The Nation Newspaper

Category: Energy

  • Facts, figures on alleged $20b missing oil fund, by PwC

    Facts, figures on alleged $20b missing oil fund, by PwC

    Is $20 billion oil cash missing? No, says accounting giant PriceWaterhouseCoopers (PwC), in its forensic audit report on the Nigerian National Petroleum Corporation (NNPC). It said $1.48 billion is missing, and directed NNPC to refund the cash to the Federation Account. It also also recommended how NNPC can be efficiently run to forestall a recurrence. EMEKA UGWUANYI reports.

    After about a year–and–a-half, the allegation of stolen $20 billion oil fund in which the Nigerian National Petroleum Corporation (NNPC) was fingered as the culprit has been laid to rest, following the release of the report of the PriceWaterhouseCoopers (PwC) last month.

    But there is need for the Federal Government to implement some of the auditors’recommendations to enhance the corporation’s efficiency.

    The missing oil money saga started on September 25, 2013, when the former Central Bank of Nigeria (CBN) Governor, now Emir of Kano, Sanusi Lamido Sanusi, wrote President Goodluck Jonathan, alleging that between January 2012 and July 2013, NNPC lifted 594,024,107 barrels of crude oil worth $65,332,350,514.57.

    According to him, of this amount, NNPC paid only $15,528,410,098.77, representing 24 per cent of the value. This indicated that the NNPC was yet to account for, and pay to the Federation Account, over $49.8 billion or 76 per cent of oil lifted in the period.

    On September 27, 2013, the President passed the letter to the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, to explain the allegations against the NNPC. The minister forwarded the letter to the former NNPC Group Managing Director (GMD), Andrew Yakubu, on September 30.

    On October 4, 2013, the minister forwarded the explanations of the GMD to the President. Nothing was heard on the matter for over a month.

    The NNPC presumed the Presidency and CBN were satisfied with the explanations until it was learnt that on December 8, 2013, the contents of the CBN’s letter were leaked to the media, including the online publications. That is how one of the most controversial issues of the nation started. In view of the weighty allegations, the Senate Plenary directed its Committee on Finance to investigate the alleged unremitted $49.8 billion.

    The NNPC also explained to the public what happened. The Corporation stated that the CBN governor did not understand the workings of the oil industry and how revenues from oil lifting were remitted to the Federation Account, adding that the CBN actually understated the figures of the lifting by NNPC by 4.13 per cent. The Corporation explained what equity crude, royalty oil, tax oil, volume for third party financing and NPDC equity volume are, just to buttress its point.

    NPDC (Nigerian Petroleum Development Company) is an arm of NNPC. Yakubu stated that remittances of proceed from each of the five streams are made according to statutory and production arrangements, adding that all remittances due to the Federation Account had been made into that account.

    In the same period, the Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, directed the Inter-Agency Committee comprising the Federal Ministry of Finance, Budget Office of the Federation, Central Bank of Nigeria (CBN), NNPC, Federal Inland Revenue Service (FIRS) and the Department of Petroleum Resources (DPR) to reconcile the various figures given by the two agencies of the government, CBN and NNPC.

    The Inter-Agency Reconciliation Committee had at the end of its job, established that $39 billion of the alleged that $49.8billion had actually been remitted to the Federation Account and Mrs Okonjo-Iweala announced that the Committee was still working to reconcile the balance of $10.8 billion.

    But when the Finance Minister and the CBN Governor appeared before the Senator Ahmed Makarfi- led Senate Committee on Finance, Mrs Okonjo-Iweala held on to the $10.8 billion balance but the former CBN Governor held on to $12 billion as the  unremitted revenue to the Federation Account.

    The Group Executive Director of Finance and Accounts, NNPC, Mr. Bernard Otti, to prove accountability of the alleged missing funds, gave a breakdown of the $10.8 billion unremitted funds as follows: Unpaid subsidy $8.49 billion, Maintenance of National Strategic Reserve$0.37 billion, Product and crude oil losses $0.72 billion and cost of pipeline vandalism and repairs $1.22 billion.

    The CBN Governor later insisted that the amount unremitted to the Federation Account was $20 billion and gave a breakdown as follows: outstanding $12 billion, $6 billion gross revenue earned by NPDC, and $2 billion being payments to third parties. The CBN governor stated that NPDC, being a subsidiary of the NNPC, must remit all its revenue to the Federation Account in line with the constitutional requirement in Section 162 (10) c.

    He also questioned the legality of NNPC floating subsidiaries to do business and keep their funds, and also the propriety of the process of incorporating NPDC and the strategic Agreements it entered into.

    The issue of subsidising kerosene also came up before the Senate Committee as well as the resistance by Nigerians when the government wanted to stop fuel subsidy, including kerosene in 2012. The report of the Committee was debated on the floor of the Senate at plenary and it adopted most of the recommendations of the Committee. It, particularly, resolved, based on the recommendations of the Committee, that the allegation of the former CBN governor that some money was missing was false and that no money (be it $49.8billion, $20billion, $12billion, or $10.8billion) was missing.

    On kerosene subsidy, the Committee observed that the government policy on the issue was ambiguous, an issue which made the Ministry of Finance and the Ministry of Petroleum to toe different lines on the matter.

    To ensure transparency and clarity on the issue, PriceWaterhouse Coopers (PwC) was appointed to look into the allegation and come out with an independent findings. According to the findings, total revenue generated, including additional revenue upon investigation, was $69.34 billion while actual remittance was $50.81 billion. Unremitted revenues by NPDC were $5.11 billion while petrol (PMS) and kerosene (DPK) subsidy was $8.70 billion. The costs attributed to domestic crude was $2.65 billion and other costs not directly related to domestic crude oil operations was $2.81 billion) while salaries and benefits was $1.52 billion.

    Monthly operations was $0.48 billion and other third party payments, including training course fees, estacode, and consultancy fees, and other vendor payments was $0.81 billion while the NPDC signature bonus was $1.75 billion and its taxes and royalties $0.47 billion. Therefore, updated expected refunds by NNPC/NPDC to Federal Government is $1.48 billion, the report stated.

     

    The facts, figures

     

    The PwC submitted its report on February 2, this year. The auditing firm stated that its findings bear out some of the key points that were made on proper reconciliation and accounting for crude oil revenues and related subsidy claims, costs and expenses defrayed, and the matter of Oil Mining Leases (OMLs) transferred to the NPDC. It said that the gross revenue generated from Federal Government’s crude lifting for January 1, 2012 to July 31, 2013, was $67 billion reported by the Reconciliation Committee and the total cash remitted into the Federation Accounts in relation to these crude oil lifting, was $50.81 billion and not $47 billion as earlier reported by the Reconciliation Committee.

    “The balance of the generated revenue is accounted for as follows: Revenue reported by NPDC of $5.11 billion by its then Managing Director Mr. Victor Briggs during the Senate hearings will be accounted for through the financial statements of NPDC, and any dividend declared will flow into the federation account. Premium Motor Spirit (PMS) and Dual Purpose Kerosene (DPK) subsidy was $8.7 billion, NNPC’s initial costs verified and accepted by the Senate of $2.65 billion, additional NNPC costs, following the audit $2.81 billion.

    “Added to the revenue is the unremitted NPDC signature bonus due for divested assets and taxes/royalties totalling $2.22 billion. Hence the net amount attributable to the Federation Account following the above summary is $1.48 billion,” the report stated.

    PwC further stated that NNPC  provided information and explanations on the difference between the gross revenues and aggregate remittances leading to a potential excess remittance by NNPC of $0.74 billion, without considering the expected remittances from NPDC. Other indirect costs of $2.81 billion which were not part of the submissions to the Senate Committee hearings have been defrayed to arrive at this position.

    “NNPC and NPDC should refund an aggregate amount of $1.48 billion; this is after taking account of the excess remittance described above and outstanding self-assessed taxes, royalties and signature bonuses for divested assets transferred to NPDC. The transfer to NPDC of remainder interests in Oil Mining Leases (OMLs) divested by Shell were validly made to NPDC on the basis of a legal opinion provided by the Attorney-General of the Federation (AGF) to the Senate Committee on the matter.

    “By reference to the submission to the Senate Committee, NPDC reported crude oil revenues of $5.11 billion (net of taxes and royalties) in the period. Subject to defrayment of its costs, the AGF’s opinion holds that NPDC/NNPC are expected to, ultimately, effect a remittance to the Federation Accounts by way of net revenue (dividend) payment to NNPC. NPDC has not declared a dividend to NNPC on the basis of which remittances are to be made to the Federation Accounts in line with the AGF’s opinion. The matter of dividend (net revenue) from NPDC should be followed up for final resolution.”

    The auditing firm said that on the  subsidy on DPK (kerosene), the Presidential Directive of October 19, 2009 was not gazetted and there is no legal instrument cancelling the subsidy on DPK. The Senate Committee had also concluded that all that was required was for the Federal Government to propose appropriation for the unappropriated subsidy for the period in a supplemental budget. DPK subsidies in the review period amounted to $3.38 billion, according to the Petroleum Products Pricing Regulatory Agency (PPPRA).

    The report further stated that the NNPC Act provides that “… Such money as may be received by the Corporation in its operations or in relation to the exercise by the Corporation of any of its functions under this Act, and from such fund there shall be defrayed all expenses incurred by the Corporation.”The Corporation defrays its costs and expenses (including the costs of its loss making subsidiaries), from crude oil revenues in line with the provisions of the NNPC Act.

     

    Recommendations

     

    The report noted that the application of the foregoing principle has resulted in the potential excess remittance situation, and indicates that NNPC operates an unsustainable model. It stated that 46 per cent of proceeds of domestic crude oil revenues for the period was spent on operations and subsidies. The Corporation is unable to sustain monthly remittances to the Federal Account Allocation Committee (FAAC) and also meet its operational costs from the proceeds of domestic crude oil revenues and have to resort to third parties to bridge the funding gap.

    “At today’s crude oil prices at 62 per cent drop from 2012 levels), if NNPC’s subsidies and operational costs are maintained and crude oil production volumes are maintained at current levels, the Corporation will exhaust all the proceeds of domestic crude oil sales and still require additional third party funding for the deficit.  This means that the Corporation will have no funds to make any remittances to FAAC.

    “In view of the provisions of the NNPC Act which appears to grant NNPC a “blank” cheque to spend money without limit or control, and the gravity of the unsustainability of the NNPC operating model and its implications for remittances (or potential lack thereof) going forward, the NNPC Model must be reviewed and restructured as a matter of urgency. The NNPC Act should be reviewed as its visions contradict the requirement that NNPC be run as a commercially viable entity.”

    The forensic audit report, like the Senate Committee on Finance’s Probe report, clearly stated that all the revenue generated from Federal Government crude lifting for the period of January 1, 2012 to July 31,  2013 amounting to $69.34 billion was fully accounted for. The report also didn’t indict the NNPC over the allegation of unremitted or missing oil revenue. Therefore, anyone or organisation still circulating information about any unremitted or missing oil revenue or that NNPC was indicted in any report over the allegation is only either being mischievous or displaying disdain for truth, the NNPC boss stated at a forum in Lagos.

     

  • 10 power plants may get gas by June, says NNPC chief

    10 power plants may get gas by June, says NNPC chief

    The 10 power plants built under the National Integrated Power Plant (NIPP) initiative  will be connected to gas pipelines either by June or the end of the year, Group Executive Director, Gas and Power, Nigerian National Petroleum Corporation (NNPC) Dr. David Ige has said.

    Speaking on the sidelines of the 12th Aret Adams Memorial Lecture in Lagos, at the weekend, Ige said the connection would enable the plants to access gas for improved electricity generation and distribution.

    Aret Adams was former Group Managing Director of NNPC.

    Ige said the plants would add 5,000 megawatts (Mw) of electricity to the national grid upon completion.

    The plants are Geregu 11 (334Mw); Calabar (630Mw); Egbema (378Mw); and Ihonvbor (504 MW). Others are Gbarain (252Mw); Sapele( 504Mw); Omoku (252Mw); Alaoji (1030Mw); Olorunsogo II (750Mw) and Omotosho ( 500Mw).

    He said: “Plans are underway to connect gas pipelines to the 10 power plants constructed by the Federal Government to ease electricity problems and further encourage economic growth. Gas is critical to the growth of the power sector and the government is working to ensure that enough gas is channelled to the power generation plants.”

    Ige also stated that the government has made arrangement to  provide gas to the privatised power generation plants formerly owned by the defunct Power Holding Company of Nigeria.

    He said there is enough gas waiting for Omoku power plant but noted that pipeline vandalism is a major problem in the industry even as the government plans to reduce or stop it.

    “A lot has been done to bring huge volumes of gas to the power plants. But each time, we try to breach the shortfall in gas supply; our efforts are frustrated by vandals who break the pipes at will. Since the beginning of this year, we have not had one week of respite. There have been consistent attacks of pipelines. When we have these attacks, the pipeline pressure drops immediately because of the off-take. If we shut down to repair the pipelines, it takes about 10 days to repair. Thereafter, you need some days to build up the pressure. By the time you are building up the pressure, people are attacking the pipelines again,” he added.

    The Acting Head, Public Communication, Bureau of Public Enterprises (BPE), Alex Okoh, said the government is working hard to provide gas to the plants.

    The spokesman, Niger Delta Power Holding Company of Nigeria, Yakubu Lawal, said the company was not delaying the sale of the plants which investors bid for in 2014. He said the firm has completed the building of the plants, with Olorunsogo being the latest one commissioned a fortnight ago in Ogun State.

    “The goal of the company is to build the 10 power plants, which we have done in line with the mandates given to us by the government. It is the responsibility of NNPC to provide the gas. So, how did we cause the delay in the sale of the plants as rumoured in some quarters? he asked. Yakubu said gas supply was not part of the mandate given to the company and would not concern itself with that. He said the court would determine the fate of three of the plants that are under litigation.

  • Indigenous firm acquires Shell’s oil field

    Oil producing communities in Rivers and Abia states have given Belema Oil and Gas Producing Limited the nod to resume exploration on oil mining lease (OML) 11 abandoned by Anglo-Dutch oil giant, Shell.

    Shell Oil Development Company (SPDC) withdrew from onshore exploration, especially within the Niger Delta, because of  security challenges. The communities have been shopping for a new company to take over production.

    Belema Oil, an indigenous company of Rivers State origin, is one of the seven local and foreign companies jostling for the deal.

    Belema Chief Executive Officer Tein Jack-Rich promised, among other incentives, 10 per cent of the company’s net profit for the development of the host communities and their youths. He also said the communities would own part of the company’s assets and also bear part of its liabilities.

    In an eight-point communiqué jointly signed by stakeholders including traditional rulers, elders, youths and women groups from the communities, the communities accepted Jack-Rich’s request to bid for the oil block, expressing satisfaction with the derivation and partnership terms.

    The communities are: Etche Cluster 1 and 2, in Etche, Oyigbo/Afam in Oyigbo Local Government Areas (LGAs) of Rivers State and Ukwa West LGA in Abia State. Communities in Ogoni, also in Rivers State have since begun the process. Some have signed up for the local firm, while others are still negotiating.

    SPDC stopped oil activities in Ogoni since 1993. No other company has been allowed to operate in the place. The communities expressed their resolve to lock their gates against any other company that is making any move for OML 11. They advised other companies to stop lobbying as they have taken decision.

    The communiqué reads: “We the oil producing communities from Nkali Imo River Abia State, Etche Clusters  1 and 2, Afam communities hereby pass this resolution this day in the presence of our Ezes, Chiefs, elders, women and youths as follows, that we have resolved and hereby endorse and declare our partnership with Belema Oil and Gas Producing Limited for the takeover  of operation and ownership of Shell’s OML 11.

    “Just as the Ogoni oil bearing communities have done, our people cannot afford to be in the hands of unknown company that we cannot have friendly access to, or too big for us to grow with. Belema Oil is a growing and well-focused company we admire and we have resolved to partner with for mutual development of our communities and youths”.

    “It is a Rivers State company from the Niger Delta with so much passion to creating wealth for our growing sons and daughters; thus we hereby accept and present Belema Oil to Shell as our partners.

    “On this note we hereby accept, endorse, declare and present Belema Oil producing Limited to SHELL Africa and to the government of Nigeria. All other bidders are no longer acceptable to us, and should desist from further lobbying of our stakeholders; especially our royal fathers and youths. Our OML 11 is not for money bag lobbyists.”

    During the agreement signing, HRM, Eze Samuel Amaechi the Monarch of Igbo Etche Kingdom appealed to the company to ensure they kept to the terms of agreement reached, to ensure peaceful business environment.

  • Eunisell, Ammasco unveil new engine oil

    Africa’s specialty fluids management company, Eunisell Chemicals, has manufactured   a new motor engine oil.  The production was made of group IV synthetic base oils with an advanced additive molecules, chemistry and technology, the first of its kind in Nigeria.

    The new technology formulated for Ammasco International Limited, an indigenous and independent lubricant blender, and marketed by Eunisell and Lubrizol Corporation, was unveiled over the weekend at Ammasco blending plant in Kano.

    Addressing reporters at the launch, the Chief Executive Officer, Eunisell Chemicals, Mr. Ken Amadi, stated that the new Ammasco Synthetic Oil “was formulated by Eunisell and Lubrizol to meet and exceed all the requirements as specified by the American Petroleum Institute, European Automobile Manufacturing Association, International Lubricants Standardisation and Approval Committee, Standards Organisation of Nigeria and indeed all the other bodies responsible for engine oil specifications across the world. We are happy to be the first company in Nigeria to have introduced this new technology and can confirm that with this, your automobile engines will last longer than you will expect.”

    The Chairman, Ammasco International Limited, Alhaji Mustapha Addo expressed satisfaction with the quality and high standard of the product, adding that the fully synthetic oil will further position Ammasco as the number one quality conscious lubricant blender and marketer in West Africa, with Nigeria as a hub.

    The General Manager, Quality, Ammasco, Mr. Joseph Idume, expressed satisfaction with the standards put in place in the blending of the Ammasco Synthetic Engine Oil. Idume said: “There was absolutely no compromise in the quality of additives used in this product. As an organisation that believes in quality as seen in all of our other products, we have consistently ensured a high quality standard, this is why we decided to enter into the next level of engine oil manufacturing with the launch of the Ammasco synthetic oil as witnessed here today.”

    The officials of the Standards Organisation of Nigeria (SON), Department of Petroleum Resources, (DPR) representatives of lubricant distributors nationwide and the Nigerian Automobile Technician Association were at the launch.

  • NSA, Ministry, NNPC to tackle vandalism

    THE National Security Adviser (NSA), the Ministry of Petroleum Resources and Nigerian National Petroleum Corporation (NNPC) have initiated moves to curb pipeline vandalism and crude oil theft through digital surveillance.

    The initiative will also ensure that operators deploy sensors where there are pipelines to check the menace. The mechanism will connect every centimetre of the pipeline and ensure that operators are informed of any act of vandalism on any pipeline.

    The Group General Manager, Group Public Affairs, NNPC, Ohi Alegbe, said the industry is at a stage where opportunities in technology are being explored to stop pipeline vandalism and other untoward practices.

    He said efforts are ongoing to use sensors, adding that the involvement of NNPC in the fight against pipeline vandalism and other untoward practices was in line with its responsibility to develop the upstream and downstream sectors.

    He said the  corporation distributes petroleum products to its depots through pipelines, and at the same time uses the channel to provide gas to the end-users, especially the power generation companies (GENCOs).

    He stated that pipeline breakage and other problems are critical to the growth of the sector, adding that the government is not leaving any stone unturned to stop it.

    He said the  National Security Adviser (NSA), Col Sambo Dasuki( rtd) is the only competent person mandated to speak on the technology, in view of the importance the Federal Government attaches to the issue of pipeline vandalism.

    Alegbe said information regarding the use of the technology are sensitive, and is therefore, being protected from the public to enable the government achieve its desired results of reducing pipeline destruction.

    Also, the Senior Special Assistant on Gas to the Minister of Power, Dr Frank Edozie said the ministry, National Security Adviser and NNPC are involved in the scheme to tackle pipeline vandalism through digital method.

    He said the Ministry of Power does not own pipeline, but only uses it as a channel through which gas is transported to the power generation companies (GENCOs) for electricity production.

    Ownership of the pipelines, he said, revolves around the International Oil Companies (IOCs) and NNPC, adding that the development underscored the reasons behind the involvement of NNPC and the Ministry of Petroleum Resources in the fight against pipeline vandalism.

    Edozie said the government has deployed military and para-military details to monitor pipelines and arrest vandals. He said the Joint Task Force (JTF) comprising the army and the police have arrested and prosecuted vandals, stressing that the devices are going to complement such efforts.

    He said: “In the past, efforts were made by the government to secure pipelines. The Army, Navy, Police and the Nigerian Civil Defence Service Corps (NCDSC) monitored pipelines but now, the government has put in place measures to complement the physical protection of the pipelines by ensuring that sensors are deployed into pipeline areas or zones.  The effectiveness of the sensors depends on the number of operators deployed to check vandalism.”

    The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, said the government has zero tolerance for vandals, stressing that a more proactive measure would be used to curb the practices.

  • N/Assembly accused of delaying investment in oil, gas sector

    There has not been any major investment in the Nigerian oil and gas sector at least in the last four years and there has not been additional increase in the nation’s oil and gas reserves in the last ten years due to non- passage of the Petroleum Industry Bill (PIB), which has been before the National Assembly for many years, the Managing Director and Chief Executive Officer, Frontier Oil Limited, Dada Thomas has said.

    Thomas said that Nigerians should hold the National Assembly accountable for lack of passage of the Petroleum Industry Bill. He noted that the bill has been in the making for more than four years until now we have only May 29, 2015 for this current regime to be over. “I don’t believe that the bill would be passed into law before then, I think the PIB will have to be addressed by the incoming National Assembly,” he stated adding that the country has lost so much for the non-passage of the bill.

    The Federal Government has over the years set a target to achieve oil reserves of 40 billion barrels 4 million barrels per day production but how this vision could be realised remains doubtful as the government lacks the political will to pass the important bill into law, industry stakeholders said.

    Speaking with The Nation at an oil and gas event in Lagos, Thomas stated that as long as there is a cloud of uncertainty as to whether or not to pass the bill, the exploration and production companies may not want to invest as they ought.

    “The damage is that there has not been any exploration in Nigeria to find new oil or gas reserves. We need to make sure that the cloud of uncertainty which is the lack of passage of the PIB is removed so that people know the rule of the game. With the uncertainty removed, the regulators will be able to know what their roles and responsibilities are, and every stakeholder including the communities will know the rules of the game in the operation of the industry,” he said.

    Thomas urged those at the corridors of power to put politics aside and think of the economic wellbeing of the people and the nation first and foremost. He said: “They should put politics aside and do what is good for Nigerians and investors so that we have a bill that would address all the concerns and needs of the various stakeholders including the investors. We need to show commitment to the growth of the industry.”

    The Managing Director, Treasure Energy Resources Limited, Rivers State owned Oil and Gas Company, Eddie Wikina, in a telephone interview also agreed that the government is prolonging investments in the country due to non-passage of the bill, which he described as prolonging the evil day.

    He also mentioned corruption and insecurity as other major factors that push investment out of the country. According to him, if the bill is passed into law it would help to check the level of corruption in the Nigerian National Petroleum Corporation (NNPC). He said that the government has severally mismanaged the funds appropriated to the corporation by having wrong priorities.

    Since the NNPC is not autonomous of the federal government, it acts on instructions. Wikina said that the government is aware of this and continues to play down on the passage of the bill so that corruption would continue to thrive in the system

    “Such a bill as the PIB has been shrouded in so much secrecy that certain unscrupulous elements begin to profit from the quagmire. Such a bill should be openly debated in the Senate and passed immediately in the interest of the nation,” he stated urging the government to pass the bill within the remaining three months.

  • •Govt urged to improve gas supply

    10 power plants may get gas by June, says NNPC chief

    The 10 power plants built under the National Integrated Power Plant (NIPP) initiative  will be connected to gas pipelines either by June or the end of the year, Group Executive Director, Gas and Power, Nigerian National Petroleum Corporation (NNPC) Dr. David Ige has said.

    Speaking on the sidelines of the 12th Aret Adams Memorial Lecture in Lagos, at the weekend, Ige said the connection would enable the plants to access gas for improved electricity generation and distribution.

    Aret Adams was former Group Managing Director of NNPC.

    Ige said the plants are would add 5,000 megawatts (Mw) of electricity to the national grid upon completion.

    The plants are Geregu 11 (334Mw); Calabar (630Mw); Egbema (378Mw); and Ihonvbor (504 MW). Others are Gbarain (252Mw); Sapele( 504Mw); Omoku (252Mw); Alaoji (1030Mw); Olorunsogo II (750Mw) and Omotosho ( 500Mw).

    He said: “Plans are underway to connect gas pipelines to the 10 power plants constructed by the Federal Government to ease electricity problems and further encourage economic growth. Gas is critical to the growth of the power sector and the government is working to ensure that enough gas is channelled to the power generation plants.”

    Ige also stated that the government has made arrangement to  provide gas to the privatised power generation plants formerly owned by the defunct Power Holding Company of Nigeria.

    He said there is enough gas waiting for Omoku power plant but noted that pipeline vandalism is a major problem in the industry even as the government plans to reduce or stop it.

    “A lot has been done to bring huge volumes of gas to the power plants. But each time, we try to breach the shortfall in gas supply; our efforts are frustrated by vandals who break the pipes at will. Since the beginning of this year, we have not had one week of respite. There have been consistent attacks of pipelines. When we have these attacks, the pipeline pressure drops immediately because of the off-take. If we shut down to repair the pipelines, it takes about 10 days to repair. Thereafter, you need some days to build up the pressure. By the time you are building up the pressure, people are attacking the pipelines again,” he added.

    The Acting Head, Public Communication, Bureau of Public Enterprises (BPE), Alex Okoh, said the government is working hard to provide gas to the plants.

    The spokesman, Niger Delta Power Holding Company of Nigeria, Yakubu Lawal, said the company was not delaying the sale of the plants which investors bid for in 2014. He said the firm has completed the building of the plants, with Olorunsogo being the latest one commissioned a fortnight ago in Ogun State.

    “The goal of the company is to build the 10 power plants, which we have done in line with the mandates given to us by the government. It is the responsibility of NNPC to provide the gas. So, how did we cause the delay in the sale of the plants as rumoured in some quarters? he asked. Yakubu said gas supply was not part of the mandate given to the company and would not concern itself with that. He said the court would determine the fate of three of the plants that are under litigation.

  • World Bank to promote solar power

    The World Bank Group has launched the ‘Scaling Solar’ initiative to help create a viable market for solar power projects in Africa and increase supply of energy for millions across the continent.

    In  a statement issued by Ejura Audu of  Africa Communications,  the  bank announced the launch of Scaling Solar at the Powering Africa Summit in Washington DC.

    The summit is a gathering of African ministries, and utility companies that came to discuss ways of improving access to energy in the continent.

    Scaling Solar aims to create a viable market for private solar power projects in Africa that will help governments increase the supply of energy for millions of residential and commercial consumers across the continent. Scaling Solar reduces the development time and uncertainty for bidders and investors, while lowering tariffs for utilities, which ultimately benefits consumers.

    “The World Bank Group is committed to promoting sustainable universal access to modern energy in Africa, and Scaling Solar is a key step towards attaining this goal,” said Jean Philippe Prosper, IFC Vice President for Global Client Services. “By quickly delivering affordable electricity to previously unreached populations, significant progress can be made on other development goals,” he added.

    Africa has some of the world’s most abundant solar resources, yet more than a third of the population lives without electricity. Investors developing private solar projects in Africa are often deterred by a variety of obstacles, including the unique features and structures of the different markets, high transaction costs, heavily negotiated agreements, and high perceived risk and cost of capital. As a result, the region continues to struggle with slow, relatively expensive and ineffective solar development, which impedes access to electricity, the World Bank Group said.

    The World Bank said that large-scale photovoltaic solar power can be quickly and economically developed to increase the supply of electricity to national grids and improve the reliability of power services for households and businesses. Scaling Solar provides a straightforward package to help countries determine the size and location of projects, then auction them competitively to developers. The initiative combines World Bank guarantees, Multilateral Investment Guarantee Agency, (MIGA’s) investment guarantees, and IFC financing to mobilise privately funded solar projects that are connected to the grid.  A simplified process and suite of contract templates significantly speeds this process to enable initial electricity production to begin within two years of initiating an engagement.

    “The countries we work with in Africa to support the development of solar energy look to the World Bank Group for our full suite of services – from technical knowledge and innovation to guarantees and financing,” said Anita Marangoly George, World Bank Senior Director for the Energy and Extractives Global Practice. “Through Scaling Solar, we are able to respond nimbly and effectively to this growing area of demand.”

    Scaling Solar builds on the World Bank Group’s experience in promoting small and larger-scale solar power development in emerging economies around the world and on South Africa’s successful Renewable Energy Independent Power Producer Programme (REIPP).

    Scaling Solar will lower the cost of solar by helping governments to procure solar power competitively and enhance the provision of sustainable energy in Africa.

    “This initiative offers a framework that allows countries to rapidly and efficiently mobilise private capital into solar projects with high development impact without having to start from scratch,” added Edith P. Quintrell, MIGA’s Director of Operations.

     

  • Stolen crude oil drops to 50,000 bpd

    The Presidential Committee on  Oil Theft Proliferation and Control has said the stealing of crude oil has declined by 50 per cent to about 50,000 barrels per day (bpd) from the initial 100,000 barrel(bpd)  when thieves  activities were at a peak.

    The Chairman of the committee,  Delta State Governor Emmanuel Uduaghan told reporters last weekend on the sideline of the commissioning of the National Integrated Power Project (NIPP) 750 megawatts (MW) Olorunsogo 11 Power Station in Ogun State that it is laughable to say oil thieves are stealing 400,000 barrels per day.

    He said the figure rose when thieves vandalised the pipes, oil firms shut down operations pending the repairs. Therefore, the shut-in production and the quantity of stolen crude oil when added together gave rise to the 300,000 bpd and 400,000 bpd often mentioned by people as stolen crude oil.

    Uduaghan described the estimated 50,000 bpd stolen daily as unacceptably high as many oil firms don’t produce that volume, adding that the government is fighting the menace at local and international levels.

    Uduaghan said: “Let me explain the issue of figures and I have always said this, when you hear 400,000 barrels, it doesn’t mean that it is 400,000 barrels that is stolen. What it means is that in the process of stealing the crude, it affects some of the wells, so the operators shut down the wells and when they shut down, and are not producing the 300,000 barrels or 400,000 barrels, the volumes are calculated as stolen. There is no time the stealing has been more than 100,000 barrels per day and that was at the peak. In fact, right now, it is less than 50,000 barrels per day that is being stolen, so it is not 400,000 barrels. But even at 50,000 barrels, it is still unacceptably high because not many companies produce up to 50,000 barrels per day. It is important I clear the figures.”

    On whether the committee is making any alternative supply arrangement to address lack of feedstock to refineries, he said it was looking into it.

    The operators of the refineries have been complaining of not getting crude to refine due to pipeline vandalism, which causes a lot of downtime and damage to their machineries.

    Uduaghan said the committee was working to drastically reduce  vandalism to see increased uptime in the refineries.

    Uduaghan said: “I don’t  know much about the refineries but there must be lot of other reasons why they are not running but on the issue of crude oil theft, there are various strategies. There are immediate and long term strategies that have been put in place especially by the security agencies directly working with Mr. President. The immediate strategy is for the security agencies to be reinforced and that is what we are doing. They are being reinforced in their activities,patrolling more and dealing with the crude oil theft more. On bigger scale, there is international collaboration on the crude oil theft. Some of these oil that are being stolen, 80 per cent is exported and it is only 20 per cent that is being used for illegal local refinery. The illegal refineries are being destroyed. On the stolen crude oil that is being exported, the Federal Government is working with various countries as part of the international collaboration because they (stolen crude oil) have destinations and are utilised by big refineries outside the country. The Federal Government is working with various countries to identify these refineries that use them and to ensure these goods don’t get there.

    “There are other local strategies including improvement in the kind of pipelines that are being used, and surveillance, among others but these are short to medium term strategies. The oil companies have to change their pipelines on the long run to pipelines that are very sensitive so that when vandals want to break it, the act can be noticed in the control room. These are some of the technical details that are being worked upon.

    “Apart from the national cooperation against pipeline vandalism, there is also the local cooperation which is mainly the engagement of the communities. For us in Delta State for in instance, we have been engaging the communities and educating them on the effects of pipeline vandalism.  Pipeline vandalism first of all leads to oil spill, and in turn, ravages the environment. If you go the Niger Delta, there is a lot of degradation of the environment from oil spill. On the long run it affects our people in terms of agriculture, health wise, among others. So we are doing a local community engagement to educate the people, because some of the people that carry out the vandalism are within the communities.

     

     

  • Operators oppose 30% cut in project costs

    Oilfield technical services operators have kicked against the move to cut down on project costs  by operators of the exploration and production (E&P) companies.

    They said  slashing project costs by 30 per cent is not right, and is anti-progress and capable of compounding their problems.

    Already, members of Petroleum Technology Association of Nigeria (PETAN) have received letters from operators of Nigeria’s Exploration and Production (E&P) companies asking them to discuss price cut due to the fall in the crude oil price.  However, the association is saying no to the request.

    Its President, Emeka Ene, said the body would resist any attempt to slash the cost because the idea is going to have negative effects on their operation. He said the issue of downward review of costs of projects should not arise because of the glut in the global oil market.

    Ene said many members got the nod to implement projects when there was a boom in the oil market occasioned by the rise in prices of crude oil to over $100 per barrel, adding that they have invested in equipment with which they would execute the projects.

    He said telling such operators to cut down project cost is an indirect way of sending them out of business because they are going to lose more money. He stated that any attempt to slash the cost of projects would further dip the revenues of the service providers as well as hinder their capacity to stay in business.

    Ene explained that the falling crude oil price is affecting stakeholders across the value chain, adding that those engaged in project implementation are badly hit. He said: “Many operators got the contracts when the price of crude oil was $115 per barrel. Now prices have dropped to between $40 and $50 per barrel, and we are being told to adjust the contract fees by 30 per cent. They have forgotten that a lot of money has gone into procurement of technologies for such projects vis-a-vis other spending. The questions begging for answers are: How are the operators going to make up for the loss they have suffered if they agree to slash the cost of projects?  How are they going to mitigate the cost of production, in the event that crude oil prices plummet further?

    “Cutting down the project costs is not the issue. We (operators) want to sit down at the table to address the issue of downward review of the cost of projects. The E&P companies can only sack us (operators) from the business by forcing us to agree to their cost-cutting measures.”

    Ene said that Nigerian companies need more jobs to do for growth, adding that they should not be discouraged through reduction of the project costs.

    Also, the Chief Executive Officer, Mansfield Energy, Dr. Dapo Oshinusi, said each company will look inwards and see where to reduce cost and where to maintain operations  in readiness for more work that will take off in the industry soon.