The Nation Newspaper

Tag: price

  • No plan to raise petrol price, says NNPC

    No plan to raise petrol price, says NNPC

    • UK supply cut pushes oil prices to $54

    The Nigerian National Petroleum Corporation (NNPC) said the recent increase in bridging allowance to transporters from N6.20 to N7.20 per litre will not lead to an increase in the N145 per litre pump price of petrol.

    Its Chief Operating Officer (COO) in charge of Downstream Operations, Mr. Henry Ikem Obih, who gave the assurance yesterday in Abuja, said there was no plan by the government or any of its agencies to review the pump price of petrol above N145 per litre.

    He explained that the rise in the bridging cost was achieved after an adjustment was made in the “lightering expenses” from N4 to N3 per litre and the difference transferred to compensate for the cost of bridging within the same template.

    The bridging allowance refers to the cost element built into the products pricing template to ensure a uniform price of petrol across the country, while lightering expenses involve charges for moving products to depot area  from mother vessels by light vessels due to the inability of the former to berth in shallow water depth.

    “What happened, in simple language, is a rebalancing of the margins allowed and approved for stakeholders. So what the Petroleum Products Pricing Regulatory Agency (PPPRA) did was to take N1 from lightering expenses and add same to the bridging allowance. That is how we arrived at N7.20. Therefore, petrol remains at the ceiling of N145 per litre.”

    On the availability of product, he said as at today, the country had 1.3 billion litres of petrol which translated to an inventory of 36 days.

    “What this means is that even if we stop importation or refining of petrol right now, we have enough products in-country to provide for the needs of every Nigerian for a period of 36 days,’’ he said.

    Obih noted that the supply availability was bolstered with the production of petrol from the three refineries located in Port Harcourt, Warri and Kaduna.

    “There is absolutely no risk of shortage in supply as we also continue to import to support the production from the refineries, we have informed the Department of Petroleum Resources (DPR) to enforce the prevailing N145 per litre price regime and also ensure that every service station that has fuel is selling to the public,’’ he said.

    Meawhile, oil rose to a near one-month high yesterday on signs of a gradual tightening in global oil inventories and on concerns about a supply cut at a field in the United Kingdom’s North Sea that feeds into an international benchmark price.

    Brent crude futures, the international benchmark for oil, were at $54.52 per barrel, up 35 cents, or 0.65 percent, from their last close.

  • Senate panel seeks subsidy removal, price deregulation

    Senate panel seeks subsidy removal, price deregulation

    How can the  domstream oil sector be sanitised? It is by the removal of subsidy and total deregulation of fuel price says the Senate Committee on Petroleum Resources (Downstream).

    According to the committee’s chairman, Senator Marafa Kabir Garba, the refineries are not working because some people are making a killing from subsidy.

    Subsidy retention he said, would lead to job losses and also inhibit the building of indigenous capacity and expertise.

    Garba told The Nation that the sector  would grow when the twin problems of  subsidy and non-passage of the Petroleum Industry Bill (PIB) were solved.

    He said: “What the downstream requires is total deregulation and the passage of the PIB that is under consideration at the moment. We are currently considering the governance aspect of the PIB, which will deal with the regulatory aspect of the oil industry. We intend to make it like a one-stop shop where investors can have  easy access to the industry without the multiplicity of bodies that regulate the sector.

    “We will strengthen the Department of Petroleum Resources (DPR) and make it stronger, such that investors will walk in and go out from there with all they require as far as the petroleum industry is concerned.

    “The laws governing the oil industry are old and archaic. These contributed to the failure of a lot of things that pertain to the industry. That informed the decision of the government to introduce the PIB, but after several Assemblies of the National Assembly, the bill has never seen the light of the day. Discussions, deliberations go on for four years without success. But this National Assembly said it is determined to do it. We are giving it a different approach, we have broken it into parts – the Governance, Fiscals and Community/Socials. The Governance Bill will see the light of  day in the next few weeks, either at end of this month or early next month (April). From there, we will go to the fiscals that relate to monetary aspect of the industry, and from there, we go to the community and social issues.

    “As far as the Senate is concerned, we are doing everything possible under the leadership of Senate President Bukola Saraki, who took it upon himself and promised Nigerians that this time around the bill will be passed. Once that is done, the downstream sector will have a breathe of life.”

    On passage of the three parts of the PIB, Marafa said: “We will be able to pass the three parts of the bill before end of the year God willing. The Fiscal aspect has gone through the first reading, so it is coming up for second reading and if that is done, in the next three to four months, that aspect will be passed. Before we pass the Fiscal aspect of the bill, the community aspect would have gone through the first reading. We will give it all the necessary attention it requires.”

    On the resistance to removal of subsidy and total deregulation of the downstream by labour and civil society groups, Marafa said as a nation, we had to make deliberate and precious decision on what we intend to achieve, adding that just a few days ago, the Senate ordered investigation into the subsidy matter again.

    He said: “The the Nigerian National Petroleum Corporation (NNPC) alone collected over N5 trillion on subsidies from 2006 to 2015. The labour and civil society, among others, should come and let all stakeholders reason together on what fuel subsidy is all about. What value do Nigerians get from the subsidy compared to the amount of money that goes into it? If you combine the subsidy collected by NNPC with that of major and independent marketers, among others, it totals about N9 trillion in a scope 10 years, which is over and above our national budget.’’

    He continued: “Does the common man really get the right value from subsidy? If such huge funds were sunk into other sectors such as health, agriculture, roads, railway systems, would it not have benefitted the common man more? It would be better and with more value addition. The labour will always fight for increased salary for workers but where is the money? Subsidy on diesel aspect of petroleum products was removed and heaven didn’t fall.

    “Also, it is regulation that is keeping our refineries from working because people are feeding fat from subsidy. The same issue applies to the power sector, as long as people continue to import and Nigerians continue to buy generators, it will be difficult for the power sector to work. If you check the cost of the number of generators we buy in Nigeria, it is enough to generate enough electricity for the country. But because we as a people are sentimental about full deregulation of the downstream, we continue to lose by exporting value and jobs through export of our crude oil, import and subsidy of refined petroleum.”

  • Optimism over rising oil price

    Firms in the upstream and downstream sector will bounce back if the price of crude oil continues to rise, stakeholders have said.

    Former Executive Director of the National Integrated Power Projects (NIPPs) Dr Albert Okorogu and  former Country President of the Association of International Energy Economists (AIEE) Prof Adeola Akinnisiju said operators would  raise their investments if the crude price hits $56 per barrel.

    Okorogu said momentum was gradually returning to the industry, adding that the sector would witness new investments soon.

    He said the decline in prices was affecting the sector, adding that operators, such as the international oil companies (IOCs) and their local counterparts, power generation companies (GenCos), gas producers and suppliers, among others, were hard hit.

    “The recovery of oil price is a good omen for operators in the nation’s oil and gas and electricity  industry. Once oil companies return to profitability, they would increase oil and gas exploration and the better for fertiliser and power companies,’’ he said.

    Okorogu said there would be enough gas for domestic consumption when oil companies increase the commodity. He said many power firms relied on Forcados pipeline owned by Shell for gas supply, adding that many power firms were stranded when militants broke the gas pipeline.

    Also, Adeola said operators would benefit when crude price appreciates further. He said activities in the sector had gone down, following the fall in the global price of crude.

    ‘’If the price of crude oil can increase from below $20 per barrel in 2014 to$56 per barrel in 2017, it means that the global oil market can record a price of $100 per barrel in the next few years,” Adeola said.

    He said the price of crude could pick up as the Federal Government  looks for money to finance critical infrastructure in the country, adding that the government relies on revenue from petroleum to finance budgets.

    The global oil crisis began mid- 2014, a development that has resulted in price crash and forced oil operators to prune their operations and workforce.

  • NLNG explains cooking gas price hike

    The Nigeria Liquefied Natural Gas Limited (NLNG) has stated that the high cost of liquefied petroleum gas (LPG), commonly called cooking, was caused by shipping cost, delay of cargo discharges at receiving terminals in Lagos and the fact that its price is based on international price index.

    Its General Manager, External Relations, Kudo Eresia-Eke in a statement, stated that the company noticed recent media reports on LPG price increases in the domestic market and it has become imperative to explain some of the causes of the price increase.

    He said Nigeria LNG’s domestic LPG price is based on an international price index plus 50 per cent of the shipping cost of delivering the product to receiving facilities in Apapa-Lagos.  That price is invoiced in naira at the prevailing official interbank exchange rates, contrary to erroneous assertions made in parts of the media.

    The reality of this is that although LPG is produced and consumed locally, the product, like crude oil, is an internationally traded commodity with an international price benchmark, open to global demand and supply pressures.

  • Cooking gas price hits N4, 500

    The price of the 12.5kg cylinder of domestic cooking fuel, Liquidied Petroleum Gas (LPG) has increased from N3,500 to N4,500 in Lagos and other parts of the country.

    This is about  a 30 per cent increase in the price of the product.

    The Chief Executive Officer, Nigeria Association of Liquified Petroleum Gas Marketers (NALPGAM), Mr Bassey Essien, said the price increase was caused by shortage of the product. He said the situation will change when more vessels bring the product to the state.

    A retailer at Ikorodu, Mr Ben Nwabueze, agreed no less with Mr Essien. He said  the price increase was a local problem which would phase out as more plants restocked.

    “Yearly, because of the heavy cooking that takes place during Christmas period, there is usually high demand for gas.

    “We try to ration it and sometimes increase price a little because we cannot restock till after the break when loading starts at the depot. More so, it will still take some days before the product circulates, thereby forcing reduction in the price,” he said.

    According to the News Agency of Nigeria (NAN), some domestic gas users said they were irked by the sudden price increase which they said was arbitrary and thoughtless.

    Mrs Rebecca Aleshinloye, a resident in Surulere, complained that gas sellers annually exploit users by increasing price of the product during festive periods.

    “I filled my cylinder with gas at N3, 500 in December, but surprisingly I was told the price has been changed to N4, 500.

    “In annoyance, I went to a gas plant inside a filling station, thinking that it would be cheaper, but was told it was N5, 000.

    “I had no choice but to go back to the first gas plant to fill my cylinder. This practice of gas sellers is highly unfair to users considering the economic situation in the country.

    “I appeal to the relevant regulatory agencies to halt this practice by monitoring and checking the excesses of the sellers,” she said.

    Mrs Jennifer Eluko, a resident of Abule Egba, said  cooking gas price rose on December 24 at most of the sale points in the area.

    “I usually fill two cylinders ahead of the festive period because I know that sellers would sometimes create artificial scarcity and inflate the price,” Eluko said.

  • Much ado about telecoms data price

    The raging debate over the proposed introduction of a price floor for data services by the nation’s telecoms regulator should be seen in the context of what it is: an indexation of the right of Nigerians to free speech. It illustrates most eloquently the fact that the fundamental human right to freely hold an opinion on any matter is respected in the country. And that is cheery news.

    But beyond the deafening din, there is the overriding need to distil the matter and make bare its fundaments. First, the nation’s telecoms regulator, the Nigerian Communications Commission (NCC) proposed a price floor for data services. The interim price floor of 90 kobo per megabyte was arrived at after consultation with telecom operators on October 19, this year. A price floor is the base price that an operator can sell its data. An operator can sell above the price floor but never below it. In simple term, it is the minimum price that an operator can sell a unit of data measured in megabyte.

    Media reports quoting a letter from the regulator to the operators said NCC clearly stated that the interim price floor was for the big operators and that the rate will subsist pending the finalization of a study on the determination of cost-based pricing for retail broadband and data services.

    The price floor regime was essentially to provide a level playing field for all operators in the telecoms space and to encourage small operators and new entrants to acquire market share and operate profitably just so they do not face insolvency. Both categories, small operators and new entrants, were exempted from the price floor. The regulator went ahead to define small operator as any operator with less than 7.5 percent of the market share while a new entrant is any operator that has operated less than three years in the Nigerian market.

    In the main, the directive from the NCC is not punitive. Here then is the misconception. The Senate must have misread the lines when it asked the regulator to suspend the introduction of the price floor regime. The Senate acted in the public interest. The NCC also acted in the public interest. The only difference is that whereas the Senate acted for the immediate satisfaction for the telecoms consumer, the regulator from its commanding height as the driver of the industry acted for the good of the consumer in the long run. Besides, the action of the regulator is not just in the interest of the telecoms consumers but also in the interest of the nation.

    The President of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) Mr. Gbenga Adebayo has argued that the regulator was spot on with the introduction of the price floor for data as a way of arresting anti-competitive practices which has already set in and which is crippling the small operators. He has also confirmed through press statements and media interviews that the decision was taken after a consultative forum between the NCC and the operators. He stressed that operators need to be guided by a price floor to avert the danger of frustrating the flourishing healthy competition that has come to define the nation’s telecoms market.

    The position of ALTON was on Tuesday corroborated by the Executive Vice Chairman of the NCC, Professor Umar Danbatta, when he appeared before the Senate Committee on Communication. Professor Danbatta told the committee that the intervention of the NCC was not designed to undermine the consumers, neither was it also intended to undermine the operators but to find a common ground whereby all the stakeholders, the operators and consumers, would enjoy the gains of participatory regulation which the regulator is noted for.

    He said: “We wanted to protect the Nigerian consumer from unhealthy price war in what may lead to a monopoly that may lead us to the days of NITEL. We did not increase any price but merely provided a regulatory standard to protect small telecom operators.”

    Danbatta said that there were some telecom operators that lacked the capacity to compete with the big operators in the field and there was the urgent and compelling need to protect such operators to enable them to remain in business and gain reasonable foothold in the market. No regulator can be faulted on this.

    ”A situation where a dominant operator provides services far below what is obtainable in the sector in order to attract more customers may lead to a situation where smaller operators will be forced to shut down. We stepped in when we noticed price war in the sector. The price war was already reaching undesirable level that we had to step in to prevent a monopoly like the days of NITEL,” Danbatta told the Committee.

    In other words, the intendment of the price floor was to protect the telecoms consumer, promote healthy competition among operators by allowing the small players the opportunity to co-exist with the big players without suffering grave economic injury that would sound their death knell.

    To fully grasp the wisdom in the regulator’s intervention, Nigerians should ponder why the CDMA’s (Code division multiple access) operators could not effectively compete in the data business with the GSM operators. Some CDMA operators are merely gasping for existential breath. They need to be protected.

    The introduction of a price floor should not be interpreted to mean an increase in tariff. On the contrary, it will lead ultimately to low tariff because it will encourage robust competition, admit more investors into the market and give the consumer the option of choice. It is the most effective tool to avert a drift to a monopolistic market.

    Any Nigerian who is of age will remember the anguish visited on the public by the state-owned NITEL in those days. Then telecoms services were not available, accessible nor affordable.  This country cannot afford a return to those dark days.

    The Nigerian telecom regulator has had a rich history of consultative and participatory regulation which strikes a balance between protecting the consumer and encouraging the operators (investors). This robust regulatory style has in the past one year alone earned the NCC global recognition including from the International Telecommunications Union (ITU) as a model regulator for the emerging markets.

    Suspending the price floor regime is akin to postponing the dawning of the full majesty of the telecoms industry especially as Professor Danbatta is rallying his team to expand and deepen the broadband market.  The glory of the industry can only fully manifest in an atmosphere of multiple choices which is the fodder for healthy competition. The regulator, noted for its active engagement with consumers through its telecoms consumers’ forums and outreach programmes, may need to engage the consumers further on this to get their buy in. The National Assembly should also see the logic behind the price floor: It is not anti-people.

    On the contrary, it is one of the most consumer-centric decisions to be taken by the regulator.  The Nigerian telecoms market has been internationally acknowledged as both revolutionary and resilient. The immediate past Secretary-General of the ITU, the eminent Dr. Hamadoun Toure, never ceases to use the miracle of the Nigerian telecoms narrative to underscore what good regulation can do for any nation’s telecoms market. At the just-ended ITU Telecom World in Bangkok, Thailand, he said there must be something Nigerians are doing very well to have kept the country’s telecoms bourse within the league of the very best in the world. He narrowed the reason to regulatory efficiency.

    The regulator, the legislature and the operators have variously echoed that their actions were for the common good. The challenge is for these stakeholders to find a common ground to convince the other critical stakeholder, the consumers, that a price floor for data (not voice) is not meant to hurt them but to proactively stave off an impending implosion in the telecoms data market which dire consequences can only be better imagined than experienced.

     

    • Umukoro, a blogger, writes from Lagos

  • ‘Why cooking gas price is high in Bonny’

    The price of Liquefied Petroleum Gas (LPG), also called cooking gas, is high in Bonny, Rivers State, despite hosting the headquarters of the Nigerian Liquefied and Natural Gas (NLNG) Limited.

    The Nation learnt that infrastructural bottlenecks and   geographical terrains of Bonny are affecting the supply of the product to the town.

    It was  further gathered that LPG suppliers could not bring the product to Bonny because of its water-locked nature.

    A member of the Nigerian Association of Liquefied Petroleum Gas Marketers (NALPGAM), who pleaded anonymity, said the price of cooking gas in Rivers State was higher than in Lagos, because the cost of transporting it to the area is high.

    The General Manager, External Affairs, NLNG, Dr Kudo Eresia-Eke said: “Bonny is an Island, the community is surrounded by water and this means accessibility to the community is by water and not road. So, the suppliers of cooking gas need to pay more to supply the product. Of course, they would factor the cost of transportation on the product they are selling to the residents. That is why I said that the cost of LPG is likely going to be higher in Bonny than Lagos.”

    According to him, NLNG supplies Lagos with LPG, and not Bonny, adding that smaller suppliers take the product to Bonny. He said there was no terminal in Port Harcourt and, as a result, LPG could not be discharged in Port Harcourt.

    “People buy LPG in Port Harcourt, from there they move it to wherever they are going to sell it. In the case of Bonny, the movement of LPG is done through the coast, a development that adds to the cost of transportation,” he added.

  • DStv: Naira volatility may stir price increase

    DStv: Naira volatility may stir price increase

    The volatility in the foreign exchange (forex) market may induce increment in DStv subscription price if not tamed by the government, the General Manager, Sales and Marketing, Multichoice, Martin Maputo, has said.

    He spoke at a briefing in Lagos.

    Maputo said DStv was trying to avoid any price increase but rather concentrating on upgrading its contents across all bouquets.

    However, he said if the government failed to curtail the forex crisis which has made it more expensive for the company to buy foreign content, especially English premiership, among others, it might be forced to consider price increase.

    “Most of the content we buy, such as EPL, others from abroad is dominated in pounds, dollars. So, we are not only operating in the market, but also respond to the market. At this stage, we are trying as much as we can to avoid any price increase but if there is nothing done to curtail the forex issues, we might be forced to increase,” he said.

    Meanwhile, Maputo said DStv has launched new value propositions to subscribers of DStv Premium, Compact Plus, Compact, Family and Access bouquets.

    “Starting  November  1, 2016, DStv will add three new HD channels for DStv Premium; DStv Compact Plus gets a major revamp with additional premium-content channels. Subscribers will enjoy massive content upgrade on all DStv bouquets including varied and quality channels that the whole family can enjoy. This latest move is in line with the company’s promise of putting its customers at the heart of the business,” he said.

    According to Maputo, in the last nine months DStv has delivered the world’s best football leagues to DStv Compact customers (February) followed by the DStv price freeze in April.

    “DStv is combining more quality and variety to its bouquets to ensure everyone has access to the best family entertainment at a price they can afford,” he said.

    He said further that the price reductions in DStv state-of-the-art decoders – Explora and HD Zapper – would ensure that great family entertainment is available to everyone at the most affordable price.

  • Cement price: High, high in the sky

    Cement price: High, high in the sky

    The price of cement, a major component in building, has gone up from N1,600 to between N2,300 and N2,600 per bag. The hike shocked many, especially those with ongoing projects who had made calculations based on the old cement price. What is the implication of this increase? Experts say it will hurt efforts at bridging the nation’s 17 million housing gap and also force adjustments in construction cost, among other consequences. Assistant Editor CHIKODI OKEREOCHA reports. 

    His frustration and fear could hardly go unnoticed. For the President, Lagos State Bricklayers Association, Deacon Abel Olukayode, nothing perhaps, could be more frustrating than not having answers to the barrage of questions from the over 5,000 members of his association seeking to know why the price of cement suddenly rose to between N2,300 and N2,600.

    Kayode told the The Nation that since this week, when the price of cement, one of the most critical raw material for the building and construction industry, went up to N2,600, from between N1,500 and N1,600, it’s been difficult controlling the anger and frustrations of bricklayers who besiege the Akesan, Lagos secretariat of the association daily.

    The price of cement rose up this week, throwing end users, and various operators and stakeholders in the building and construction industry into confusion. From cement distributors to property developers, bricklayers, block moulders, and contractors, there is palpable fear and apprehension over the unsavoury, far-reaching consequences of the price hike.

    Deacon Olukayode lamented: “They (bricklayers) have been lamenting. Contractors in the building and construction industry cannot bear it anymore. Things are getting worse every day. The unreasonable naira/dollar exchange rate, which stood at N414/per dollar, as at yesterday (Tuesday), is seriously affecting the economy and is at the root of the current problem.”

    He, therefore, called on President Muhammadu Buhari to “do something tangible to reduce the exchange rate to N100/per dollar to save lives and property of Nigerians.” He expressed fears that if nothing was done urgently to force down the price of cement, by halting the crashing value of the naira, then Nigerians may have to brace up for more building collapse.

    Olukayode raised some posers to drive home his fear that the skyrocketing price of cement could trigger more building collapse. “Will operators in the block industry be honest enough to mould 25-30 pieces of six inches blocks with a bag of cement based on the orientation being given to them? If they do, can our clients endure to purchase them under the current hardship caused by the economic downturn?” he asked.

    He explained that, for long, block moulders and bricklayers had been complaining  over rising incidents of collapsed building due to mismanagement of cement and other building materials in the market, which are substandard. He warned that with the rise in cement price, the situation may get worse as “clients that are supposed to use five bags of cement, for instance, will be pleading to manage four bags, which is totally unprofessional.

    Olukayode confided in The Nation that baring last-minute hitches, his association will meet next week Thursday to review the situation and deliberate on the way forward for the industry that has in recent times seen an astronomical rise in the cost of building materials and transportation. He hinted that the outcome of the meeting will determine the next line of action, which may include a rally by members of the association.

    However, while the possibility of more building collapse across the country as a result of the rise in cement price is giving Olukayode a cause for serious concern, other operators and industry experts who spoke with The Nation expressed fears that the effects of the development go beyond building collapse and the shrinking margin of block moulders.

    For instance, the former President of Association of Town Planning Consultants of Nigeria (ATOPCON), Mr. Moses Ogunleye, lamented that the development will affect the production of housing viz-a-viz the number of housing units that can be delivered to Nigerians. While noting that Nigeria’s housing deficit, put at 17 million, may have been grossly understated, he said the current cement price hike will frustrate efforts at bridging the gap.

    Bridging Nigeria’s estimated 17 million housing gap has been a pain in the neck of successive administrations, private property developers, and other stakeholders in the housing sector such as mortgage institutions. The World Bank recently brought the nation’s housing crisis nearer home when it said that about N59.5 trillion in needed to bridge the housing deficit through affordable housing.

    But with the price of cement hitting the roofs, it is easy to see why industry experts and stakeholders including Ogunleye are worried that authorities in the housing sector may have hit the brickwall. The former ATOPCON chief was emphatic that apart from affecting efforts at affordable housing delivery, the development will also lead to adjustments in construction cost and delay in project delivery time.

    Indeed, there are fears that the price hike will trigger increase in the cost of construction and by extension, the need for cost variation in all ongoing contracts. More importantly, perhaps, cases of delay in project delivery and outright abandonment may have become inevitable, even as contractors may be discouraged from embarking on new projects.

    A private developer lamented that the likely price variation for most construction projects might cause confusion and pitch contractors against their clients. According to the developer, who declined to have his name in print, resistance to requests for adjustments in construction cost might force a resort to unprofessional construction practices with consequences for the integrity of construction projects.

    Could the challenge of forex be the only factor responsible for the jump in cement price?  Ogunleye pointed out that although, it is a reaction to the general increase in price of goods and services caused by the challenge of sourcing Foreign Exchange (forex), the rising cost of production caused by lack of infrastructure, particularly power supply has become too heavy for cement manufacturers to bear.

    The town planning consultant is right. Manufacturers in the building and construction industry, especially cement producers, have come under severe strain in recent times as a result of rising cost of production. Ogunleye said, for instance, that the anticipated improvement in electricity supply by the power generation and distribution companies has yet to come the way of industrialists including cement manufacturers.

    At the last count, power takes up over 40 per cent of manufacturers’ cost, according to data from Manufacturers Association of Nigeria (MAN). Also, over 75 per cent of the electricity needs of manufacturers are said to be generated in-house, while about 25 per cent come from the utility firms. Though, cement manufacturers rely on their own gas-powered plants, getting gas to fire their plants remains a pain in the neck.

    Apart from lack of electricity, the challenge of transporting cement and building materials by road as well as the huge forex required to bring in raw materials may have also contributed to the sudden increase in cement price.

  • NLNG’s earnings may dip by over 50% on oil price crash

    NLNG’s earnings may dip by over 50% on oil price crash

    Nigeria Liquefied Natural Gas Limited (NLNG) earnings this year may drop by as much as $6 billion over 50 per cent, compared to 2014 earnings.

    The firm’s Managing Director, Babs Omotowa, told The Nation that the realities in the global oil and gas, especially in Nigeria, have adversely affected oil and gas operations.

    To underscore the impact of the price crash, he said in 2011, when crude oil sold for as much as $140 per barrel, NLNG earned over $11 billion, but this year, considering low oil price and some local challenges confronting Nigeria’s oil and gas industry, anticipated earnings will be about $5 billion.

    He said: “Low oil price has affected our revenue significantly because gas price follows oil price. Compared to 2014 when oil price was about $140 per barrel when we had over $11 billion, this year we might be earning about $5 billion. That is clearly more than 50 per cent reduction in revenue.

    “Oil price fluctuation is always expected, so from 2012 we had already started to plan in anticipation that oil and gas prices will come down. Since 2012 we had anticipated price crash and we have been working towards it. We have been able to take action to minimise our cost because while we cannot control oil price, we can control our cost, and improve our efficiencies.Even though we are more than 50 per cent lower in revenue, we will still be able to deliver a net income after tax of close to $6 billion at the end of the year.”

    On the impact of the renewed attacks on oil facilities by the Niger Delta militants, Omotowa said militancy affects the oil and gas industry in Nigeria and not just the NLNG.

    He said the development of the region would help in significantly reducing insurgency, urging stakeholders to collaborate to achieve that objective with the government leading the way.

    “Issues around militancy affect the entire oil and gas industry. Since 2008 when we started to see this insurgency in the Niger Delta, it has affected oil and gas generally, so I wouldn’t go to any specifics on NLNG but I will say for us as a country, this is a major issue that made the country to lower production and higher cost for the industry. All the stakeholders must work together to try and find lasting solution for the betterment of the country.

    “It is an issue that we all need to pay attention to and find ways to resolve, bring all the gladiators together. I think the key thing at the end of the day is that the Niger Delta where oil and gas is produced has to be developed. That is the fundamental cause that everybody can talk about – the devastation of the environment, poor skills, poor development and no infrastructure. We all need to work together, government especially, which has the biggest role to play in providing infrastructure, and the oil and gas industry have to support in all that effort. I think if we all can address that, it will gradually bring an end to the insurgency,” he added.