OIL PRICE NG

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THE Federal Government has paid N168 billion outstanding subsidy debt to oil marketers, as part of measures targeted at stimulating activities in the downstream sector of the petroleum industry. Investigation by Vanguard indicated that the payment was made through promissory notes, which the major and independent marketers started to collect on June 1, 2020.

However, the notes would not be turned into cash until the next three to four years, meaning that the poor financial situation of the downstream sector would not improve in a short term. The Operations Controller, Independent Petroleum Marketers Association of Nigeria, IPMAN, Mr. Mike Osatuyi, who confirmed the development in a telephone interview with Vanguard yesterday, said: “The government does not owe anymore. We have started collecting promissory notes for the last segment of the subsidy payment. However, it should be noted that we would not be able to cash it until the next three to four years.”

Mr. Osatuyi, who confirmed the marketers have not been able to embark on fuel importation, barely one month after the government had permitted them do so, added that marketers were still constrained by many problems, including lack of funds and uncertainty over inadequate foreign exchange. He said: “It is not that we do not want to import, after all we imported in the past. The fact is that, there are many constraints affecting our operations at this time. These include lack of funds, huge subsidy debts and uncertainty over foreign exchange.”

COVID-19 delays engagement

Osatuyi, who noted that marketers planned negotiation, was being stalled by the coronavirus pandemic, said: “We need to settle down, review and resolve these issues with the relevant government agencies. We need to have a clear idea about the direction, before we delve into fuel importation.

“Unfortunately, we cannot hold the planned engagement immediately because of the coronavirus pandemic, which has restricted the movement of persons from one place to another. We look forward to holding it once the pandemic is over.”

Private sector input

Similarly, speaking at a webinar in Lagos, chairman, Major Oil Marketers Association of Nigeria, MOMAN, Mr. Adetunji Oyebanji, said: “We are aware of the recent pronouncements to the effect that there is no longer going to be anything like subsidy anymore to more recent comments, stating that the sector had been deregulated.

As far as we are concerned, there is a need for the private sector to make input, while such policy is being put in place so that at the end of the day, we would have a policy that is beneficial not only to the industry, but to the economy as a whole.”

“We believe that the market forces should be allowed to determine the prices, particularly the price of Premium Motor Spirit, PMS, and there are several reasons that support that, but I think the most important point, I will like to put across is that we require very significant investment in distribution facilities, especially pipelines, trucks and refineries to create an environment of certainty for the operators.

“The downstream needs even more investment and we believe that creating that kind of environment where the market determines the prices will give operators the kind of certainty they require and this is all through the value chain, right from the refinery gate all through the dealers, the retailers at the end of the station. Uncertainty is not a friend of investment.”

Inconsistent policies

Also, Managing Director, NorthWest Petroleum & Gas Limited, Dame Winifred Akpani, stated: “There has been many investments in depot constructions across Nigeria because opportunities presented themselves for people to make such investments at the time. Initially, it was worthwhile because there were so many things going on at the same time. But subsequently over the years, as government has continually overtaken the whole operations in the downstream sector to a large extent it has been very difficult for a lot of depot owners to survive especially those who had not made further investments into other areas of the downstream.

“On the average, we have each depot costing between N3 billion to N5 billion at the minimum. For some they were able to make subsequent investments into retail, marine vessels, pipelines and others. For these set of people it has not been so bad in the sense that they have been able to continue to operate.”

Deregulation

Furthermore, Akpani maintained: “Deregulation, as we know it now, is a complete removal of government regulations or control, especially with regard to pricing or product as we know them. For the depot operators, over the years with NNPC taking over 100 per cent of import until recently and then fixing very little margins for operators who take on these products for distribution, the operators have not been able to operate.”

Source: Vanguard

The President of African Development Bank (AfDB), Akinwumi Adesina, a former Minister of Agriculture in Nigeria, is enmeshed in allegation of corruption, leading to a pressure probe from the United States of America.  

AfDB board agreed to an independent probe of its president after the U.S. rejected an internal investigation that cleared him of allegations of favoritism.

Africa’s largest multilateral lender decided on the inquiry after several governments backed U.S. Treasury Secretary Steven Mnuchin’s criticism of a bank-led examination into the allegations. Adesina, who has repeatedly denied wrongdoing, may have to step back from the role until the probe is completed.

According to reports, unidentified whistleblowers accused him of handing contracts to acquaintances and appointing relatives to strategic positions. Hence only fair, transparent and just processes would confirm his innocence of allegations on corruptions.

The proposed investigation comes three months before the bank’s annual meeting, at which Adesina is the sole candidate to extend his five-year term. The AAA-rated lender’s 80 shareholders in October pledged to provide funding that will help to more than double its capital base to $208 billion.

Denmark, Sweden, Norway and Finland are among countries that wrote to the AfDB to back the Mnuchin’s demands for professional outsiders to look into the allegations.

Mr. Mnuchin expressed reservations about the integrity of the lender’s ethics committee for giving Adesina clean bill of health with regards to the allegations.

The scope and detail of the allegations are serious enough for a further inquiry to ensure the AfDB’s shareholders have confidence in the bank’s leadership, Mnuchin said in a letter addressed to Niale Kaba, the chairwoman of the bank’s board of governors.

The United States is the second largest investor and biggest shareholder with 6.5% after Nigeria. The demands for an independent probe are aimed at ensuring that if the allegations are baseless, the process of reaching that conclusion is public and transparent.

Shareholders of the AfDB include 54 nations on the continent and 27 countries in the Americas, Europe, Middle East and Asia. It has an AAA rating from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.

S&P Analyst Alexander Ekbom said, “If there are questions from major shareholders on the appropriateness of an internal process, clearly it’s not harmful if that is put into a different light and looked at from the outside world with fresh eyes.”

Prior to Mnuchin’s letter to the board, African leaders including South African President Cyril Ramaphosa and his Nigerian counterpart, Muhammadu Buhari, expressed support for Adesina and commended him for his efforts to help secure funds for Africa to deal with the fallout from the disease.

U.S. criticism of the bank’s internal processes follows comments by World Bank President David Malpass in February that multilateral lenders including the AfDB tend to provide loans too quickly, and, in the process, add to African nations’ debt problems. The bank rebutted the statement, saying it undermines its governance systems, impugns its integrity and that there is no risk of “systemic debt distress” on the continent.

In March, the lender issued a $3 billion social bond to help African countries deal with the fallout from the coronavirus pandemic. The bank also launched a $10 billion crisis-response facility for African nations.

However, some political watchers believe the AfDB president could have fallen out of favour from the US as he was so close to China, and with election coming in the US, while Trump seeks re-election bid, there was need to change the bank’s president.

source: energyfocusreport

Nigeria LNG Limited (NLNG) on Sunday, 24th May, 2020, received the Honourable Commissioner for Health, Rivers State, Professor Princewill Chike, who led a delegation to inspect the company’s medical facilities and to assess its readiness in the fight against COVID-19 pandemic in the State.

The Commissioner, who was received by NLNG’s General Manager Production, Adeleye Falade, inspected the Holding Centre at NLNG Residential Area Hospital and the Bonny Zonal Hospital Holding Centre, which was recently donated by NLNG.

Professor Chike commended NLNG for being responsive to the needs of the State in the containment efforts against COVID-19 and assured of the State Government’s continuous support for its operations.

He condemned the use of social media to create unnecessary panic on the Island and urged all those who are in the habit of posting unverified stories on social media to desist from the practice.

He remarked that health officials were in Bonny to examine and take samples from persons who were alleged to have reported symptoms consistent with a resistant strain of malaria and typhoid, adding that the results will be ready soon. He said the causes of malaria and typhoid are well known and advised anyone who feels unwell to visit the hospital for investigation and treatment.

Unveiling the plaque for the Bonny Zonal Hospital 10-Bed Holding Centre to formally declare it open for public use, he described it as a well-equipped centre that can be upgraded to a treatment centre in the future.

The Commissioner stated that the facilities were adequate for handling any Covid-19 case ahead of evacuation to a designated treatment facility.

Welcoming the delegation, Falade said the holding centres were part of the company’s response to COVID-19. He commended the State Government for supporting the actions meant to help manage the pandemic.

He added that NLNG’s contribution to the fight against the Corona Virus is in line with its vision of “…helping to build a better Nigeria”.

Other programs to boost the healthy well-being of residents of Bonny Island include the Bonny Malaria Eradication Programme, instituted in 2019 to reduce malaria-related mortality among women and children between the ages of zero to five and to make Bonny Island Nigeria’s first malaria-free zone, and the Bonny Community Health Insurance Programme, a scheme established to ease financing and access to quality health care on the Island. Some 1,393 residents have enrolled in the insurance programme.

Other members of the NLNG delegation at the visit include the manager Community Relations and Sustainable Development, Mr Godson Dienye; the Chief Medical Director, Dr Okuns Ohiosimuan; and Head, Government Relations, Rivers State, Michael Igoni.

source: energyfocusreport

One of Shell’s major project in Nigeria, Bonga crude oil export terminal has begun routine maintenance in order to meet record time.

The Shell Nigeria Exploration and Production Company (SNEPCo) said that maintenance on the Bonga floating production storage and offloading unit (FPSO) began on May 21.

SNEPCo made it known that, “The scope includes statutory recertification and critical asset integrity activities and will run until July during which there will be a few days of total shutdown.”

The company said it was working to complete the maintenance “safely and in record time.” This was disclosed by a source that the FPSO would be closed for two weeks.

Bonga was scheduled to load four cargoes in June, or 127,000 barrels per day (bpd), up slightly from May at 123,000 bpd.

The Bonga FPSO like its Egina counterpart, is expected to add significant production of crude to Nigeria.

source: energyfocusreport

Recent discovery and findings in the exploration space of Nigeria oil and gas industry show that the country is more of a gas nation than oil. This is also confirmed with the Minister of State for Petroleum Resources, Chief Timipre Sylva, signing of the gas network code.

To this end, Nigeria is finally on the verge of unlocking huge economic benefits arising from its natural gas endowment. For many years, the country had been hindered by absence of gas transmission pipelines in her bid to harness its abundant gas reserves for provision of gas to generate electricity, and stimulate rapid industrialization using gas as feedstock for fertilisers, ammonia and other petrochemical applications.

The commencement of the NNPC-sponsored Ajaokuta–Kaduna–Kano (AKK) Gas Pipeline project by leading indigenous EPC giant – OILSERV Limited is the cause for this renewed optimism. OILSERV has been awarded the engineering, procurement, construction, installation, testing, and commissioning of the first segment of the 614 km x 40-Inch Gas pipeline, which is from Ajaokuta to mid-way between Abuja and Kaduna. The second segment has been awarded to another company.

The indigenous company has achieved significant progress in a short spate of time including ongoing detailed engineering design, topographical and geotechnical surveys, haulage and stacking of line pipes in preparation to commence construction activities.

Confirming OILSERV achievement, the Group Managing Director (GMD) of NNPC; Melle Kolo Kyari asserted thus: “the AKK project is key to resolving the power deficit challenge of the country. Its multiplier effect on the economy and provisions of jobs will be unprecedented. NNPC will give all necessary support to the Contractors to enable them deliver the project within time and within budget.”

On his part, Chairman of OILSERV Ltd, Engr. Emeka Okwuosa, gave a pledge that OILSERV will leave no stone unturned to partner with NNPC and make the dreams of 200million Nigerians come true by delivering the AKK project to global quality and standards. In his words, “The capability of OILSERV has been honed in the course of successful delivery of landmark EPC contracts such as lot B of the 48inch OB3 gas pipeline system that is currently being commissioned.”

The optimism and hope that this development represents is a clear elixir that is surely needed by the entire nation at this time. We wish OILSERV, NNPC and everyone else involved in this endeavor, success.

The AKK project upon completion will definitely give a face lift to Nigeria’s power sector and improves the country’s gas reserve.

Source: Energyfocusreport

retail marketers of petrol are currently raking in billions of naira as findings on Wednesday showed that they would make over N8.3bn profit in May (this month) due to the recent reduction in the ex-depot price of the product.

On May 6, the Nigerian National Petroleum Corporation announced a reduction in the ex-depot price of petrol from N113.28 per litre to N108 per litre.

Ex-depot price is the price at which depot owners sell petrol to retail outlets in Nigeria.

Marketers and consumers had expected the Petroleum Products Pricing Regulatory Agency to review the commodity’s pump price downward but this never happened.

The PPPRA had in March promised that it would be reviewing petrol price monthly based on global crude oil market fundamentals.

But it last reviewed petrol price on April 1, when it announced N123.5/litre and N125/litre as the lower and upper price bands for the commodity.

Data obtained from the PPPRA Abuja showed that since the N25.28 reduction in the ex-depot price of petrol and PPPRA’s silence on price review, marketers had been making larger profit margins.

An analysis of petrol pricing templates from January to April showed that the difference between the ex-depot price for collection and real ex-depot price was N7.65/litre.

According to the PPPRA, the ex-depot price for collection was a summation of the real ex-depot cost, bridging allowance, marine transportation allowance and administrative charge.

It was gathered that the N7.65/retailers profit margin was the difference between the ex-depot prices and the lower/higher bands of petrol pump price.

Retailers profit margins differ across the country, but while adding their profit, the cost must not exceed the higher price band specified by the PPPRA.More in Home

Adding the N7.65 to the current N108 ex-depot price that was announced on May 6 brings the actual cost of PMS to about N115.65/litres.

But the commodity is dispensed at most filling stations at N125/litre, meaning oil dealers have been making about N9.35 on every litre of petrol sold nationwide.

According to the NNPC, in its most recent report on petrol consumption, Nigerians consumed 38.65 million litres of petrol daily in January.

With a daily consumption of 38.65 million and a profit of N9.35/litre, the marketers will make about N8.3bn for 23 days in May, beginning from May 7 when the N108/litre ex-depot price announced by NNPC took effect.

Oil marketers, however, had stated that it was not their responsibility to determine petrol price and noted that they would continue implementing the April 1 rate announced by the PPPRA.

They told our correspondent that by reducing the ex-depot price of petrol without announcing a new price band for the commodity at filling stations, the Federal Government through its agencies was trying to set marketers against the buying public.

The National President, Petroleum Products Retail Outlets Owners Association of Nigeria, Billy Gillis-Harry, had stated that the non-reduction in petrol price was not the fault of marketers.

He said, “When a government organisation reduces the ex-depot price and you are not telling the buying public the approved band for the pump price at filling stations, you are trying to set us the retail outlet owners against the Nigerian public.

Gillis-Harry added that since there was no directive on approved lower and higher rates, it could mean that the NNPC left the pricing in the hands of marketers even though it was not their call to make.

Copyright PUNCH.