The Nation Newspaper

Category: Energy

  • ‘How local content is aiding foreign, direct investment’

    ‘How local content is aiding foreign, direct investment’

    The Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Ernest Nwapa, has said the country is creating a new set of indigenous operators who will soon attract Foreign Direct Investment (FDI) worth billions of dollars.

    Speaking at the launch of Future Concerns Safety Office in Lagos, Nwapa said the industry was experiencing a shift from small to bigger ticket transactions, going by the projects executed by indigenous operators.

    He said were operators forging alliances with bigger firms abroad to finance big ticket transactions adding that the partnership between MSA, a United States–based manufacturer and distributor of safety equipment and Future Concerns Safety Limited, would impact on the local content policy.

    He said: “Without doubt, the local content policy of the government is yielding fruits. Gone are the days when Nigerians celebrated the award of fat contracts in the industry as the only dividend of local content.

    “We have gone beyond that. Nigerian entrepreneurs are now taking on bigger roles by attracting Foreign Direct Investment (FDI) and forging alliances with global brands with the purpose of technology transfer and capacity development that could aid the progress of the local content policy.

    “I congratulate Future Concerns on this milestone and urge you to move to the next level which is the sustenance phase. Maintain the standards that swayed the decision of MSA by delivering consistently quality service to your clients.”

    Nwapa said the oil and gas industry is recording appreciable progress due to the improved participation of indigenous operators like Future Concerns, who have taken the bulls by the horns through their substantial investment in the industry.

    Nwapa said local operators have taking advantage of the enabling law to improve their investments, adding that their efforts have validated the position of the Federal Government to improve local participation in oil and gas industry.
    The company’s the Chief Executive officer, Tony Oguike, said a climate that would allow local companies to operate well is emerging, adding that a lot of synergies is taking place in the industry.
    Oguike said local firms that want to play well must have enduring business propositions, arguing that foreign-owned companies are looking for those that can compliment their efforts.
    This company came out with what he describes as ‘’ 3&T business propositions, noting the idea culminated in the partnership forged with MSA to provide a centre that would help in providing safety services in the petroleum and allied sectors.
    Oguike said: “The 3 S&T propositions include sales of MSA equipment; spares locally available; service and maintenance made locally, and training with global certification locally. That is what MSA indentified and nurtured a few years ago, and for the first time gave us the rights to build an independent service and maintenance centre in West Africa.”
    Mr. Colin Oliver, Managing Director, Sub-Saharan Africa, MSA, hailed the enterprising spirit of Oguike and the professionalism and integrity of Future Concerns. He noted that the relationship between the two companies has been further strengthened by the core values of quality service, integrity and responsiveness that Future Concerns has displayed all through the years of the relationship.
    He said: “MSA is no doubt the biggest brand globally in safety equipment manufacturing and maintenance. We have provided solutions to various clients across the world. The African market, particularly Nigeria, is very huge and we are excited to be a major player in the industry. Our partnership with Future Concerns so far has enabled us to provide better tailor-made solutions and services to our clients.”

  • Consumers decry increase in fixed charges

    There is concern among consumers over possible increase in fixed charges by the Nigerian Electricity Regulatory Commission(NERC) in June.

    The development is coming on the heels of the commision’s decision to review the yearly fixed charges for residential and corporate consumers in June.

    Consumers, who spoke with The Nation, said any upward review of the charges would further compound their woes.
    A partner at Paul Usoro &Co ( A law firm), Laidi Munirudeen, said the country is in a terrible situation, following the inability of the government to find a lasting solution to the power problem.

    Munirudeen said consumers were paying for electricity they cannot access, adding that they are tired of the situation.

    He said there is no cheering news from the sector, despite of the billions of naira realised from the sale of Power Holding Company of Nigeria (PHCN). He said fixed charges had been increased from N500 in 2012 to N700 last year, arguing that any increase would compound the woes of consumers.

    He said: “It is not an over-statement to say the sector is in a sorry state. In fact, all indices point to the fact that the sector is sick. Of what benefit is the huge bills paid by consumers every month without getting the right value. In my company, we use generators 24 hours, which means we spend a lot on diesels. When you factor the cost of obtaining alternative energy into the production cost, you realise all your profits have gone.’’
    Also, the Chief Executive Officer,New Horizon Computer Limited, Tim Akano, said NERC should be talking of how to cut down all charges and not increasing them in view of the problems facing the consumers and the sector in particular.

    “Already consumers are paying huge bills. Any attempt to upwardly review fixed charges, as stipulated in the MYTO guidelines would worsen the conditions of consumers. In the Information and Communication Technology (ICT) where I work, a lot of money is required to power computers and other devices for the training of people on various skills. This implies that a lot of money goes into generators, aside huge bills paid companies,’’ he said

  • Why electricity market take-off is delayed, by NERC

    Why electricity market take-off is delayed, by NERC

    The Nigerian Electricity Regulatory Commission (NERC) may not implement the Transitional Electricity Market (TEM) policy soon, its Chief Executive Officer, Dr Sam Amadi, has said.

    He told The Nation that it would be futile to declare the market open because of problems, such as tarrifs and shortfall in gas supply.

    He said indices, such as calculations and pricing, must be engaged in the buying and selling of electricity before the market is opened.

    “The Commission is monitoring the market conditions. Once the conditions are satisfactory to stakeholders, including NERC, the power generation companies (GENCOs) and distribution companies (DISCOs), among others, we would declare the market open. If the conditions are not okay, we would not declare the market open. The review of the market conditions is on-going; when it is completed and growth mitigating factors are addressed, we would know what to do,” he said.

    He described TEM as a post-privatisation phase, where energy will be bought and sold based on agreement among stakeholders, adding that its operations are crucial to the industry.

    The market, Amadi said, allowed the GENCOs and DISCOs to buy electricity without going through the bulk trading agency.

    Also, the Head, Power Procurement & Power Contracts, Nigerian Bulk Electricity Trading Plc, Yesufu Alonge, said there were some assumptions in the fixing and implementation of tariff adding that the market may not start until these problems are solved.

    “There are lots of assumptions around the tariff. I understand that a consultant has been hired to work on the assumptions as part of efforts to ensure the commencement of the operations of the market. NERC will validate the outcome of the review. This, among others, would help in determining the terms of the market,’’ he added.

    He said a workshop was organised to address issues impeding the take-off of the market, adding that the interim market rules are being addressed.

    ALonge said the main rules to govern the market would be rolled out later.

    The implementation of the TEM was expected last month, but was postponed following complaints by chief executive officers of the 15 power generation firms.

    The complaints include operational losses, tariff review and challenges in gas supply.

  • Operator seeks corporate governance

    Indigenous oil and gas operators must provide a strong corporate governance framework to foster growth, the Chief Executive Officer, Midwest Oil and Gas Limited, Adams Oko-Ene, has said.

    He spoke at a stakeholders’ forum in Lagos. He said the complexities in crude oil transactions requires that local operators known as independents provide a solid risk management framework to get bigger and international partnership.

    He said: “Everybody would have take a critical examination of their operations and see if they are complying with the globally acceptable financial standards. Operators need to access opportunities for their businesses; they can only do this by putting in place best practices of corporate governance.’’

    According to him, banks are stronger and have the capacity to finance big-ticket transactions in the oil and gas industry, stressing that they would only give loans of operators that show enough due diligence.

    “Banks are in a position to give, let’s say $100million or $200million loans, to players in the local energy services industry. To access this, operators need to improve on their operations by providing clear, consistent and internationally acceptable method of financial transaction to investors,’’ he added.

    He said banks would like to know that whether prospective loan seekers are acquiring green field assets or old ones; prospects in the assets and other attributes before they provide credit.

  • Board attributes success to govt

    The Nigerian Content Development and Monitoring Board’s (NCDMB) has attributed its successes to the Federal Government’s courage, cooperation of International Oil Companies (IOCs) and local oil servicing companies.

    Speaking at the inauguration of the Tolmann Allied Services’ Deepwater Simulation Theatre (DST) in Port Harcourt, Rivers State capital, NCDMB Executive Secretary Ernest Nwapa praised the entrepreneurial spirit of local oil servicing firms owners who set up key facilities and acquired hi-tech assets despite the challenges in the sector.

    He also praised the Petroleum Technology Association of Nigeria (PETAN) for the Board’s creation, saying its members pushed for indigenous participation before the Federal Government crowned their efforts with the Nigerian Content policy which later became law.

    “You needed a resolute person to lead and drive the changes we have witnessed. The government gave the Board a strong tone from the top to implement the Act,” he said, adding that the Minister has assured that the government would support any investment and ensure that such firms get patronage.

    Nwapa, who represented the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, at the event, said the inauguration of Africa’s first DST was a good way to start the celebration of the fourth NCDMB’s anniversary.

    The DST, he said, was not only the first in Africa, but also the third in the world, and that it was conceived to carry out deep offshore exploration and groom operators in the sector.

    It was noteworthy that the company invested in such an upscale facility, adding that it is a further proof that Nigerians can own and operate key assets in the industry, he said.

    Nwapa said the Board’s insistence on indigenous ownership of key assets as a major plank of monitoring compliance is based on the fact that it is a guarantee that the implementation of the Content policy would endure.

    “Because Nigerians now have stakes in ownership, we are sure that the Nigerian Content will survive even after the current officials in the government may have left the scene,” he said, adding: “It is from these kinds of service companies and investments we see from Tolmann and PETAN companies that assure us that jobs will be created and we will push them to make more investments.”

    The Managing Director of Tolmann Allied Services, Mr. Emmanuel Onyekwena, listed the challenges the company faced while setting up the DST, noting that the intervention of the Minister helped them. He said the project would address challenges in deep water exploration, build in-country capacity with global reach, create employment and assist communities.

  • Shell: we generated $44b for govt in four years

    Shell: we generated $44b for govt in four years

    Between 1999 and 2013, oil giant Shell Petroleum Development Company (SPDC) generated $44 billion in revenue for the Federal Government, the firm’s report has said.

    The firm and its sister company, Shell Nigeria Exploration and Production Company (SNEPCo), paid $4billion in taxes and royalties to the government last year. A breakdown shows SPDC paid $2.6 billion and SNEPCO, $1.4 billion.

    These are contained in the report published by Shell in complaince with the Extractive Industries Transparency Initiative (EITI) guidelines, which mandate oil firms to publish payments to the government.

    In its 2013 Sustainability Report , Shell said the disclosures would help in entrenching transparency on how such revenues are disbursed.

    The company said: “Our operations generate revenue through taxes and royalties for governments around the world. These funds can help support a country’s economy and contribute to local development. We believe greater transparency in payments to governments, and how they are used, is important for building trust between businesses such as ours and the communities we work alongside.

    “We work openly with governments on matters of taxes and royalties. We are a founder and board member of the Extractive Industries Transparency Initiative (EITI). This initiative requires both governments and companies to disclose revenues received from oil and mineral activities.

    “In 2003, Shell was the first company to publish the royalties, taxes and other payments made to the government, with its permission and support. Shell started to voluntarily publish an annual revenue transparency report in 2012.

    “It provides an overview of the revenues we pay to host governments in certain key countries in respect of our activities, where such disclosure is not prohibited by the host government. We took this step to reinforce efforts to increase transparency on revenues to governments ahead of any mandatory requirements taking effect.”

    Shell said to help improve accountability, it supports a global reporting rule for the industry, in line with EITI goals to achieve greater transparency, adding that it is monitoring the implementation of United States’ and European Union’s (EU) regulations and actively engaging with others to find a workable and common global standard.

    “In 2013, Shell paid globally $20.3 billion in corporate taxes, and $4.1 billion in royalties. We collected $80.9 billion in excise duties and sales taxes on our fuel and other products on behalf of governments,” the report added.

    The report also noted other Shell’s contributions to the economy. They include SPDC and SNEPCo contracts awarded to Nigerian companies last year worth $1.5 billion, 4,000 direct employees working at SPDC and SNEPCo, thousands of indirect jobs created, adding that about 95 per cent of employees at SPDC and SNEPCo are Nigerians.

    It also said SPDC and SNEPCo’s contributions to the Niger Delta Development Commission (NDDC) last year was $180.6 million while $104.1 million was the contribution from SPDC and SNEPCo to community development projects.

  • ‘Needed: Infrastructure in oil, gas’

    Nigeria requires infrastructure to achieve the much-needed growth in its oil and gas industry, the Managing Director, Chevron Nigeria Limited, Andrew Fawthrop, has said.

    Fawthrop, who spoke at a stakeholders’ forum in Lagos, said there are investment windows in the industry, adding that only consistent and solid infrastructural framework can help foster the sector’s growth.

    He said the development of infrastructure would help in providing the needed energy support for the populace and further galvanise the tempo of economic activities.

    ‘’Development of infrastructure is required to get energy support in Nigeria to Nigerians, and Africa to Africans. Nigeria can develop its energy resources, as well as provide them commercially to bolster growth. Though Africa contributes more to energy security in the world, the impacts are not being felt in economies of oil producing countries,” he said, adding that a stable framework is needed to increase Direct Foreign Investments (FDIs) in Nigeria and Africa.

    He said immense opportunities are waiting to be tapped in the continent.

    ‘’To increase the inflow of foreign investment in energy resources in Nigeria and Africa in particular, government and private sector participation is needed. Chevron has for more than a century, been doing business in Africa. We are focusing on opportunities in Angola to boost investment prospects in Africa,” he added.

     

  • Body warns against flouting SON’s policy on cylinders

    THE Nigerian Liquiefied Petroleum Gas Association (NLPGA) has warned its over 200 members against flouting the policy of the Standards Organisation of Nigeria’s (SON) on gas cylinders. Such offenders are to be prosecuted.

    Its President, Dayo Adesina, told The Nation that the Department of Petroleum Resources (DPR) would prosecute any marketer who frustrates SON’s policy of removing obsolete cooking gas cylinders from the market and replacing them with new ones in the next six months.

    He said his members were aware of the powers of the DPR to prosecute defaulters, adding that the development became necessary to ensure compliance when the policy takes effect in June.

    Adesina said: “The roles of the two regulatory bodies – the DPR and SON- are crucial on this issue. DPR is vested with the powers to regulate operators in the oil and gas industry. Its duty is to ensure that operators comply with policies formulated for the growth of the sector. By this, DPR has the powers to prosecute operators that refuse to comply with the new policy on cooking gas cylinders.

    “Our members would also monitor users of cylinders to ensure compliance to the policy. They know much about cylinders and are in a position to hold consumers who use defective cylinders responsible.

    ‘’You cannot be our members and at the same time, be involved in unsafe practices. We have a code of conduct that guides our operations. If there is any breach, DPR and SON have the rights to sanction erring aoperators to encourage the growth of the sub-sector.’’

    He explained that his members know the intricacies of the LPG market, compositions and quality of cooking gas cylinders, and are, therefore, in a position to differentiate between the old and the new; sub-standard and quality cooking gas cylinders.

    The body, Adesina said, has regulations, which members must comply with, or face sanctions. He said the association was working on modalities for the implementation of the policy.

    “The document on cooking gas cylinders is in exhaustive. SON is yet to tell the public the direction it is taking on the issue. The scheme is long-term; the issue of retracting the old cylinders would take some time. At the moment, consumers own cylinders, coupled with the fact that there is no control over the use. Though SON regulates the cylinders coming to Nigeria, there is no control over the product.’’

    He said a paradigm shift from the individual to institutional ownership of cooking gas cylinders would take place as a result of the policy. The idea, he said, would change the LPG’s market structure because marketers would own LPG cylinders, and not the consumers.

    Efforts to get the DPR to comment on the issue proved abortive as calls made to the agency was not returned.

    SON had planned to come out with guidelines on the quality of LPGs. The aim is to regulate cooking gas coming to Nigeria, and ensure that consumers use the right product.

  • Nigeria unveils plans for Shell’s, Total’s Eni’s assets

    To ensure the viability of the six oil wells it acquired from the International Oil Companies (IOCs), the Nigerian Petroleum Development Company (NPDC) has adopted a new employment strategy.

    The NPDC, a subsidiary of the Nigerian National Petroleum Corporation (NNPC), took over some oil wells from Shell, Total and Eni, following their decision to sell their stakes because of what they called losses from crude oil theft and pipeline vandalism.

    While unfolding plans to expand NPDC’s business, including spending $5.2billion in the next five years at a stakeholders’ meeting in Lagos, its Managing Director, Mr Victor Briggs, said human resources were vital to the companies’ growth.

    He said NPDC was not following its traditional method of recruitment, in view of the huge assets at its disposal.

    He said a paradigm shift from periodic to constant recruitment of experienced professionals was necessary, in view of the enormous challenges of growing the assets to an enviable height.

    He said: “NNPC recruitment is subject to the rules of the government. However, we have to look at other options to improve oil production in the industry. We look at the assets we took over from the IOCs operating in Nigeria, to see how best we can manage them well. We do not have the time to train people; we employ whenever we see the opportunities. We lay ambush when we hear that some people are trying to leave and employ them.

    “We look for contractors to manage the assets. Sometimes, we train others at a short period to grow the assets. Upstream services sector of NNPC has been well developed. ‘’

    According to him, crude oil production is complex and comes with its own attendant cost.

    ‘’The cost of sustaining increase in crude oil production is high. There is a lot of demand for crude oil globally. People look at the sector from the point of volumes of barrels produced per day; without looking at the human resources required to grow it. When companies come into the industry, they need to ask themselves this question: What does it take to employ expatriates or local staff? That has become a challenge to many operators,’’ he added.

    NPDC is hoping to in increase its output on Oil Mining Lease, OML, 42 by an additional 30,000 barrels per day(bpd), to bring total output from the asset to 60,000 bpd. Currently, the OML 42 licence produces 30,500 bpd.

    The company took over the operatorship of the licence from SPDC in January 2012 when it was producing 25,000 bpd from 11 strings.

  • Schneider Electric inaugurates rewards programme

    Schneider Electric has launched the Schneider Electric Green Currents loyalty programme for electricians as part of its initiative to develop the electrical retail business in Nigeria.

    At a special induction to welcome the first 250 members of the club in Lagos, Country President, Schneider Electric, Marcel Hochet, said: “The essence of the programme is to build a critical manpower base for the electrical retail sector by connecting and growing the electricians club members to a network of accredited distributors and resellers ensuring availability but more importantly safety and reliability of new or renovated electrical installations.”

    Hochet noted that electrical installations are a strategic part of any building as the safety of lives and property depend on it.

    Vice President, Retail Business, Schneider Electric, Tonye Briggs, said the programme was designed to reward loyal electricians and electrical contractors and encourage them to patronise only an accredited network of resellers.

    He said: “Schneider Electric is a major player in the power sector today, partnering with the government, especially in ensuring stable and reliable distribution of power at the grid level. Today, we have added another focus to our business, electrical retail. This is to ensure that the final consumer in his home or office receives the full benefit of the power privatisation which essentially is safe, clean and available power.”

    Briggs noted that the club offers four levels of membership with discounts, training and rewards based on purchases.

    “One of our goals with this loyalty programme is to structure our market so that everyone in the value chain benefits,” he said.

    He added that the company plans to extend the programme to enrol about 6000 electricians across the country and create a network of no fewer than 300 resellers.

    The Public Relations Officer of the Licensed Electrical Contractors of Nigeria (LECAN), Waheed Bada commended Schneider Electric for the initiative, reiterating the association’s commitment to support firms investing in developing the electrical and business skills of the sector.

    He noted that training as one of the rewards of the club would help to improve the expertise of the sector and prevent accidents.