The federal government expended a total of N2.3 trillion on subsidising the consumption of petrol and electricity from 2015 to 2018, a report from global accounting and consulting firm, PricewaterhouseCoppers (PwC), has revealed.

The report, which was obtained by THISDAY yesterday, was presented to power sector stakeholders at a roundtable organised by Mainstream Energy Solutions- operators of the Kainji and Jebba hydro power generation companies (Gencos), by the Chief Economist of PwC Nigeria, Dr. Andrew Nevin.

The report highlighted the challenges of Nigeria’s electricity sector and potential solutions to them. It equally indicated that the country spent N1.12 trillion as electricity subsidy and another N1.2 trillion on petrol.

It noted that both subsidy expenditures within the review period represented 17 per cent of Nigeria’s current foreign reserves and 26 per cent of 2019 federal budget.

It said: “The federal government has expended about N1.2 trillion as petroleum subsidy over the past four years (2015-2018). The tariff shortfall in the electricity sector which technically is the electricity subsidy payable by the federal government stood at N1.12 trillion between 2015 and 2018.

“Both subsidies amount to N2.3 trillion, which represents about 17 per cent of current foreign reserves and 26 per cent of the 2019 budget.”

The PwC report stated that the total electricity subsidy for the four years could cover the current budget of the ministries of health and education.

It added that electricity distribution companies (Discos) have steadily reported losses since they took over the distribution assets from the government at the conclusion of the power sector privatisation in 2013.

“In addition, there has been a steady growth in the amount of loss reported. In 2017, the total loss reported by Discos stood at N417 billion.

“Liquidity crunch is the biggest challenge of the Nigerian electricity sector today. The 11 Discos have been struggling to meet their obligations to the Nigerian Bulk Electricity Trading Plc (NBET) and Market Operators (MO) as evidenced in their low remittances to NBET and MO,” the report stated.

According to it, in the first quarter (Q1) of 2019, only about 28 per cent of the N190 billion invoice comprising invoice of N161.4 billion for energy purchased from the NBET and an invoice of N28.8 billion for administrative services from MO, were remitted by the Discos.

“In one year (Q1’2018 – Q1’2019), Discos’ outstanding remittance to NBET and MO stood at about N523.8 billion and N80.3 billion respectively.

“Consequently, NBET have in turn been unable to meet their obligation to the generation companies (Gencos) thus creating a liquidity challenge that has plagued the electricity industry since the privatisation exercise in 2013,” it added.

The report noted that the proportion of remittances relative to market invoice were low across all the Discos, indicating that none of the Discos could attain 50 per cent of the total bill they owed for electricity supplied to them.

“This situation creates liquidity challenges to the generation and transmission segment of the industry,” it said, adding that it is believed that metering customers will reduce the liquidity challenges of the country.

“But meter delivery progress has been slow so far. Abuja, Benin and Port-Harcourt are the Discos that currently have more than half of their customers metered. Yola Disco recorded the slowest metering progress (21 per cent) of all Discos as at Q1’ 2019.
“Progress in metering customers will help to reduce ATC&C (Aggregate Technical Commercial and Collection) losses and billing collection inefficiencies in the sector,” it said.

Indicating that the tariff shortfall in 2018 by the 11 Discos amounted to N384 billion, the PwC report also stated that the average aggregate technical, commercial and collection loss in 2018 was 52.7 per cent.

This, the report pointed out, meant that more than half of the energy received by Discos was wasted.

Source: This Day

The law and the regulation governing the operation of the West African Gas Pipeline (WAPCO) is the subject of an amendment in Lomé, this Thursday, September 26, 2019. Experts, delegates and parliamentarians of the four countries that are part of this transnational mechanism (Nigeria, Ghana, Benin and Togo) are meeting in a workshop that was opened by Dèdèriwè Marc Ably-Bidamon, Togolese minister of mines and energy, and also president of the Committee of Ministers of the West African Gas Pipeline Project .

Indeed, the meeting “aims first of all to imbue you with the realities of the West African Gas Pipeline, after eight years of operation,” said the Togolese minister. It is also for these actors to harmonize their points of view, “on amendments that the test of time, or the experience of exploitation have made necessary”.

The experts will thus floor on the proposals of amendment of the law of WAPCO and its regulation with the institutions concerned. The idea being to submit the harmonized proposals for adoption by the parliaments of the four States Parties.

This solidarity tool between the four countries of West Africa, with an estimated cost of $ 974 million, aimed at its launch to provide gas with a maximum capacity of 13.45 million cubic meters per day to countries such as Benin, Togo, Ghana and Nigeria . Launched since the beginning of this decade, its functioning has, however, been undermined by cash and unpaid issues vis-à-vis some partner countries.

As a reminder, these negotiations take place in a context where Nigeria has closed its borders with its western neighbors, particularly Benin, and consequently Ghana and Togo. A closure that is not without consequences on the economies of these countries and continues without the authorities of Abuja announce end date.

Source: Agence Ecofin

NIPCO Plc, has declared N254 billion turnovers and a profit after tax of N1.58 billion for 2018 financial year just as it deepened its petroleum products outlets expansion and doubled its Liquefied Petroleum Gas (LPG) market share in Nigeria.

The Company Chairman, Chief Bestman Anekwe, who declared this at 15thAnnual General Meeting of the company in Abuja, maintained that these achievements were recorded in the face of the prevailing difficult environment, which had prevailed in the sector in the last few years.

The Board of Directors, he said, proposed a total dividend of N563 million translating into 300k per share from the profit after tax ,which was unanimously approved by the shareholders .

Stating that the result achieved even in the face of the challenging business environment, made the company to feel proud, Anekwe noted that NIPCO Plc has maintained its culture of outstanding performance and industry leadership by focusing on pursuing its major objectives.

“We are yet improving on our core competencies and remain committed to our vision of being the First choice company in the Oil & Gas Industry to all stakeholders

“We have maintained a constant expansion of our retail outlets and furthermore our company has maintained the lead in the LPG subsector by doubling the number of LPG skids and plants all over the country “the chairman pointed out

Said he :” Our strategy and approach in venturing into the upstream sector hopefully will give us a competitive advantage to explore even new frontiers in the business environment.”

Chief Anekwe noted that regardless of the prevailing difficult environment in the downstream sector in 2018, NIPCO was able to sustain its steady growth through strategic expansion of some of its core business activities and made a turnover of about N254B and a profit after tax of N1.5B.

According to him, the result is rather commendable considering the prevailing operating environment in the sector ,which NIPCO was not immured adding “we are hopeful that we will sail on calmer waters in the coming year.”

Meanwhile, NIPCO Plc has announced plans to go into production of Liquefied Petroleum Gas (LPG) in new investments surge.

Managing Director of the company, Mr. Sanjay Teotia, who disclosed this on the sidelines of NIPCO’s 15th Annual General Meeting (AGM) in Abuja, pointed out that conscious efforts are in place in preparation for the take off of the LPG production.

“Your company is thinking of venturing into LPG production against the background of the nation’s richness in natural gas. In the near future, we are going into its production,” he said.

The strategy to diversify and grow the streams of income through the expansion of the company’s oil and gas business, Teotia said, would gain more momentum.

Currently in LPG storage space, NIPCO, the company’s helmsman said, “we not only possess the largest but the most active as well as the supplier of choice.

“Our shareholders will continue to smile with good returns on their investment year in year out but with a caveat that challenges in the sector are addressed headlong by concerned stakeholders” ,he asserted.

Source: Oriental News

Within a one-year period covering August 2018 to July this year, the country earned a total of N5.37tn from oil, figures obtained from the Central Bank of Nigeria have revealed.

The amount is contained in the economic report of the CBN for the month of July, a copy of which was obtained by our correspondent in Abuja on Friday.

The amount was earned from four major sources of oil revenue. They are crude oil and gas exports; Petroleum Profit Tax and royalties, domestic crude oil and gas sales, and others.

A breakdown of the N5.37tn showed that the sum of N346.45bn was earned from crude oil and gas exports, while N3.59tn was collected from the PPT and royalties.

In the same vein, the sum of N1.31tn was realised from domestic crude oil and gas sales, while about N60.82bn was received from other oil revenue items.

A monthly breakdown of the N5.37tn showed that the sum of N403.6bn was earned from oil in August, while September, October, November and December had N471.1bn, N422.1bn, N601.0bn and N441.3bn, respectively.

In January, the country earned N417.3bn from oil; February, N479.5bn; March, N516.9bn; April, N472.4bn; May, N410.2bn; June, N336.6bn; and July, N387.7bn.

Findings further revealed that throughout the 12month period, the Federal Government could not achieve its budgeted monthly oil revenue of N640.2bn

It was learnt that the inability of the government to meet its oil revenue target of N640.2bn was due to production shut-down and closure of various terminals due to fire and flooding.

The Minister of Finance, Mrs Zainab Ahmed, last week expressed concern about the country’s medium-term fiscal challenges, particularly in the area of revenue generation.

She said that the 2020 budget would be predicated on a lower oil production of 2.18 million barrels per day and lower benchmark oil price of $55 per barrel.

In the 2019 budget, the budget benchmark was based on 2.3mbpd oil production and $60 per barrel benchmark.

She said, “Oil production volume is projected to average 2.18mbpd for 2020. Although this is lower than the projected oil production volume of 2.3mbps for 2019, we believe that this is a more realistic projection. For 2021 and 2022, the projections are 2.22mbpd and 2.36mbps respectively.”

Explaining the reason for the cut in oil price benchmark, Ahmed said that this was done considering the fact that there would be glut in the oil market.

She said there were strong indications of an oversupplied oil market by next year, adding that when this happened, it would result in a fall in oil prices.

The minister said all three major forecasters,  the Organisation of Petroleum Exporting Countries, the International Energy Association and the United States Energy Information Administration, had predicted that non-OPEC countries would grow oil production by about two million barrels this year and produce even more next year.

According to her, while the US shale oil accounts for most of the total supply increase, new projects in Norway, Brazil and Australia will also contribute to the increase in the non-OPEC supply.

She said, “A lower oil price benchmark of $55 per barrel is assumed, considering the expected oil glut in 2020 as well as the need to cushion the unexpected price shock.

“There are strong indications of an oversupplied market in 2020. Oil projection volume is projected to be average 2.18mbpd for 2020. Although this is lower than the projected oil production volume of 2.3mbpd for 2019, we believe that this is the realistic projection.”

Copyright PUNCH.