The Nation Newspaper

Category: Energy

  • ‘Price Control Act has no relationship with fuel subsidy’

    The Chairman, OTL Africa Downstream, Emeka Akabogu has said fuel subsidy has nothing to do with the Price Control Act, and repealing or retaining the Act will have no effect on fuel subsidy removal programme.

    Akabogu was reacting to a statement made by the Speaker of the House of Representatives, Honourable Yakubu Dogara. Dogara reportedly said by law  the price of petroleum products must be controlled, and that the only legal way subsidy can be removed is to either amend or completely repeal the Price Control Act.

    Akabogu said: “With due respect to the Honourable Speaker, his contention is not entirely correct. Indeed, neither the Price Control Act nor facts as available relating to its operation show any impediment to the removal of fuel subsidy. It is important to note that what the Price Control Act prohibits is sale of “any controlled commodity at a price which exceeds the controlled price.” A necessary precondition to this provision is that the controlled commodity must have had a controlled price fixed in respect thereof.

    “By Section 5 of the Act, it is only the Board that can fix the controlled price by notice published in the Federal Gazette. I am not aware and the Honourable Speaker has not suggested that the Price Control Board has at any time fixed a controlled price in respect of petroleum products.

    “The position, therefore, is that where a price has not been fixed by the Board in respect of a controlled commodity, the Price Control Act is of no moment as far as that commodity is concerned. As far as petroleum products are concerned, no price has been fixed in respect thereof by the Price Control Board. The removal of subsidy on petroleum products, therefore, is not limited, affected nor impacted in any way by the Price Control Board Act.

    “The subsidy, which currently applies to petroleum products, is a function of the Petroleum Support Fund, which has no statutory backing. The Petroleum Products Pricing Regulatory Agency Act only provides for the PPPRA to determine a ‘pricing,” he said.

  • Power improves in Lagos as Egbin exceeds 1000mw output

    Customers of the Electricity Distribution Companies (DISCos) in Lagos have confirmed that electricity supply has improved remarkably when compared to previous supply.

    The improvement, however, was as a result of improved generation at the Egbin Power Plc. The 1320 megawatts (mw) capacity plant is currently producing over 1000mw for the first time since it started operation.

    Many customers in Lagos said the hours of supply have doubled and some areas that have been darkness are getting supply. However, some areas are still battling darkness.

    The management of Egbin said the improvement in generation was due to continued investment and upgrade activities on the plant by the Sahara Power Group and Korea Electric Power Corporation (KEPCO), the new owners of the company.

    It said before the company was privatised in November 2013, the average generation was below 500MW because the plant’s six turbines were in deplorable state.

    The Chairman, Egbin Power Plc, Mr. Kola Adesina said the improved output is a testament of the unfolding success of the privatisation and power sector reform in Nigeria. He attributed the achievement partly to the direct intervention of the Federal Government in its determination to resolve the power crisis. “This is driving the increase in power supply in the nation, boosting socio-economic development. Prior to this, we had invested heavily and had the plant ready to generate power at full capacity but there was no gas to do so. This is indeed a good development for the power sector in Nigeria,” he said.

    Egbin’s Chief Executive Officer, Dallas Peavey said about N50 billion in new capital has been invested in the power company post-privatisation. He noted that the Sahara Power/KEPCO partnership has brought to the power plant an unprecedented level of innovativeness, professionalism, human capital development and continuing investment in new technology.

    Peavey also said the company focused on human capital development for efficient service delivery. He said: “In 2014, 107 young Nigerian graduate engineers were recruited into our Graduate Engineering Programme (GEP). In the true spirit of national development, the engineers were sent to the National Power Training Institute of Nigeria (NAPTIN) for year training under the Graduate Skills Development Programme. They graduated last week and have begun to contribute their quota in strengthening the company and power sector.”

  • Ayade, Okowa inaugurate N3b Fynefield’s fuel depot

    CROSS River State Governor, Prof. Ben Ayade and his Delta State counterpart Dr. Ifeanyi Okowa have inaugurated the 40-million-litre capacity petroleum products depot built by Fynefield Petroleum at the Calabar Free Trade Zone.

    The facility has capacity for 40,734,724 litres of petroleum products. It takes 20,413,594 litres of premium motor spirit (PMS) or petrol, 10,157,073 litres of dual purpose kerosene (DPK), and 10,164,057 litres of automotive Gas Oil (AGO) or diesel.

    Ayade praised owners of Fynefield Petroleum for the huge investment, describing it as a significant milestone and a big boost to the economic and social development of the state and Nigeria. He said the facilities would provide several employment to Nigerians as well as enhance speedy distribution of products across the country.

    He thanked Fynefield Petroleum’s management for choosing Cross River as the location for the depot. “We are very glad you chose to make this huge investment in Calabar. We can assure you that it is a very good decision,” he said.

    Ayade said his administration was already working on the identified challenges. “My administration is aware of some of the challenges that you have mentioned and we are already working on them. I assure you that the evacuation corridor will no longer be a challenge. In no distant time the construction of 240 kilometre highway from Calabar down to ikot-Ogoja will commence, the contract has been signe few days ago.

    “On the issue of draft which I understand has increased your cost of doing business because you are not able to load your vessels to full capacity; this government has thought it wise to set up a special task force to dredge the channel. In 18 months’ time modern vessels will be able to berth in Calabar because we are commencing the construction of a deep sea port,” he added.

    Okowa lauded the project as a huge investment, a source of employment for youths and a boost to petroleum products distribution in the Southsouth and in the North.

    Acknowledging the challenges faced by depot operators in the area, the governor appealed to his Cross River colleague to look into the areas of concern raised, assuring that he was confident that Ayade appreciated the importance of providing an enabling environment for business to thrive.

    Managing Director, Fynefield Petroleum FZE, Gabriel Ogbechie said the depot was built to enrich the distribution chain of petroleum products in the country. He said the depot would, in addition to Cross River, serve neighbouring states, such as Akwa Ibom, Abia, Imo, Taraba, Plateau and others in the North.

    He said the investment was the company’s contribution to the economic development of Cross River State in particular and Nigeria at large.

    “This facility will provide direct employment to over 50 individuals and hundreds indirect jobs because trucks will come to the facility from all over the country to lift petroleum products,” he said.

    On the challenges in the distribution of products, Ogbechie said poor road network was the most critical. He urged the federal and state governments to attend to road infrastructure challenge, especially the Calabar-Ikot Ekpene road and Calabar-Ikom-Ogoja road, which links Cross River with the Northern part of the country.

    He also said due to the low draft of the Calabar River channel, which is 6.4 metres, they had to load 15,000 metric tonnes of products into vessels as against the 30,000 tonnes capacity thereby increasing operational cost.

  • N291b subsidy debt: Govt, marketers in waiting game

    After a stakeholders’ meeting convened by the government early last month when the oil marketers were promised reimbursement of their outstanding fuel subsidy, the marketers are yet to hear from the government. The marketers have also decided to continue to quietly wait despite the government’s “worrisome” silence.

    The Executive Secretary, Major Oil Marketers Association of Nigeria (MOMAN), Mr. Obafemi Olawore in a telephone chat with The Nation, said since the meeting with the government, they (marketers) have not heard from them (government). He said: “We have met with the government and they promised to pay but we have not heard from them since then.” He refused to make further comment on the issue.

    The implication of non-payment of the debt is that the interest has continued to soar. As at the time the Federal Government made the last payment in April, the outstanding was a little above N200 billion but by end of May the Executive Secretary, Depot and Petroleum Products Marketers Association (DAPPMA), Mr. Olufemi  Adewole said the debt has gone up to N291 billion. The major marketers and DAPPMA members are jointly owed the subsidy debt. Therefore, with the increasing interest on the loan, the debt will by now be well over N300 billion.

    The marketers have since May refused to make further imports of fuel. They have insisted that until the government clears the arrears, they will not import. Currently, it’s only the Nigerian National Petroleum Corporation (NNPC) that imports and the Corporation only has the capacity to meet 50 per cent of national demand of about 40 million litres per day of premium motor spirit (petrol). The situation accounts for the recurrence of scarcity and selling of the product above regulated price of N87 per litres by some filling stations especially those owned by independent marketers.

    To ease distribution and make the product accessible to consumers, NNPC gives the marketers part of its imports to sell in their retail outlets. NNPC doesn’t have adequate retail outlets that will enable fuel consumers access the product.

    The Permanent Secretary, Ministry of Petroleum Resources, Mr.Taiye Hassan Haruna at the beginning of last month, had a closed door meeting with the ministry’s agencies and stakeholders in the oil and gas industry including members of MOMAN, DAPPMA, Pipelines and Products Marketing Company Limited (PPMC), Petroleum Tanker Drivers (PTD), members of the National Association of Road Transport Owners (NARTO) and the Department of Petroleum Resources (DPR).

    The stakeholders reached an agreement to ensure steady flow of fuel but with a promise from the government that outstanding subsidy debt would be paid but a month after, the promise has remained unfulfilled.

  • Operators urged to invest in gas processing

    To make gas available, operators in the oil and gas industry have been urged to invest in gas processing facilities.

    The Chief Executive Officer, Seven Energy International Limited, Philip Iheanacho, made the call when he spoke with The Nation in Lagos.

    He said such investment is necessary given the dearth of the product, adding that it is responsible for the shut-in of several megawatts (MW) of electricity. He said many power plants have capacity to generate but no gas. He noted that some of the power plants might deteriorate if they are starved of gas and kept idle for so long.

    He said: “For us to meet the amount of gas required by the power sector there is urgent need for more investment in gas processing. I also feel concerned that some of the power plants may begin to depreciate in the next few years if we don’t get gas to run them in time. Once you are completing the construction of a gas plant there is need to introduce the gas and run machinery steadily.

    “There is possibility the power plants will deteriorate in few years because when you build a power plant some metallic particles are competing with it, which implies that you start supplying it with gas to enable it run on a continuous basis.”

    He said the immediate past government did well in setting a framework for gas. He gave them kudos in the power sector reform, noting that the changes would take time to materialise.

    He urged the government to work with stakeholders in the oil and gas sector who are interested in gas development and look at making gas projects more viable and bankable. There was also the need to look at optimising credit enhancement for power projects in order to encourage investment, he added.

    Iheanacho called on the government to look at facilitating access to gas market. “We should as a country be doing annual bid round for oil and gas acreages. It is not a big deal doing it on a regular basis because that will bring in those interested in investing in the sector.

    “If we have more valuable projects, we will have access to the banks. Government has to look at more innovative ways to attract capital by looking at innovative ways of creating more projects in the upstream sector,” he added.

    Iheanacho said there is huge potential in gas business in Nigeria because it has a huge population that needs energy, and also has abundant deposit of hydrocarbon resources.

    However, the infrastructure that will connect the population demand to the resources is still missing, he said, adding gas is fundamental to solving our power problem in Nigeria.

    He said his company is engaged oil and gas exploration, development, production and distribution, and is committed to become a leading supplier of gas to the Nigerian domestic market for power consumption. We have built capacity to attract medium to long term investment funds from reputable international and local financial institutions that share in our optimism to harness Nigeria’s gas resources.

  • Why Lagos is not yet among oil producing states

    Lagos State’s hope of joining the league of oil producing states this year may have been dashed following the crash in oil price. Crude price fell from an average of $100 per barrels to below $50 per barrel by first quarter of this year.

    During the third quarter of last year, a consortium led by Yinka Folawiyo Petroleum Company Limited took a final investment decision (FID) to develop the first phase of the Aje field, shallow water asset in oil mining lease (OML 113).

    But, after taking the FID for the development of the $220 million project, oil price fell and it is only recovering gradually, standing at an average of $60 per barrel.

    The first phase of the development was anticipated to produce 10,000 barrels of crude oil daily but the price dip forced many  firms to review their work programmes and workforce.

    The former Lagos State Commissioner for Energy and Mineral Resources, Mr. Taofiq Tijani, told The Nation that low oil price coupled with non-passage of the Petroleum Industry Bill (PIB) stopped the reasons there is no exploration for fresh oil discovery.

    He said besides low oil price  and eforts by Folawiyo, Afren and Lekoil in Lagos, oil business is basically a Federal Government issue. Lagos is not a regulator. The oil and gas business in Nigeria is on the exclusive legislative list.

    “The only benefit Lagos State will have is, once those companies start producing, it can be called an oil producing state and definitely it will get the benefit of derivation and that is what the state is looking forward to.

    “The state government has also established an oil and gas agency – Ibile Oil and Gas Corporation. The government has also appointed a general manager to head that agency. The agency too can go out and look for technical partner to have an asset that it can develop and also get revenue for the state from such areas just like other states such as Delta and Bayelsa States,’’ he added.

    He also said exploration have not increased over the years because the Federal Government has not put the right legislation in place to encourage people to come and carry out exploration, and principally because the National Assembly has not concluded the PIB.

    “I believe that once the PIB is concluded and passed, it will encourage people to come and invest in the oil and gas sector because they will be in the know of the fiscal policies in place. You have to know the fiscal policies or fiscal regime before you do your economic analysis. I think this is a major factor that is holding down exploration. Hopefully this new government will do anything possible to rectify this problem in order to stir up exploration activities,” he added.

  • Firm unveils gas technology

    A FIRM, has developed a natural gas technology using – a dual fuel High Pressure Direct Injection (HPDI) for off-road trucks and locomotives.

    MANTRAC Managing Director Edmund Martin-Lawson said users of high horsepower applications, such as those in mining and locomotives need the technology because of its environmental and financial benefits to them.

    The firm also introduced a line-up of dual-fuel products called ‘Dynamic Gas Blending’ (DGB) kits. These products, which leverage Mantrac’s high-horsepower diesel engines and burn a range of fuels including field gas and liquefied natural gas (LNG) are available in Nigeria now.

    HPDI and DGB retrofit kits according to the company, are available to customers of caterpillar engines, standing behind the performance to guarantee the performance and reliability of its gas solutions.

    Application of the utility gas generator would ensure efficient use of resources, reduced energy costs as well as increased revenue opportunities for the end users.

    He  said the base load generator set power plants could range in size from just a few megawatts (MW) for a small island to cover 100mw for larger metropolitan areas. The power plants could be built with many two to six megawatts size class generators operating in parallel as a central source of electricity for the local electric grid.

    Martin-Lawson said power plant solutions could operate at the highest point of between two and 50Mw and ranges from 100 to 33,000 hours yearly.

    He said most 100 hour-per-year plants would be diesel fuelled and cover a super peak while natural gas fueled power plant economics favour higher hour applications and longer duration peak demand.

    He said electric utilities could operate gas engine generators continuously to serve base electrical loads.

    This, he said, is, particularly, advantageous in the absence of a reliable centralised power plant, or where the economics and availability of natural gas fuel are key drivers.

    He said cat utility grade parading switchgear would operate multiple generator sets together and in parallel with the main utility grid.

    According to him, the power produced from these generators during the peak times of day could be transmitted to meet local customers’ needs or sold in open, real-time markets at the spot price for a profit.

    It also provides utility scale gas rental power modules through the cat rental power that could be quickly sent and installed to make up immediate power shortages, he added

    He said natural gas presents huge opportunities as its availability increases, along with the development of technologies to use in more products.

    He said the company was committed to developing technologies that would boost growth in natural gas in the country.

    He said the company provides caterpillar generators and engines for the oil and gas sector and industrial users with a range of output to 14,000kva, including gas applications.

    According to him, the options of gas-powered generator sets give the industrial customers up to 70 per cent saving on running costs

    The generator sets, he said, were made to run on abundant gas sources with fuel flexible options, ranging from 20 to 9700 eKW, with customisable options to match your power needs, adding that the generator sets are easy to install.

    He noted that the country’s economic growth and industrialisation drive depend on the amount of energy available.

    He said with the increased economic activity in the country and as the world evolves into a more digital economy, there is need to ensure reliable power supply in the country

  • Firm trains employees in Ghana

    FMC Technologies has trained 16 of its employees from across Africa at a week-long leadership programme in Ghana.

    The management course, designed by FMC Technologies University’s Talent Development group, was customised to fit the diverse population as well as the logistical requirements for the region. The university, launched in 2012, gives employees the opportunity to advance their skills.

    Management Essentials include modules on Transition to Leader; Cultural Diversity; Human Resources Fundamentals and Crucial Conversation. Participants were from a variety of professional backgrounds, job responsibilities and cultural backgrounds.

    Ajikere Abuchi, Surface Operation Supervisor in Port Harcourt, said: “The training was the best I have ever had in my career and touched on every aspect of what I need to carry out my leadership responsibilities. In my 14 years of working with FMC Technologies, I have found that the company has a great regard for staff training and development. It gives staff the flexibility to acquire knowledge from other departments and encourages employees on their career paths, and that contributes to a conducive working culture and environment.”

    “The course was a great success, and a positive step toward strengthening the nationalisation of FMC Technologies’workforce. The focus on collaboration between diverse cultures during the training resulted in building strong relationships and networks. Equally importantly, the company is building momentum in the nurturing of strong leaders from countries such as Angola, Egypt, Ghana and Nigeria,” he added.

    The company said it focuses on developing people and skills across the continent, with future programmes on mentor/coaching; collaboration with educational institutions in the region; career development (job rotation/changing assignments); project management training; and additional leadership programmes.

  • FCT wins NNPC’s 2015 quiz

    The Federal Capital Territory  (FCT) representing the North Central Zone has won the 2015 NNPC annual national quiz competition.

    The contest was won by three students from some secondary schools in the FCT. They will enjoy university scholarships to be sponsored by the Nigerian National Petroleum Corporation (NNPC) in any institution.

    Speaking during the grand finale of the event at the NNPC Towers, Abuja, the Group Managing Director of the Corporation, Dr. Joseph T. Dawha, felicitated with the winners, assuring of the readiness of the NNPC to sustain the programme to mentor the leaders of tomorrow to succeed in their academic pursuits.

    Dawha said the competition, which is the 14th edition, has lived up to the objectives for which it was instituted, adding that most of the winners of the competition in the past have graduated with flying colours from various universities across the country.

    According to him, since the competition made its debut 14 years ago, it has helped in developing the interest of young Nigerians in studying science and technology courses in tertiary institutions across the country and beyond. He said the scholarship scheme has not only helped the development of science and technology in the country but has also gone a long way in assisting the nation’s future leaders to prepare towards contributing their quota to national development.

    He assured that NNPC would not relent in supporting this competition and other community-based efforts aimed at building national human capacities and capabilities stressing that the NNPC would continue to execute many more strategic community development projects, particularly those that would improve Nigerians.

    Dawha announced the increase of the bursary from N100,000 to N250,000 yearly for all NNPC scholars in their first degree programmes.

    The Permanent Secretary Ministry of Petroleum Resources, Mr. Taiye Hassan Haruna represented by the Director Reform and Coordination Mrs. Edna Eneh commended the NNPC for giving the young ones the opportunity to compete at the national stage stressing that hard work is the only way out of hard life.

    The Permanent Secretary Ministry of Education Dr. MacJohn Nwaobiala represented by Mrs. Justina Ibe, Director Support Services in the Ministry applauded the NNPC for encouraging science based education, saying it would help sustain the programme of the Federal Government.

    A pioneer winner of the NNPC quiz competition, Modungwo Andrew Nwabu, expressed gratitude to the NNPC for the award of scholarship that saw him through his university education and called on the winners to do the Corporation proud.

    The Group General Manager, Group Public Affairs Division, Ohi Alegbe said the NNPC as a responsible and responsive corporate citizen, would continue to contribute its quota to adding value to the educational sector through its annual quiz competition.

    The list of finalists for the competition were made up of the champions of the six geo-political zones, including Akwa Ibom for the Southsouth, Anambra for the Southeast, FCT for the Northcentral, Lagos for Southwest, Katsina for Northwest and Gombe for Northeast.

    The contest was in English Language, Mathematics, Chemistry, Physics, Biology and General Knowledge.

  • ‘Indigenous refining solution to fuel scarcity’

    To find lasting solution to the lingering fuel scarcity, the Federal Government has to ensure the refineries work at full capacity and new ones built to support them.

    The former Executive Secretary, Petroleum Products Pricing Regulatory Agency (PPPRA) and the immediate past Executive Secretary, Petroleum Technology Development Fund (PTDF), Dr. Oluwole Oluleye, told The Nation that ensuring the refineries work was key to self-sufficiency in petroleum products supply.

    He said the way out of the protracted fuel scarcity is ensuring minimal importation and making the refineries work. “One thing is that the Nigerian economy no matter what anyone says has been expanding. The refineries are at best with the current capacity that is on ground. I think it is approximately 18 million litres per day.

    ‘’During my time, it was 30 million litres per day that was required, which meant that about 12 million litres was imported. But it was more than that because the refineries were not working at full capacity. So what we had then was probably about 12 million litres and we were bringing in about 18 million litres. The key thing is to get the refineries working, get additional ones in, so that whatever we require within the economy is produced within the refineries in the country.

    “There must be minimal importation. It is only the deficit that can actually be imported. So, the refineries have to be given the latitude and capacity to function very well. From what I read, I think with Mr. President’s body language even though he has not tinkered with anything, you will understand that the refineries will start working from this month. By the time, he brings out his policies I think we might just be at full production and whatever will be imported will be very minimal. I’m optimistic about that.”

    On how to reduce fuel subsidy, considering that during his tenure at the PPPRA, subsidy payment was about N200 billion until 2010, when it shot up to N280 billion, it has since gone up to about N2 trillion yearly.

    He said: “I wouldn’t speculate on what has happened, I can only speak for the period that I served. During the period that I served, marketers must give us notice of readiness; they must let us know when the vessels would come in and I would station staff at various jetties, depots and as these products come in, my staff are in and I also make sure that DPR and the auditors (Ithink Akintola Williams then) were around. They saw the product and while the products were coming in, they take the figures and send to the headquarters in real time. Having the aforementioned monitors present, quality and accuracy are ensured. We all worked in unison to ensure that things worked out well and we were able to keep subsidy figures down as much as possible. I understand some people don’t bring in products but get paid, I don’t know how they get around that but that never happened during my time.”

    Oluleye frowned at the frequent changes of chief executives at the PPPRA after he left office in 2009. He was the Executive Secretary of PPPRA between 2003 and 2009 but between the time he left and end of 2013, the agency has had four chiefs.

    He said: “So far, I think I have been the longest serving. I don’t know what I did right or wrong but there has been greater turnover of Executive Secretaries in the agency. I may be wrong, but the Act establishing the agency says it reports to no one other than the President because of the sensitivity of petroleum products prices and I can only speak for my period.

    “While I was working there, I had the full backing of the Presidency and we just tried to do what was right. Mr. President never interfered, he just felt that we knew what we were doing as he kept a lead on the amount of subsidy that was to be given out, and that was why you saw the PPPRA coming out incessantly to adjust prices trying to make the template very plain and insisting that those who cannot stay in the industry should exit.

    “He was not pampering anybody to stay to import. It was free entry and free exit during the period. So he gave us that latitude but I don’t know what happened when I left but with the high turnover in executive secretaries, there must be either some differences in policy issues or directions. There was just some instability.”