valuation of the now six train plant is $16 billion.

    At the expiration of the tax holiday  for NLNG, the company did not have taxable profit for the 2010 to 2012 financial years due to unrelieved Capital Allowances on qualifying fixed assets acquired during the pioneer period. The Capital Allowances were duly applied in line with the provisions of the NLNG Act and Companies Income Tax Act, CAP C21, Laws of the Federation of Nigeria, 2004, he added.

    ‘’Regardless, NLNG paid Education Tax of $65.08 million, $107.04 million and $118.59 million for the 2010, 2011 and 2012 financial years,’’ he said.

     

     

     

     

     

  • ExxonMobil gives N100m projects to Erha communities

    ExxonMobil gives N100m projects to Erha communities

    ExxonMobil affiliate, Esso Exploration & Production Nigeria Limited (EEPNL), in production sharing partnership with Nigerian National Petroleum Corporation (NNPC) and its co-venturers on the Erha North Phase II Development (EPC2), Shell Nigeria Exploration & Production Company (SNEPCo), has built and donated community assistance projects worth over N100 million in six communities in Lagos, Ondo and Rivers states.

    The projects include a community town hall and water purification plant in Onne, Rivers State; Water purification plants for Igbologun 1 & 2, Igboeseyore and Igbosu communities in Lagos State and the reconstruction of a community market and water purification plant for Igbo-Egunrin community in Ondo State.

    Speaking at the hand-over of the projects to the community in Ondo State, the Project Executive, EEPNL, Mr. John Unietis, who was represented on the occasion by the Technical Manager, EPC2, EEPNL, Dr. Tunji Obawole, said the projects signified “yet another important step we have taken as an organisation to improve living conditions in communities across Nigeria through investment in such infrastructure as clean and safe drinking water, as well as the promotion of economic well-being of these communities through various support schemes and initiatives.”

    He said the water purification plant “is meant to improve the overall well-being of the community through the provision of clean, potable water thereby reducing the incidence of water-borne diseases in the community, along with their negative consequences.” He added that the project was based on the Meckow Aquapur technology, which meant the plants could be powered by solar energy; could purify over 24,000 litres of water daily and is also durable.

    Obawole further said EEPNL undertook the reconstruction of the Igbo-Egunrin community market to improve economic activity in the community, adding that as “the major market in the Ilumeje axis of Ilaje local government area, we believe the reconstructed market will help improve the economic well-being of the communities it serves through the provision of this enhanced operating environment.”

    Ondo State Governor, Dr Segun Mimiko, who was represented at the event by the Chairperson of Ondo State Micro-Credit Agency, Princess Banke Sutton, expressed appreciation to ExxonMobil for taking the lead to come to the community’s assistance. He also commended the company for supporting the  governor’s vision of building conducive market spaces for traders.

    She said her agency would  offer loans to traders to improve their businesses.

    The traditional ruler of Igbo-Egunrin, Oba Philip Kalejaiye, thanked ExxonMobil for the projects, noting that they would uplift the conditions of the community as well as improve economic activity through the reconstructed market.

    Erha North Phase 2 Development is an extension of the Erha sub-sea system and infrastructure. It is part of the Erha floating production, storage and offloading (FPSO) vessel.